Supreme Court Puts a Hold on Rs 21,000 Crore GST Demand for Gameskraft
In a major development, the Supreme Court has stayed the Karnataka High Court’s ruling that overturned a Rs 21,000 crore goods and services tax (GST) demand imposed on Gameskraft, a prominent online gaming company based in Bengaluru. This decision comes as a setback for online gaming companies as they face an uncertain future in terms of tax liabilities.
The bench, led by Chief Justice DY Chandrachud, also instructed all parties involved to submit a compilation of judgments and related documents. The Supreme Court has scheduled the next hearing in this case for three weeks’ time.
The controversy surrounding Gameskraft began when the Directorate General of GST Intelligence ordered the company to pay a hefty tax demand of Rs 21,000 crore. However, Gameskraft challenged the order in the Karnataka High Court, which subsequently suspended the demand. The High Court, on May 11, nullified the GST notice against Gameskraft Technology, ruling in favor of the Bengaluru-based firm.
Additional Solicitor General N Venkataraman argued in the Supreme Court that the services provided by Gameskraft fell under the category of betting and gambling, thereby making them subject to a 28% GST. He contended that the online rummy game included two distinct transactions: the game itself and a wager on the outcome.
In response, Gameskraft’s legal team, including senior counsel Mukul Rohatgi, asserted that a rummy game, with or without stakes, is a skill-based game as determined by previous judgments of the apex court.
The Show Cause Notice issued by the GST department accused Gameskraft of evading Goods and Services Tax by misclassifying its supply as services rather than actionable claims, which are categorized as goods. The company was also accused of misrepresenting the taxable value of the supply by submitting fake or backdated invoices. These alleged discrepancies were discovered during a forensic examination of the company’s documents.
With the Supreme Court’s stay on the Karnataka High Court’s ruling, the future of online gaming companies hangs in the balance. This decision will have far-reaching implications for the industry, which has witnessed significant growth in recent years. As the legal battle continues, experts and stakeholders are eagerly watching to see how the courts will interpret the complex legal framework surrounding online gaming and its taxation.
In conclusion, the Supreme Court’s stay on the GST demand against Gameskraft marks a significant turning point in the controversy surrounding this online gaming company. The decision has serious implications for the online gaming industry as a whole, and all eyes are now on the court’s forthcoming judgment.
