“Rummy for stakes is still skill” — Gameskraft slams ₹21,000 crore GST ‘absurdity' in SC
According to the DGGI, any game played for stakes — whether it is a game of skill or of chance — amounts to gambling because the outcome is uncertain.
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Online gaming firm Gameskraft Technologies on Tuesday told the Supreme Court that the ₹21,000 crore GST demand against it is “absurd” and “mathematically inflated”, arguing that rummy — even when played for stakes — is a game of skill, not gambling.
In a high-stakes legal battle before the Supreme Court bench of Justices JB Pardiwala and R Mahadevan, online gaming company Gameskraft Technologies contended that its flagship rummy platform hosts a “game of skill” and not “betting or gambling” as alleged by tax authorities.
The Directorate General of GST Intelligence (DGGI) has accused the Bengaluru-based firm of facilitating betting and gambling by allowing users to play rummy for stakes, and has claimed GST on the entire face value of stakes placed — rather than on Gameskraft’s actual earnings, which come solely from platform fees.
According to the DGGI, any game played for stakes — whether it is a game of skill or of chance — amounts to gambling because the outcome is uncertain. It has maintained that historical statutes exempted “games of skill” only to shield them from penal action, but that such exemptions do not apply to taxation.
The department’s show cause notice, issued in September 2022, pegs the alleged tax liability at ₹20,989 crore (excluding interest and penalties), arguing that Gameskraft’s taxable turnover should be calculated as the total of all player stakes — a figure it claims is “churned” multiple times in a single game cycle.
Represented by senior advocate Dr. Abhishek Manu Singhvi, Gameskraft in its rejoinder written submissions to the court has rejected the premise that playing any game for stakes automatically constitutes gambling. Citing a long line of Supreme Court and High Court judgments — including RMD Chamarbaugwala (RMDC-I and RMDC-II), Satyanarayana, and Lakshmanan — Singhvi argued that the settled legal position is that only betting or wagering on a game of chance qualifies as gambling, while games of skill remain constitutionally protected under Article 19(1)(g).
The company has stressed that rummy has repeatedly been held to be a game of skill, even when played for stakes, and that its platform charges only a nominal service fee for hosting games. It has “no interest whatsoever in the outcome” of any match, Singhvi submitted.
Gameskraft maintains that the presence of stakes is irrelevant if the underlying game is predominantly skill-based. The company cited the Satyanarayana ruling, where rummy for stakes was held not to be gambling under the Hyderabad Gambling Act, and where the court accepted that a club charging a service fee for facilitating such games did not make it a common gaming house.
Singhvi also dismissed the department’s reliance on six pre-Independence judgments, saying these were outdated, dealt largely with games of chance, and pre-dated constitutional protections for trade in skill-based games.
A key plank of Gameskraft’s rebuttal is that the GST claim is “absurd” and “mathematically inflated” due to the department’s “churn mechanism” — which counts every buy-in and re-buy by players as fresh taxable turnover, even when it is the same money circulating in a single game. The company said its actual revenue during the disputed period was around ₹4,650 crore, on which it has already paid GST, and that the demand exceeds not only its entire earnings but also the total revenue of India’s online skill gaming sector.
The case is seen as a potential precedent-setter for the online gaming sector. If the Supreme Court accepts the tax department’s stance that games of skill played for stakes fall under “betting and gambling” for tax purposes, the sector could face crippling liabilities under the 28% GST regime.
