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Gameskraft files caveat in Supreme Court against possible appeal by GST Department against order quashing Rs. 21,000 crore notice


Gameskraft Technologies Private Limited and its founders Vikas Taneja and Prithvi Raj Singh have filed caveats in the Supreme Court in the Rs. 21,000 crore Goods and Services Tax (GST) Show Cause Notice (SCN) matter, wherein a single judge of the Karnataka High Court had quashed the SCN issued against the company as being arbitrary and against the law. The online rummy company through its advocate-


on-record PLR Chambers and Co. has filed the caveats in the apex court on 12th and 13th May, 2023 to prevent the revenue department from obtaining an ex-parte interim stay against the quashing of the SCN. With the filing of the caveat, if the department


chooses to file any appeal in the Supreme Court, Gameskraft would have to be informed and a copy of the petition will have to be served upon them. Advocates of Gameskraft can also be present and


gambling/betting and had claimed 28% tax on the entire entry fee. While unequivocally and unambiguously rejecting


seek to be heard when the matter is listed, even before any formal notice is issued by the court. It is learnt that apart from the Supreme Court, the


company has also filed a similar caveat in the Karnataka High Court, in case the Director General of GST Intelligence (DGGI) chooses to file an appeal in the Division Bench of the Karnataka High Court against the order of the single judge. It may be noted that the single judge of the


Karnataka High Court in a landmark judgment on 11th May, 2023 had quashed the Rs. 21,000 crore SCN issued by the GST Department against Gameskraft, which had alleged misclassification of its offering as technology service instead of


Central Govt to form its own SRO if gaming bodies not adhere deadline


In a recent development to the notification issued by the Ministry of Electronics and Information Technology (MeitY) on April 6, the central government has stated that if the bodies related to online gaming industry fail to form a self-regulatory organization (SRO), it will end up forming one of its own. Centre’s SRO will be formed with a primary


intention to manage the administration and implementation of the rules related to online gaming, given the firms do not adhere to the three-month deadline ending July 6, 2023. It has been understood that there is a lack of understanding between the gaming companies and the corresponding bodies. The MeitY had asked the gaming companies as


well as the corresponding bodies to form an SRO within 30 days to a maximum of 90 days from the date of notification. However, there seems to be no general understanding related to structure, nature of the SRO and who should be the nominated


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members, as reported by Economic Times. The All India Gaming Federation (AIGF) and The


Federation of Indian Fantasy Sports (FIFS) had expressed that they have been working closely with industrial partners to develop a self-regulatory body, which will be compliant to the requirements under the Information Technology (IT) Rules, 2022. “Any SRBs being formed will be through a


comprehensive framework for verifying games and governing online gaming intermediaries,” said AIGF’s CEO Roland Landers. Meanwhile, FIFS General Director Joy


Bhattacharjya stated, “We are currently working with industry partners to formulate an SRB in line with the requirements under the IT Rules. We are hoping to apply to MeitY for recognition of this SRB soon.” However, a source closely related to the


development explained, “There are obvious differences between AIGF (All India Gaming


Federation), EGF (e-Gaming Federation) and IAMAI (Internet and Mobile Association of India). These differences are mainly on our interest and ethics of how gaming SROs should function”. It is further to be understood that if an SRB is


being formed, it will assume powers to regulate the functioning and other related managerial duties of the gaming sector in the country. “They (the SROs) will have all the powers. For


example, they can revoke the certification of a gaming intermediary at any future date even if it has been approved to function in India earlier. There will also be measures for other punitive steps that these SROs can take,” one of the officials quoted above said.


the GST department’s contention, Justice Kumar in his 325-page landmark judgment noted that offering of online rummy or other skill games with or without stakes did not amount to gambling or betting and that the SCN was illegal, arbitrary and without jurisdiction or authority of leave and deserved to be quashed. The GST Department can prefer an appeal against


this order to the division bench of the Karnataka High Court, or on demonstrating similar pending cases in various jurisdictions and importance of the matter, directly to the Supreme Court. Currently, however, the department’s strategy is unclear and there has been no official comment from the DGGI or other government authorities on whether they would prefer to file an appeal against this judgment.


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