The Karnataka High Court has quashed a Goods and Services Tax intimation notice worth about Rs 21,000 crore issued to Gameskraft Technologies Pvt. Ltd., holding that online, electronic and digital rummy and other games played on its platforms are not taxable as "betting" and "gambling"1. The bench of Justice S.R. Krishna Kumar delivered the ruling on 11 May 2023 in Writ Petition No. 19570 of 20221.
The notice, issued under Section 74(5) of the CGST Act, called on Gameskraft to deposit Rs 2,09,89,31,31,501 along with interest and penalty1. The department had also issued a show cause notice under Section 74(1) of the CGST Act to the company and its founders1. The case turned on whether offline or online games such as rummy, mainly based on skill rather than chance and played with or without stakes, amount to "gambling or betting" under Entry 6 of Schedule III of the Goods and Services Act, 20171.
The court held that the terms "betting" and "gambling" in Entry 6 of Schedule III of the CGST Act must be given the same interpretation courts have given them under Entry 34 of List II of the Seventh Schedule to the Constitution and the Public Gambling Act, 18671.
"the terms "betting" and "gambling" appearing in Entry 6 of Schedule III of the CGST Act do not and cannot include games of skill within their ambit"
The court also observed that online, electronic and digital games that are "substantially and preponderantly games of skill and not of chance" are not gambling1. Gameskraft is an online intermediary company incorporated in June 2017 that runs technology platforms allowing users to play skill-based online games against each other; it has over 10 lakh users across India, is headquartered in Bangalore and is registered under the GST Act1. The company argued that money contributed by players to prize pools is held in trust, that it has no right, lien or interest over those funds, and that it merely charges a service fee on which GST is paid; it also said the revenue of the entire industry is not Rs 21,000 crore, so taxing one entity over that amount by way of the show cause notice was absurd1. Abhishek Manu Singvi appeared for the petitioner and N. Venkataraman for the respondent1.
What it means for players
The ruling concerns how online skill games are treated under GST, not whether gambling is legal in India. For people who play online rummy in India, the decision means the court treated the format as a game of skill rather than betting or gambling for the purposes of the tax entry at issue. That distinction sits at the center of how Indian gambling law and the wider legal definition of gambling across Asia separate skill from chance. The order applies to Gameskraft's platforms and to the notice before the court; it does not by itself change the legal status of other operators or other game formats, and the sources do not say whether the department will appeal.
What happens next
The sources do not report any next step, such as an appeal by the tax department or further proceedings against Gameskraft or its founders. The show cause notice under Section 74(1) of the CGST Act mentioned in the ruling has not been reported as resolved.
