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- (c) Assumption that all online games are games of chance?
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In fact, upon the recommendation of the GST Council, the law was amended and a special computation kabook777 mechanism for online money gaming came to be notified from October 2023. The contest is clearly going to shed intriguing insights for lawyers and law students alike, with much larger ramifications for the online gaming stakeholders. To appreciate this aspect better, the illustration of banking services is appropriate. In any given case, as Section 15(1) of the CGST Act also propagates, in a free-market economy the consumption of services is measured by the amount received by the supplier from an unrelated recipient. The legislature has sought to make the task easy by introducing a deeming fiction that identifies online gaming platforms as the supplier of specified actionable claims.45 However, this legislative scheme is not at the cost of conceptual incongruities and challenges in the scheme of GST.
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The fact that regulatory provisions have been enacted to control gambling by issuing licences and by imposing taxes does not in any way alter the nature of gambling which is inherently vicious and pernicious. Interpretations.— (15) “betting or gambling’ means putting on stake something of value, particularly money, with consciousness of risk and hope of gain on the outcome of a game or a contest, whose result may be determined by chance or accident, or on the likelihood of anything occurring or not occurring. Section 7(1)(c) of the CGST Act specifically characterises import of services for a consideration to constitute “supply”.… In the commercial reality of the times, the conceptual lines between goods and services wear thin. In modern commerce, the distinction between goods and services is increasingly becoming a matter of degree than substance. Nonetheless, the effect of the GST authorities’ argument amounts to enforcing this new mechanism effectively from July 2017 i.e. since the introduction of GST, a position which does not appear to be logical or reasonable and, therefore, is opposed by the online gaming industry.
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In view of the complex legal regime and issues relating to taxes on betting and gambling having been extensively addressed by the judiciary in the past, there are a host of legal grounds which are likely to be canvassed in the proceedings. This valuation mechanism, therefore, adopts a taxable base which steeply undercuts the very business model of the online gaming industry. According to the GST authorities, the entire amount collected by the online gaming platforms is subject to GST rejecting the industry’s position which pays tax on the platform fee i.e. its collection towards facilitating the gamers.