SC Upholds Retrospective 28% GST Levy on Online Gaming | Fantasy Sports

Centax Editorial Board

June 3, 2026

• 7 min. read

Case Details: Directorate General of Goods and Services Tax Intelligence (HQS) vs. Gameskraft Technologies Pvt. Ltd. (2026) 42 Centax 495 (S.C.)

Judiciary and Counsel Details

- J.B. Pardiwala & R. Mahadevan, JJ.

Facts of the Case

The petitioners were online gaming operators operating online platforms that offered games of skill. Show cause notices were issued, alleging misclassification of their activities by treating them as betting and gambling, and demanding GST on the entire stakes rather than solely on the platform fee. Aggrieved by these notices, the petitioners challenged both the notices and the constitutional validity of certain provisions of the CGST Act and the rules framed thereunder. Pursuant to orders of the Supreme Court, various writ petitions involving similar issues were transferred from different High Courts for adjudication. The matter was placed before the Hon’ble Supreme Court.

Supreme Court Held

The Hon’ble Supreme Court held that the levy of GST on actionable claims arising from betting and gambling transactions is constitutionally valid and falls within the legislative competence conferred by Article 246A of the Constitution. It held that Sections 2(31), 2(52), 7, 9 and 15 of the CGST Act, the corresponding provisions of State GST Acts, Rules 31A and 31B of the CGST Rules, and the related notifications and circulars are constitutionally valid and that the challenge to their validity was liable to be rejected. The Court further held that the amendments introduced by the CGST (Amendment) Act, 2023, including the amendment to Entry 6 of Schedule III and the insertion of Rules 31B and 31C, are clarificatory and explanatory in nature and therefore operate retrospectively.

It further held that organised online gaming activities, including fantasy sports and other gaming formats involving pooled stakes, give rise to actionable claim supplies taxable under the statutory framework governing betting and gambling transactions, irrespective of the characterisation of the underlying game as one of skill or chance. In respect of casino transactions, it held that recourse to Rule 31 and best-judgment valuation under the pre-amendment framework could not be regarded as impermissible where complete and reliable records were unavailable, though the ultimate determination of taxable value would be governed by Rule 31C.

The Court also set aside the Karnataka High Court judgment quashing the SCNs and restored the notices for adjudication in accordance with law. Further, it set aside the Bombay High Court ruling to the extent it held that fantasy sports transactions constituted actionable claims other than betting and gambling and therefore fell outside the GST framework. Accordingly, all pending SCNs, adjudication proceedings and consequential demands relating to online gaming, fantasy sports and casino transactions were directed to be decided in accordance with Rules 31B and 31C and the findings recorded in the judgment, and the writ petitions and transferred cases were dismissed.

List of Cases Cited

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