Online gaming company Gameskraft Technology Pvt. Ltd. was issued an intimation notice in which the company was asked to cough up a tax worth ₹20,989 Crore for the period between August 2017 to June 2022. The gaming brand was taken a back by the notice and quickly approached the Karnataka High Court and filed a court order against the notice.
According to the GST department, as Gameskraft’s business activities involve betting and gambling, it stated that 100% face value of the bet is subject to tax under Rule 31A of the CGST Rules, 2017 at the rate of 28%. The tax notice further said that the company was not issuing invoices to the customers which violated Section 15(3) of the CGST Act, 2017.
A spokesperson from Gameskraft commented on the situation saying, “Games of skill are a constitutionally protected activity per the Supreme Court and various High Courts across the country. Rummy is one such game declared to be a skill game like horse racing, bridge and fantasy games. Therefore, the notice is a departure from the well-established law of the land.
As a responsible start-up with Unicorn status in the online skill gaming sector, we have discharged our GST and Income Tax liabilities as per standard industry practice, which is now over a decade old. We are confident that we will be able to respond to this notice to the full satisfaction of the authorities since they have sought to apply 28% tax applicable to games of chance and lottery, instead of the 18% applicable to online platforms of games of skill.”
The Karnataka High Court has scheduled the next hearing for the case on 11th October 2022. Justice SR Krishna Kumar expressed his inability to take up the matter given the heavy docket burden. He also said that the next hearing will be listed post the Dussehra holidays. Gameskraft asked the court for stay during the hearing, which was objected by Additional Solicitor General (ASG) N Venkataraman, representing the GST authorities.
The court also pointed out that Gameskraft was apprehensive of coercive actions such as attachment by the GST department in the interim. However, ASG Ventakaraman said that such apprehension is ill-established as a period of 30 days has been given under the SCN for the company to respond to. Ventakaraman also assured the court that no action will be taken without hearing the petitioners (Gameskraft).
Donna Amo was a writer at Gutshot Magazine. She is a graduate from Sophia College of Women, Mumbai with a degree in English Literature. When this October born foodie is not writing content or poetry, she spends her time laughing at memes or watching series. Based out of Mizoram, she is drawn to all things nature and has a soft spot for puppies.
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