The Supreme Court’s ongoing hearing on the Gameskraft batch of cases saw heated exchanges between senior lawyers on May 16, 2025. The focus of Day 9 was the validity of GST rules on online gaming platforms.
Senior advocate, representing gaming companies, continued his arguments. He asserted that no actionable claim is created by these platforms. He explained that players’ funds are kept in escrow accounts based on the Quistclose Trust principle. According to him, “The player can withdraw the funds at will.”
He emphasized that these funds do not form a right to property and cited multiple case laws. He further took the bench through Sections 7, 9, and 15 of the CGST Act and Rule 31A of the CGST Rules. He submitted that Section 15(5) must align with Section 15(1) and that rules cannot assign arbitrary supply value.
He raised objections against Rule 31A(3), which assigns 100% of the bet face value as the value of supply. He claimed it was against the concept of actual transaction value.
At this point, Additional Solicitor General (ASG) N. Venkatraman interrupted the arguments. He stated, “I played on 14 different gaming websites and lost money. The funds are not withdrawable without playing.”
He objected to the ASG’s interruption, stating, “The ASG is edgy because he is fighting a losing case.”
Another senior advocate, also representing gaming companies, responded with sarcasm. He stated, “Since the ASG has no case, he has become a gambler for the day.”
To this, the ASG replied humorously, “Thankful that he is now conceding the activities are gambling and not skill-based.”
He also compared online gaming with casinos. He said casinos pay GST only on the Gross Gaming Revenue (GGR), not on total bets. He argued that show-cause notices were issued based on assumptions without proper records.
He then addressed constitutional aspects. He stated that after Entry 62 of List II was removed, GST on gambling must come from Parliament’s residuary powers under Article 246A. He cited the Godfrey Phillips case to argue that such taxes are on activities, not goods.
He further called the Skill Lotto judgment “per incuriam” for not considering the Godfrey Phillips ruling.
The hearing will continue on May 19, 2025. Senior advocate Arvind Datar is scheduled to argue for the Federation of Indian Fantasy Sports (FIFS).
