GST Levies 'Unfair': Harish Salve Defends Skill-Based Games From Gambling Tag In Supreme Court

A high-stake legal battle over the applicability of Goods and Services Tax to online gaming platforms has been underway and the verdict could be just around the corner, with senior advocates having made their crucial submissions before the Supreme Court on Tuesday.

Senior advocates Harish Salve, Rakesh Dwivedi and Abhishek Manu Singhvi made detailed submissions before a bench comprising Justices J B Pardiwala and Manoj Misra.

Leading a robust constitutional challenge, Salve targeted the 2023 amendment to Rule 31A(3) of the CGST Rules, arguing it is ultra vires the parent CGST Act. He emphasised that the tax regime unfairly levies GST on the entire player deposit pool instead of the platform’s actual revenue—an approach he called disproportionate and legally untenable.

Drawing analogies from casino taxation and relying on precedents such as Devans Modern Breweries and Mohit Minerals cases, Salve argued that this method of valuation distorts the actual tax base and amounts to an unjust financial burden on platforms.

Further, Salve strongly contested the government’s classification of skill-based games as “actionable claims”—a legal term typically limited to enforceable monetary rights like debts. He contended that no such rights are transferred between players and platforms in games of skill, and thus, treating these as actionable claims under GST law is misconceived.

Rakesh Dwivedi focused on the statutory interpretation of "supply" under Section 7 of the CGST Act. He argued that Rule 31(A) was originally designed for physical betting establishments, such as race clubs, and that applying it to virtual gaming platforms without legislative backing is legally indefensible.

Abhishek Manu Singhvi stressed the judicial and constitutional distinction between games of skill and chance. Citing landmark rulings including K Satyanarayana and RMD Chamarbaugwala cases, Singhvi asserted that games like rummy and fantasy sports fall within the "skill" category and therefore should not be equated with gambling. He also raised questions about the Union’s legislative competence to impose GST on such games, which he argued rightly fall under the State List.

The bench actively engaged with the arguments, with Justices Pardiwala and Madhavan questioning the validity of applying race-club-specific tax provisions to modern digital platforms. They also acknowledged the potential constitutional overreach in taxing player deposits and highlighted the importance of preserving legal distinctions between gambling and skill-based gaming.

The final ruling will have far reaching implications for the online gaming industry and the verdict is expected to set a significant precedent not just for gaming, but for the broader digital economy navigating the intersection of innovation and taxation.