The Supreme Court on Wednesday stayed Karnataka High Court's judgment, which quashed a goods and services tax (GST) notice against online gaming company Gameskraft Technology for alleged tax evasion to the tune of Rs 21,000 crore. A bench led by CJI DY Chandrachud is likely to hear the case for final hearing in three weeks.
In September 2022, a GST intelligence unit had sent a showcause notice to Bangalore-based Gameskraft Technology alleging that the company failed to pay Rs 21,000 crore in GST. This has been the biggest claim sofar in the indirect taxation arena. The notice was for the period between 2017 and June 30, 2022.
At the hearing on Wednesday, Additional Solicitor General N Venkatraman said that they have approached the Supreme Court as the High Court has relied heavily on a judgment of a two judge bench of the same court.
He further said the observations, made by the HC in the judgment, have put a pause on other showcause notices leading to a problem for the GST department. He argued that the department has put a pause on at least 35 different showcause notices due to the HC's judgment.
On Wednesday, the apex court directed Gameskraft to file a response to the plea filed by the Centre.
The CJI also allowed the Directorate of Revenue Intelligence (DRI) of GST to file a rejoinder to the same. The court further stayed the operation of the judgment as a result of which the GST department can now initiate proceedings against Gameskraft.
The apex court added that Gameskraft allowed its clients to place money bets on online games, saying the company was promoting online betting through card, casual, and fantasy games like Rummyculture, Gamezy, and Rummytime.
GST authorities had, therefore, slapped a 28 per cent tax — which is applicable on games of chance/betting and gambling — on the firm on a betting amount of about Rs 77,000 crore.
In July, Revenue Secretary Sanjay Malhotra said that the GST on online gaming companies has been 28 percent on face value.
He had added that the online gaming companies were paying 18 per cent GST based on Karnataka High Court’s decision in 2022.