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

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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 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 gambling/betting and had claimed 28% tax on the entire entry fee.

While unequivocally and unambiguously rejecting 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.