Finance ministry files special leave petition in Supreme Court against Karnataka HC’s Gameskraft ruling 

The Union finance ministry has filed a special leave petition in the Supreme Court against a Karnataka High Court ruling that quashed a Rs 21,000-crore demand for goods and services tax (GST) on online gaming company Gameskraft.  

According to sources, the Supreme Court is expected to set the date for hearing in the next three to four days.  

Union Revenue Secretary Sanjay Malhotra said the Centre filed the SLP on August 1. Briefing reporters on Wednesday on the decisions taken by the GST Council, Malhotra said the amendments for GST on online gaming, horse racing and casinos will be prospective.  

“Amendments are prospective. But as mentioned earlier, this amendment is more of a clarification as betting has been included as actionable claims and even online gaming and betting are in nature of betting,” he said, adding that they are taxable at 28%.

“The Karnataka High Court has not upheld the stance. We have filed an SLP yesterday and whatever is decided by the Supreme Court will prevail,” he said after the 51st meeting of the GST Council. 

A single judge Bench of the Karnataka High Court in May set aside a Rs 21,000-crore GST show-cause notice against Bengaluru-based Gameskraft Technologies Private Ltd. The Directorate General of GST Intelligence was of the view that the company promoted online betting and these activities amounted to Rs 77,000 crore between 2017 and June 30, 2022. It had sought GST at the rate of 28% to be paid on the entire consideration, which the company had contested. 

The GST Council in its 51st meeting recommended certain amendments in the CGST Act 2017 and IGST Act 2017, including amendment in Schedule III of CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing and online gaming. The amendments are expected to be tabled in Parliament in the current session and states are also likely to table it in their ongoing assembly sessions. Other states are expected to issue an Ordinance so that the tax can be levied from October 1. 

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