• Notification Date: 07-09-2023
• Notification No: N/A

SC stays Karnataka HC's Judgment on Gameskart Case quashing Rs 21,000 crore GST Notice

The Supreme Court on September 6 stayed Karnataka High Court's judgment, which declined a Goods and Services Tax (GST) notice against Bengaluru-based online gaming company Gameskraft Technology for alleged evasion of Rs 21,000 crore. 

A bench led by CJI DY Chandrachud is likely to hear the case for final hearing in three weeks. 

At the hearing today, Additional Solicitor General (ASG) N Venkatraman argued that they have approached the Supreme Court as the High Court has relied heavily on a judgment of a two-judge bench of the same court. 

According to the ASG, the observations made by the HC in the judgment, have put a pause on other show cause notices leading to a problem to the GST department. He argued that the department has put a pause on at least 35 different show cause notices owing to the HC's judgment. 

The CJI on hearing the case directed Gameskraft to file their response to the case and permitted the Directorate of Revenue Intelligence of GST to file a rejoinder to the same. The court further stayed the operation of the judgment because of which the GST department can now initiate proceedings against Gameskraft. Furthermore, the CJI orally observed that the Supreme Court would not want any other High Court following this order. 

Joyjyoti Misra, Group General Counsel at Gameskraft said that they, along with the skill gaming industry associations, will put forth their submissions before the Supreme Court in the coming weeks. 

"We have full faith in the judiciary and are confident that the Supreme Court will reaffirm the settled law of over five decades once again and vindicate our and the industry's position" he said. 

Casefile: 

In September 2022, a GST intelligence unit has issued a show-cause notice to Gameskart Technology alleging that the company failed to pay Rs 21,000 crore in GST, the biggest such claim in the history of indirect taxation. The notice was for the period between 2017 and June 30, 2022. 

Gameskraft Technology Private Limited (GTPL) was also accused of promoting online betting through cards, casual and fantasy games such as Rummy Culture, Gamezy, and Rummy Time. Gameskraft allegedly was not issuing invoices to customers, the officials have said. 

GST officials slapped a 28 percent tax on betting amount of nearly Rs 77,000 crore. "GTPL was engaged in the betting by allowing its players/gamers to place bets in the form of money stakes on outcome of card games played online," the authorities said. 

The gaming platform submitted fake/back dated invoices, which was uncovered during a forensic examination of the documents, they alleged, adding that the company was also inducing its customers to bet as there was no way of returning the money once it was added in the wallet. 

The company approached Karnataka High Court challenging the show cause notice. In May 2023, the High Court quashed the show cause notice and proceeded to observe that the department was picking and choosing its arguments. 

Directorate of Revenue Intelligence of GST thus appealed against this judgment in the Supreme Court. 

Started in 2017, Gameskraft's portfolio of real-money gaming platforms include online rummy game Rummyculture and a multi-game platform Gamezy that offers rummy, fantasy sports, and online ludo among others.