Gameskraft GST SC Day 25: ASG argues Platforms supply actionable claims, defends GST applicability

The Supreme Court on Monday resumed hearing final arguments in the Gameskraft batch of matters concerning the applicability of GST on online gaming platforms. Additional Solicitor General N. Venkatraman, appearing on behalf of the Union of India, continued his rejoinder submissions.

The ASG read from the terms and conditions of Gameskraft’s Rummy Culture platform to highlight that it is the platform which controls every key aspect of gameplay, including the rules, deposits, withdrawals, discounts, stakes, and the declaration of winnings. He submitted that the online version of rummy offered by Gameskraft is distinct from the physical version, as players are matched through algorithms based on stakes and not on any skill-based criteria. This, he argued, makes the game a game of chance rather than a game of skill.

He further contended that the creation of actionable claims by online gaming platforms is a supply under Section 7 of the CGST Act, and that the taxable event occurs at the time of creation of the actionable claim, which is anterior in time to any winnings paid out. The extinguishment of the actionable claim through payout of winnings does not take away from the fact that the claim was created and supplied earlier by the platform.

Responding to arguments made by senior counsel Harish Salve, who had submitted that the power to tax gambling and betting could be traced to the residuary Entry 97 of the Union List, the ASG submitted that gambling and betting can indeed be taxed under Entry 97 in addition to actionable claims being brought within the GST framework. He argued that the Centre’s competence to impose tax is independently traceable to both the constitutional entries and the GST enactment.

In the second half of his submissions, the ASG addressed issues relating to the existence of a taxable person and rate of tax. He explained that for the period from July 2017 to January 2018, the show cause notices have levied tax at 18 percent on face value of bets under Entry 453 of Schedule III of Notification 1/2017, which deals with the residuary category of goods.

For the period after January 2018, he submitted that Rule 31A was inserted and Entry 229 was introduced in Schedule IV of Notification 1/2017 through Notification 6/2017. This new entry imposed GST at 28 percent (14 percent CGST and 14 percent SGST) on supply of actionable claims in the nature of chance to win in gambling, betting, or horse racing. The entry referred to “any chapter” of the Customs Tariff Act, indicating that no specific HSN code was needed.

On the objection that actionable claims do not have a corresponding HSN code, the ASG submitted that HSN codes are for convenience and do not impact the legality or rate of tax. He referred to a circular clarifying that in the absence of a specific code, suppliers may simply use “any chapter” on invoices.

The ASG is scheduled to continue with his submissions on Tuesday, 5 August 2025. The matter remains listed for further hearing.