On Wednesday, September 6 the Supreme Court stayed the decision of the Karnataka High Court quashing the GST show-cause notice issued to Gameskraft for Rs 21,000 crore. With this, the GST department can resume proceedings in the Gameskraft matter for now.
This development comes as a heavy blow to the online real money gaming (RMG) industry as similar notices can be issued to several other RMG platforms, too. Coupled with the levy of 28% GST rate on the industry, online gaming firms can face serious issues in the days to come.
However, with the Supreme Court stating that it would determine whether online gaming involves only skill or chance, this can also turn out to be a great opportunity for the online real money gaming firms to put forward their case and aim to end the debate once and for all.
Here’s how the industry reacted to the Supreme Court’s ruling –
The favourable order of the single bench of the Karnataka High Court quashing the Rs. 21,000 crore showcause notice issued to Gameskraft has been stayed by a 3-judge bench of the Supreme Court. Thus, the showcause notice proceedings against Gameskraft are revived until the ad-interim stay on the High Court orders is not vacated or until the proceedings in Supreme Court do not reach a conclusion. It is not clear at the moment if the department intends to also proceed with coercive action against Gameskraft such as freezing of bank accounts and assets etc.
Further, the Additional Solicitor General (ASG) N. Venkatraman during arguments in the Supreme Court today clearly stated that the department is in the process of issuing showcause notices to at least 35 other real money online gaming companies. The ghost of retrospective taxation for the online gaming industry has been revived and the ultimate outcome of the proceedings in the Supreme Court will determine the fate of retrospective GST liabilities of all real-money online gaming companies.
– Jay Sayta, Technology & Gaming Lawyer
We, along with the skilled gaming industry associations, have full faith in the judiciary and are confident that the SC will reaffirm the settled law of over five decades once again and vindicate our and the industry’s position.
– Joyjyoti Misra, Gameskraft general counsel
As the Supreme Court has given an interim relief to the revenue against Karnataka High Court order, there are higher chances of recoveries, summons, statements and confirmation of demands happening in next three weeks. In such a situation, the recovery proceedings will have to be separately challenged and stayed through the jurisdictional High Court by the online gaming companies.
– Abhishek A Rastogi, founder, Rastogi Chambers
We trust and have full faith in the judicial arm of the country to reaffirm the settled law & specific verdict arrived by the Karnataka High Court recently. We are confident that the Honorable Supreme Court of India will diligently review and subsequently agree with the industry’s position on the matter.
– Bobby Garg, Co-Founder & CEO, Rummy Passion