Rs21,000 Crore GST Notice: Karnataka HC Observes Experts Should Decide Nature of Game, Not the Tax Officer, Says Report
Moneylife Digital Team 28 October 2022
Hearing online gaming platform Gameskraft's petition against the notice demanding Rs21,000 crore tax, the Karnataka High Court observed the experts have to decide the nature of the game and not the goods and services tax (GST) officer, says a report from LiveLaw . 
The directorate general of GST intelligence has demanded the tax, claiming that the activities being carried on Gameskraft are betting and amounts to a game of chance.
During the hearing justice SR Krishna Kumar asked whether the notice provided the reasons for declaring the activity of rummy by Gameskraft a 'game of chance'. 
According to the report, when deputy solicitor general N Venkataraman, who represents the directorate general of GST intelligence, informed that elaborate reasons had been given in the notice, the HC asked, "Are you competent, first of all. How are you... the experts have to decide the nature of the game, not the officer. What does officer know? I am just saying."
Earlier, senior counsel Abhishek Manu Singhvi made submissions on behalf of Gameskraft and took the court through various judgements on skill versus chance in gaming. 
The hearing will continue on Friday.
Gameskraft is headquartered in Karnataka and is involved in hosting of skill-based online games on its platform as an intermediary and the game of rummy constitutes more than 96% of the games played on its platform. 
"Arguing that the games being played on its platform have already been held to be games of skill and not games of chance, the company has said the impugned Intimation notice dated 8 September 2022 is arbitrary and violative of law. It has prayed the department be restrained from levying GST at the rate of 28%," the report says.
During the hearing, the bench observed that if it comes to the conclusion that it is settled by apex court and high court division bench that it is a game of skill, 'that is end of this'.
Earlier on 23 September 2022, the HC stayed the intimation notice demanding a total GST of Rs21,000 crore plus interest and penalty. "It is made clear that this interim order is restricted and limited to the impugned Intimation ... dated 8 September 2022 and without prejudice to the rights and contentions of the parties in any other matter, pending or otherwise and also without expressing any opinion on the merits/demerits of the rival contentions and the same are kept open," the report says quoting the court order.
Gamescraft claims that it paid more than Rs1,500 crore as taxes to the government exchequer as income-tax and GST up to June 2022.
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