GST Notice of Rs 21,000 Crore to Gameskraft Struck Down by Karnataka HC

A GST notice sent to the online gaming platform Gameskraft was invalidated on Thursday by a single-judge bench of the Karnataka High Court. Previously, a Rs 21,000 crore notice to Gameskraft had been stayed by the High Court in September 2022. Justice SR Krishna Kumar served as the bench’s only member. We are awaiting the full order.

The debate over whether the platform’s online games would be classified as games of skill or chance up until this point had focused on the fact that the latter attracts 28 per cent GST while the former only is 18. The majority of these games, according to Gameskraft, are variations of rummy, which they claim was once thought to be a game of skill.

On the other hand, the GST Department contended that it amounted to a platform for games of chance and was, therefore, subject to taxation at a rate of 28% because they would fall under the category of “supply of actionable claim”. In contrast to the payment that Gameskraft was making, which was 18 per cent calculated on the platform fees that were charged to both players, the GST department argued that this would apply to the entire buy-in amount being staked by the players.

A stay order was obtained by Gameskraft after an Intimation notice under the CGST Act was issued in September 2022 with a tax demand of Rs 21,000 crores. In this instance, they argued that the show cause notice based on the intimation notice that was granted a stay was also received on September 23, the day the stay order was granted. They reiterated their position that rummy would only be regarded as a “game of skill” and further argued that Gameskraft could not be taxed as a “supplier of actionable claim” since they had no rights over the money that the players had pooled. The bench then ordered the cancellation of the same notice.