In win for e-gaming companies, HC quashes Rs 21k crore GST notice
Bengaluru, May 12, 2023
In a big relief to Gameskraft Technologies (GTPL) and the online gaming industry, the Karnataka high court on Thursday quashed a government notice issued to the Bengaluru based company raising a demand for Rs 21,000 crore towards goods & services tax (GST). The notice had been issued in September last year. Justice S R Krishna Kumar’s judgment copy is yet to be made available.
Gameskraft, founded by former Grofers engineer Prithvi Singh in 2017, operates platforms RummyCulture and Gamezy. It has over 700 employees. It had revenue of Rs 2,112 crore and profit of Rs 937 crore in the financial year 202122.
The directorategeneral of goods & services tax intelligence (DGGSTI), Delhi, had contended that GTPL had to pay 28% GST on the buyin amount, the entire sum pooled in by the players, instead of 18% it was paying on the platform fees it was charging.
The DGGSTI had said that GTPL was not a facilitator of services to players of games of skill, but in fact a supplier of ‘actionable claims’ in the form of chance to win in ‘betting and gambling’. Actionable items are defined as amounts staked in online gaming or gambling.
GTPL countered this on the grounds that it has no right or lien over the pooled money from players. The demand on GTPL exceeds the entire revenue of the online gaming industry of Rs 15,000 crore, and this is nothing but an absurd demand, the company argued.
Speaking to TOI, advocate Sudipta Bhattacharjee,who along with his colleague Onkar Sharma represented GTPL, said that it is a historic judgment for the entire online gaming industry.
“The GST authorities sought to levy GST against Gameskraft, and in the last few months, against the entire online skillgaming sector in India in a manner that is applicable only for companies indulging in ‘betting and gambling’, thereby obliterating the centuries old legally recognised distinction between ‘games of skill’ and ‘games of chance’. It is heartening to note that there has been no deviation in the position of law, which has been settled for more than 60 years, that games of skill do not fall under the ambit of ‘betting and gambling’ even if played for stakes,” he said.
Joyjyoti Misra, group general counsel in Gameskraft, said it is a clear vindication of the company’s business model. “We had and continue to have full faith in the government and the judiciary. We are hopeful that this decision will pave the way for constructive dialogues with the GST authorities and will form the basis of progressive GST regulations for the industry,” he said.
Roland Lander, CEO of All India Gaming Federation, described it as a landmark decision that reiterates six decades of jurisprudence. He said it will greatly aid gaming startups across India to work towards building the industry and ensure its healthy growth.
Malay Shukla, secretary of the EGaming Federation, said the judgement will have a direct and material impact on the growth of the online gaming industry and will help the industry operate with clarity.
[The Times of India]
