On May 22, 2025, the Supreme Court heard arguments in the ongoing GST matter involving Gameskraft and other gaming companies. The case pertains to the applicability of GST on online gaming platforms before the 2023 amendments.
Senior counsel Tarun Gulati appeared on behalf of two online gaming companies. He argued that online gaming, including gambling and betting, was classified under specific HSN codes as services. This classification existed prior to the 2023 amendment of GST laws.
He pointed out that the Customs Tariff Act, before the amendments, had no entry for actionable claims in online gaming. Gulati argued that this omission showed that such claims were not treated as goods under the law.
He further submitted that Rule 31A(3) of the CGST Rules involved excessive delegation of powers. He stated that it lacked connection with transaction value or the actual price paid.
“Rule 31A was introduced under the general rule-making power and not under Section 15(5) of the CGST Act,” Gulati stated. Section 15(5) allows the GST Council to fix transaction valuation for certain specified supplies.
He also questioned the showcause notices issued under Section 74 of the CGST Act. This section deals with cases involving wilful fraud or suppression of facts. He contended that this issue had been under discussion at the highest levels for years.
“There were deliberations within the GST Council, which shows the issue lacked clarity,” he added.
The arguments from other counsels are expected to continue after the summer vacation. The next hearing has been scheduled for July 15, 2025.
Earlier in the hearings, senior counsels like Harish Salve and Arvind Datar argued important points regarding the applicability of GST on online gaming. Salve emphasized that the dispute hinges on whether online gaming is an actionable claim under Section 31A of the GST Act, asserting that such claims should not attract GST. Datar supported this by highlighting that fantasy sports platforms like Dream11 have been recognized as skill-based games and are compliant with GST under the new rules. He also pointed out inconsistencies in the tax department’s approach, especially concerning retrospective show-cause notices. These arguments have shaped the legal debate on the classification and taxation of online gaming services.
Source: G2G News
