LI Network
Published on: 7 September 2023 at 15:56 IST
The Supreme Court intervened by staying the Karnataka High Court’s ruling, which had invalidated the intimation notice issued by the Goods and Service Tax (GST) department, demanding Rs 21,000 crore from an online gaming platform.
A bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Mishra issued notice and requested a response from the Directorate General of Goods and Services Tax Intelligence regarding the matter involving the Karnataka-based online gaming platform, Gameskraft.
The Supreme Court has scheduled the case for further consideration in three weeks.
The Directorate General of Goods and Services Tax Intelligence had contested the Karnataka High Court’s May 11 decision, which determined that ‘rummy,’ whether played with or without stakes, does not qualify as gambling.
The high court concluded that rummy, whether played online or physically, is primarily a skill-based game rather than one of chance. Therefore, the online rummy game and other digital games hosted on Gameskraft’s platforms were not subject to taxation as “betting” or “gambling.”
The dispute originated when Gameskraft received an intimation notice from the GST authorities on September 8 of the previous year, demanding a payment of Rs 21,000 crore. The company subsequently challenged this notice in the high court.
A single-judge bench of the high court had, on September 23, 2022, suspended the GST department’s notice, citing the existence of several contentious issues within the case.
Subsequently, the online gaming firm returned to the high court, alleging that despite the earlier stay order, the authorities had unlawfully and maliciously issued a show-cause notice on the same day as the high court’s order on September 23, 2022.
The September 8, 2022 notice aimed to impose a 28% GST rate on the company’s transactions.
In response to these developments, the company issued a statement, saying, “We have taken note of the Supreme Court’s interim order. In the upcoming weeks, we, in conjunction with skilled gaming industry associations, will present our arguments before the Supreme Court.”
“We have full confidence in the judiciary and believe that the Supreme Court will once again reaffirm the established legal principles spanning over five decades, vindicating our position and that of the entire industry,” the statement added.
