Centre’s Special Leave Petition (SLP) challenging Karnataka High Court’s order in Gameskraft Technology Private Ltd (GTPL) issue is likely to be taken up by the Supreme Court (SC) on Wednesday. As per the information, the issue is listed as item 15 for September 6.

Share Market Live

NSE

Senior Supreme Court advocates Mukul Rohatgi, Abhishek Manu Singhvi and Abhishek Dattar will appear for All India Gaming Federation (AIGF), GamesKraft and E-gaming federation respectively. The Union Finance Ministry had filed an SLP challenging Karnataka High Court’s order that went in favour of GamesKraft

Earlier, the Karnataka High Court (HC) had quashed a Rs 21,000 crore show-cause notice issued by the Directorate General of GST Intelligence (DGGI) to Bengaluru-based online gaming company, Gameskraft.

Issued in September 2022, this is regarded as the biggest show cause notice in the history of indirect taxation. GamesKraft was accused of not paying GST (Goods and Services Tax) to the tune of Rs 21,000 crore and the show cause notice is for the period between 2017 to June 30, 2022.

Revenue Secretary Sanjay Malhotra, in an exclusive conversation with CNBC TV-18 in July, made it clear that the GST on online gaming companies has been 28 percent on face value. He added that the online gaming companies were paying 18 percent GST based on Karnataka High Court’s decision in 2022.

The SLP filed by the union finance ministry challenging the Karnataka High Court’s order that quashed a GST demand of Rs 21,000-crore on online gaming company Gameskraft, is likely to be taken by the Supreme Court today, i.e. September 5. The matter is listed as item number 15 for September 6. Big names including Abhishek Manu Singhvi and Mukul Rohatgi are likely to be present in the Supreme Court for this matter.

According to sources, Abhishek Manu Singhvi will represent GamesKraft, Mukul Rohatgi will be the lead counsel for All India Gaming Federation (AIGF) and Abhishek Dattar will represent eGaming Federation in the Supreme Court. The SLP has been filed challenging an order by a single judge bench of the Karnataka High Court in which it set aside a GST show cause notice to Gameskraft Technologies Private Ltd. The Directorate General of GST Intelligence (DGGI) had sent a notice demanding an additional Rs 21,000 crore from the company. The DGGI had sought GST at the rate of 28 percent, which the company had contested in the Karnataka High Court.

This order in May set a broader precedent for GST to be paid at 18 percent by online gaming companies providing games of skill. However, in the fiftieth GST Council Meet, the council said there should be no distinction between ‘games of skill’ and ‘games of chance’. The GST Council in the fifty-first council meeting kept the door open for a review down the road, but stuck to its decision to impose a 28 percent levy on the full face value of bets placed on online gaming, casinos and horse racing.

According to lawyers familiar with the matter, the government’s SLP sticks to the same arguments it made in the Karnataka High Court and the decisions of the fiftieth and fifty-first GST Council Meetings will have no bearing on the matter.

“In our understanding, the rate has always been 28 percent on the full value, not the GGR (gross gaming revenue). So basically, it is a clarification and it is already in effect as of the date. It is already 28 percent on the face value and we continue to charge that. Prospectively this doubt no longer remains — that is the only difference,” Sanjay Malhotra, Revenue Secretary had told CNBCTV-18 in July.

Also Read: Will move Supreme Court against Karnataka HC’s order on online gaming: Revenue Secretary

First Published:Sept 5, 2023 4:19 PM IST