Shahejad R. Sayyed
Quick Summary
Recently, a SCN, to the leading online gaming platform company named GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED, has been issued, attempting to impose a 28% GST on the entire entry fees paid by the participants. Around Rs. 21,000 crore of goods and services tax liability is at stake, perhaps making the
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FAQ :
The main contention is whether online rummy is a game of skill or a game of chance. The GST department argues it's a game of chance, subject to 28% GST on total entry fees, while gaming companies argue it's a game of skill, with different tax implications.
An actionable claim is a claim to any debt or a beneficial interest in moveable property not in possession, recognised by civil courts. For GST purposes, actionable claims, other than lottery, betting, and gambling, are neither a supply of goods nor a supply of service.
The GST department argues that Gameskraft facilitates betting and gambling through its platform, and therefore, a 28% GST should be levied on the entire entry fees paid by participants, not just the company's revenue.
Gameskraft maintains that online rummy is a game of skill, constitutionally protected, and that they act as an intermediary providing facilitation services for which they earn a platform fee, on which GST is paid. They argue the transactions between players are separate.
The outcome of this litigation is eagerly awaited as it will have a significant impact on the entire online gaming sector, influencing how actionable claims are taxed, the valuation of services, and the applicable tax rates.
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