SC stays Karnataka HC order quashing GST notice of Rs 21,000 Cr against gaming platform firm

The Supreme Court on Wednesday stayed the Karnataka High Court order that had quashed the intimation notice of the Goods and Service Tax department seeking Rs 21,000 crore from an online gaming platform.

A bench of Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Mishra issued notice and sought a response to a plea of the Directorate General of Goods and Services Tax intelligence from the Karnataka-based online gaming platform Gameskraft.

The top court listed the matter after three weeks.

The Directorate General of Goods and Services Tax Intelligence has challenged the May 11 order of the Karnataka High Court which had held that ‘rummy’, whether played with stakes or without stakes, is not gambling.

The high court had held that rummy, whether played online or physically, is substantially a game of skill and not a game of chance and thus the online rummy game and other digital games played on Gameskraft’s platforms were not taxable as ”betting” and ”gambling”.

The matter arose after Gameskraft was issued an intimation notice from the GST authorities on September 8 last year, raising a demand of Rs 21,000 crore. The company challenged the notice before the high court.

A single-judge bench of the high court on September 23, 2022, stayed the notice of the GST department, observing that there were several contentious issues involved in the case.

The online gaming company moved the high court again, claiming that despite this stay order, the authorities had illegally and maliciously issued a show-cause notice on the very same day as the high court’s order of September 23, 2022.

The September 8, 2022 notice sought to impose 28 per cent GST on the company’s transactions.

Reacting to the development, the company, in a statement, said, “We have noted the interim order of the Supreme Court. We, along with the skilled gaming industry associations, will put forth our 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,” it said.