In win for e­-gaming companies, HC quashes Rs 21k crore GST notice


BENGALURU: To the great relief of Gameskraft Technologies (GTPL) and the online gaming industry Karnataka Supreme Court canceled on Thursday a Government Notice issued to the Bengaluru based company representing a claim of Rs. 21,000 crore for Goods and Services Tax (GST). The notice was issued in September last year. The copy of Judge SR Krishna Kumar’s verdict is not yet available.
Founded in 2017 by former Grofers engineer Prithvi Singh, Gameskraft operates the platforms RummyCulture and Gamezy. It has over 700 employees. In the fiscal year 2021, the company had a turnover of Rs.2,112 crore and a profit of Rs.937 crore22.
The Directorate-General of Goods & Services Tax Intelligence (DGGSTI), Delhi, had claimed that GTPL had to pay 28% GST on the buy-in amount, which is the total amount pooled by players, and not the 18% it paid on the Platform fees paid was charged.

The DGGSTI had stated that GTPL was not an intermediary of services for skill game players, but in fact a provider of “enforceable claims” in the form of odds in “betting and gambling”. Actionable items are amounts wagered in online gaming or gambling.
GTPL countered by arguing that it had no right or lien over the players’ pooled funds. Demand for GTPL exceeds the online gaming industry’s total revenue of 15,000 crore, and this is nothing but an absurd demand, the company argued.
Speaking to TOI, attorney Sudipta Bhattacharjee, who represented GTPL along with colleague Onkar Sharma, said it was a historic ruling for the entire online gaming industry.
“The GST authorities have attempted to levy GST against Gameskraft and in recent months against the entire online skillgaming sector in India in a manner that only applies to companies dedicated to ‘betting and gambling’ and have thus erasing the centuries-old legal recognition.” Distinction between “games of skill” and “games of chance”. “It is encouraging to note that there is no departure from the legal position, established for more than 60 years, that games of skill do not fall within the realm of ‘betting and gambling’, even when played for stakes,” he said.
Joyjyoti Misra, Group General Counsel at Gameskraft, said it was a clear endorsement of the company’s business model. “We had and continue to have full confidence in the government and the judiciary. We hope this decision will pave the way for constructive dialogues with GST authorities and lay the foundation for progressive GST regulations for the industry,” he said.
Roland Lander, CEO of the All India Gaming Federation, described it as a landmark decision that reaffirms six decades of jurisprudence. He said it will help gaming startups across India work to build the industry and ensure its healthy growth.
Malay Shukla, secretary of the EGaming Federation, said the ruling will have a direct and significant impact on the growth of the online gaming industry and will help the industry operate more clearly.

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