Online Gaming Firms Are ‘Suppliers’, Must Pay GST Even Without HSN Code: Centre To SC

In the ongoing legal battle over the taxability of online gaming, the Centre has reportedly argued before the Supreme Court that gaming companies qualify as “supplier” and would therefore become the “taxable person”, even if no specific HSN code exists for their services.

A Moneycontrol report, citing additional solicitor general N Venkatraman, said platforms like rummy and fantasy sports operators supply “actionable claims”, which makes them taxable under Section 2(105) of the CGST Act.

He said gaming companies arrange everything from hosting games to managing bets and without them, there would be no supply. “Players receive actionable claims only because of these platforms,” he said.

Notably, earlier gaming companies had claimed they could not be taxed since there’s no HSN code applicable to such services. Venkatraman rejected that too, citing a 2017 government circular. 

It allows companies to use “any chapter” in the invoice if no HSN code exists. He said this practice already applies to lotteries, which are also actionable claims.

Notably, the ongoing case is part of a larger legal battle over whether games like rummy are games of skill or chance, and whether GST should apply on the entire bet amount or only the platform fee. Several gaming firms are challenging retrospective tax demands, including a INR 21,000 Cr notice to Gameskraft.

The hearings, which have lasted over a month, are expected to conclude this week.

(The story will be updated soon)