Brand Marketing
FMCG firms cut senior roles by 32%; Total headcount shrinks 9.26% in FY25
“Platform, not player, controls prize pool”: Centre labels stakes as actionable claims in SC
A significant part of the rejoinder was dedicated to dismantling the argument that GST applies only when there is a transfer — not creation — of an actionable claim.
The ASG also rebutted the claim that the players merely entrust their funds to the platform.
The Union Government, through Additional Solicitor General (ASG) N. Venkataraman, has argued before the Supreme Court that the amounts staked by players on online gaming platforms constitute “actionable claims”, thereby attracting Goods and Services Tax (GST) under the Central Goods and Services Tax (CGST) Act.
In a detailed written rejoinder submitted in the case of Directorate General of GST Intelligence & Ors vs. Gameskraft Technologies Pvt Ltd, the ASG refuted the gaming company’s contention that no actionable claim arises from the gaming activity, and therefore no taxable event is triggered.
Citing Section 3 of the Transfer of Property Act, 1882—which is adopted by Section 2(1) of the CGST Act—the ASG explained that an actionable claim is a claim to any beneficial interest in movable property, not in the claimant’s possession, but recognized by civil courts as affording grounds for relief.
He emphasized that money is movable property, and the claim to win it—dependent on an uncertain event—qualifies as a beneficial interest. Thus, the first element of the definition is met.
Addressing the second requirement under the law—that the claimant does not possess the beneficial interest—the ASG argued that players have neither actual nor constructive possession of the prize pool.
“Control over the winnings lies entirely with the online gaming platforms,” he wrote, citing platform-defined terms for depositing, staking, and withdrawing funds. He added that players cannot select opponents or influence match-making, which is driven by the platform’s algorithm.
Quoting from the Supreme Court's jurisprudence in Gurucharan Singh, the ASG said that possession implies control plus intention, both of which are missing in the players’ case.
“Until a player wins, there is no control over the winnings. Players are incapacitated to alter the legal status of the prize amount. That control is vested entirely in the platform.”
He also compared the current scenario with lottery schemes, referencing Sunrise Associates, where the Court held that lottery tickets constituted actionable claims, even though winners were unknown at the time of purchase.
The ASG also rebutted the claim that the players merely entrust their funds to the platform. He highlighted platform terms and conditions showing that once money is deposited in the player's RC Account, it is divided into deposit and withdrawable segments — with the latter only accessible if a player wins and the balance reaches at least ₹100.
Thus, players lose control over their funds at the point of deposit, undermining the notion of entrustment and reinforcing the case for lack of possession — a necessary condition for qualifying as an actionable claim.
A significant part of the rejoinder was dedicated to dismantling the argument that GST applies only when there is a transfer — not creation — of an actionable claim. The ASG explained that under the GST regime, the term “supply” is defined expansively and includes all legal forms of supply, not just those listed in Section 7(1)(a) of the CGST Act.
He clarified that the creation of an actionable claim in the players’ hands upon their participation in games with stakes itself constitutes a taxable supply, regardless of whether there is a transfer.
Rejecting the view that only governments or state grants can create actionable claims, the ASG emphasized that the CGST Act incorporates only the definition of actionable claim from the Transfer of Property Act and not its full operational scheme. The platform’s act of enabling gameplay with stakes, and hence creating the right to win a pool amount, meets the legal standard of creating a conditional beneficial interest in movable property. Therefore, even privately created actionable claims — as opposed to those granted by a state — are subject to GST.
The Revenue further addressed concerns about enforceability, stressing that the mere imposition of contractual restrictions on withdrawing or assigning winnings does not negate the creation of an actionable claim. These limitations are self-imposed through platform terms and do not alter the inherent capability of the claim to be actionable in nature.
On the constitutional question of whether the tax amounts to a levy on betting and gambling — which would fall outside the purview of the GST regime — the ASG made a distinction. He asserted that GST is being levied not on the act of betting or gambling itself, but on the supply of the actionable claim that arises from such activities. Parliament retains the authority to tax betting and gambling under Entry 97 of List I, but this does not preclude the taxation of actionable claims as supplies under GST.
The matter is expected to continue on Monday before the bench of the Supreme Court, with further hearings anticipated on remaining constitutional and factual issues.
Info Edge ups FY25 Ad budget to ₹373 cr to drive growth in Naukri, 99acres
The number of complaints filed under the POSH Act witnessed a sharp increase in FY25 compared to the previous financial year.