Will not take coercive action against Gameskraft till next date of hearing: GST authorities to Karnataka High Court

The Directorate General of Goods and Services Tax Intelligence (DGGI) told the Karnataka High Court on Tuesday that no coercive action would be taken against online gaming intermediary Gameskraft until the next date of hearing, pursuant to the show-cause notice issued to the company after a ₹21,000 crore tax demand was made by the authorities..Justice SR Krishna Kumar conveyed the Court's inability to take up the matter given the docket burden, and said that the matter would be listed for hearing post the upcoming Dussehra holidays..During today's hearing, Gameskraft asked the Court to pass a status quo order, which was objected to by Additional Solicitor General N Venkataraman, appearing for the GST authorities.When Gameskraft expressed an apprehension that coercive action like attachment of accounts could be taken in the interim, the ASG said that the same was ill-founded. He added that the DGGI would not take such steps, since it had given the company 30 days to respond to the show-cause notice..Counsel for Gameskraft then pointed out that coercive action could be taken irrespective of the notice. The ASG at this point gave an assurance to the Court that no action will be taken without hearing Gameskraft. He also said that any process or hearing, if conducted, will be reasonable and follow all principles of natural justice. Further, he pointed out that the provisional attachment order, which was stayed by the High Court on September 23, is still operative till November 10. Given this fact, fresh attachments or other actions may not be done, he added.After taking the assurances on record, the Court posted the matter for hearing on October 11..Gameskraft was represented by Senior Advocate Udaya Holla along with advocates Siddhartha HM, Siddharth B Muchandi, Vyasakiran Udadhya, Suhaan Mukerji, Varun Thomas Mathew and Nikhil Parikshith..The gaming company had moved the High Court against a show-cause notice issued by the DGGI despite the High Court’s stay on a previous ₹21,000 crore tax notice issued to the company.Despite this stay order, the authorities illegally, contemptuously and maliciously issued the show cause notice on the very same day as the High Court’s order, the petition stated.Further, it was submitted that the issue of taxability of online gaming was pending consideration before the GST Council for more than three years. In this light, the authorities had erred in alleging that the gameplay facilitated by the petitioner was taxable at 28 per cent.The petition also points out that the respondents' entire case was built on the erroneous surmise that the activities undertaken by Gameskraft were an actionable claim and not a service."The allegation that the Petitioner were engaged in betting in the guise of Rummy, goes against all the settled principles and jurisprudence with respect to betting/gambling," the plea reads..The issue stems from a raid conducted by the GST authorities on Gameskraft's office in November 2021, which culminated in an order by which all the company's bank accounts were attached.Pertinently, the quantum of amount alleged to be evaded by Gameskraft was at first marked at ₹419 crore. However, this increased to ₹5,000 crores, and ultimately to over ₹21,000 crores after July 2022 when the respondents changed their narrative and began to allege that Gameskraft might be indulging in betting."It is submitted that the aforesaid averments of the Respondents would itself depict that the course of investigation had suddenly changed mid-way," the petition contended..[Online Gaming] GST notice issued despite Karnataka High Court stay: Gameskraft moves HC against ₹21,000 crore demand