Case Name: Directorate General of Goods and Services Tax Intelligence (HQS) & Ors. v. Gameskraft Technologies Pvt. Ltd. & Ors
Citation: SLP(C) No. 19366-19369/2023
Forum: Supreme Court of India
Bench: Justice J.B. Pardiwala and Justice R. Mahadevan
Facts of the Case:
Gameskraft Technologies Pvt. Ltd., a Bengaluru-based online gaming company, operates skill-based platforms such as online rummy. In September 2022, the Directorate General of GST Intelligence (DGGI) issued a show-cause notice of ₹21,000 crore, alleging that the company was involved in “betting and gambling” activities. The tax authorities argued that Gameskraft must pay 28% GST on the full face value of all entry fees/stakes collected from players under Rule 31A of the CGST Rules, treating them as actionable claims similar to betting.
Gameskraft challenged this in the Karnataka High Court, arguing that games like rummy are games of skill, not chance, and only provide a digital platform, earning a service fee (commission) taxable at 18%. The High Court on May 11, 2023, quashed the notice, holding that online rummy is not gambling and cannot attract GST on the full bet amount.
Final Judgment / Current Status:
The DGGI appealed to the Supreme Court of India, which has stayed the Karnataka High Court judgment (Order dated 6 September 2023). The Supreme Court held that the matter involves substantial questions of law regarding the classification of online games under GST. Final arguments were heard in early 2025, with the next hearing scheduled for 15 July 2025.
Until the final verdict, the High Court’s order remains stayed, and the ₹21,000 crore tax demand is pending. The Supreme Court’s upcoming decision will determine whether skill-based online games fall under “betting and gambling” and the extent to which GST applies to the gaming industry in India.