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Karnataka HC Quashes GST Council’s Notice Against Gameskraft

The High Court of Karnataka passed its judgement in the Gameskraft Technologies vs Directorate General of Goods and Services Tax (GST) Intelligence.

Last year, the GST authorities issued a notice raising a demand of ₹21,000 Crore. The GST authority argued in court that if games of skill are played for money, then the games fall under the umbrella of betting and gambling. Gameskraft Technologies argued against the same. The All India Gaming Federation (AIGF), the apex body for online gaming in India, supported Gameskraft in the matter. 

Gameskraft Technologies was represented by Senior Advocate Udaya Holla, while the Gameskraft founders were represented by senior Advocate Dr. Abhishek Manu Singhvi, along with Advocates Suhaan Mukherjee and HM Siddhartha. Senior Advocate Mukul Rohatgi represented AIGF, while senior Advocates Arvind Datar and Sajjan Poovayya appeared for another intervening E-Gaming Federation.

Talking about the judgement, AIGF CEO Roland Landers said, “This landmark decision by the Hon’ble Karnataka High Court reiterates six decades of jurisprudence, clearly distinguishing constitutionally protected games of skill from gambling and betting activities. The judgment will greatly aid gaming start-ups across India to work towards building the industry and ensure its healthy growth. AIGF had intervened in the case on the limited question of law on behalf on the industry and especially to safeguard the interest of our smaller members.”

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“Being the oldest and the largest industry body and the voice of the MSME gaming start-ups, we believe that a progressive and rational GST policy will boost investments within the sector and make this sunrise sector a cornerstone for Hon’ble PM’s vision of a 1 trillion dollar digital economy. We had and continue to have full faith in the government and the judiciary and are hopeful that this progressive decision will pave the way towards clarity and certainty from the GST Council in the GST policy for this sunrise sector,” he added.

The issue originated after GST authorities conducted a raid conducted on Gameskraft’s office in November 2021. After the raid, the company’s bank accounts were attached.

Initially, the directorate stated that Gameskraft invaded taxes worth approximately ₹419 Crore. It was later increased to ₹5,000 Crore. After the respondents eventually alleged that the online gaming company might be indulging in betting, the amount was later revised to ₹21,000 Crore. 

Gameskraft contended, “It is submitted that the aforesaid averments of the Respondents would itself depict that the course of investigation had suddenly changed mid-way.”

Image credit: Socio Legal Corp

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