1. INTRODUCTION
While courts (including the Supreme Court of India) have, over
the years, clarified a whole range of issues surrounding
classification of games, albeit, lack of clarity lingers in the
taxation sphere. Classification of a game as a game of skill or as
a game of chance has a direct impact on the rate of tax and also
the valuation of the said supply. Accordingly, the dichotomy
between the game of skill and game of chance in the taxation sphere
needs a deeper examination.
With the above background, we wish to update you that in the
month of September, 2022, proceedings were initiated against online
gaming company Gameskraft Technologies Private Limited
(“Company” or
“Petitioner”) by the directorate
general of goods and services tax intelligence
(“DGGI”) for allegedly indulging in
betting and gambling. From the news reports, it appears that a
demand of INR 21,000 crores (including interest and penalty) is
being imposed on the Company, which is one of
