• Notification Date: 22-05-2023
• Notification No: N/A

Karnataka HC declares GST Notice to Gameskraft as ‘Illegal, arbitrary’

Days after the Karnataka High Court quashed a GST notice issued to online gaming platform Gameskraft, a detailed copy of the order revealed that the single-judge bench of Justice S R Krishna Kumar said the notice was “illegal, arbitrary, and without jurisdiction”. 

The proceedings dealt with whether online games under the platform would be considered games of skill or chance, as the latter attracts 28 per cent GST but the former only 18. According to Gameskraft, most of these games were rummy, which they argued had been previously held to be a game of skill. The GST department had argued that rummy was a game of chance and hence liable to taxation at 28 per cent. 

A Rs 21,000 crore notice to Gameskraft had been stayed by the high court in September 2022. 

In a decisive order, the court on May 12 struck down the notice claiming Rs 21,000 crore GST payment, referring to the GST department’s argument as a “vain and futile attempt on the part of the respondents to cherry-pick stray sentences from the judgments of various courts including the Apex Court, this court and other high courts and try and build up a non-existent case out of nothing which clearly amounts to splitting hairs and clutching at straws…”. 

The bench also noted that rummy being substantially a game of skill and not chance, it would not be considered gambling even if the players are playing for a stake. The same would apply in online and offline modes of the game alike, it added.