The Supreme Court today (day 16) continued final hearings in the Gameskraft batch of cases challenging the levy of 28% GST on online gaming, casinos, and horse racing, with the matter listed before the division bench of Justices J.B. Pardiwala and R. Mahadevan.
Senior Advocate Dr. Abhishek Manu Singhvi, appearing for the casino industry, resumed his submissions on behalf of listed casino operator Delta Corp. He assailed Rule 31A of the CGST Rules, arguing that it prescribes an arbitrary and unconstitutional method of valuation that violates Article 14 of the Constitution. According to Singhvi, the rule imposes a tax burden far exceeding the actual revenue earned by the casino operator, leading to fiscal outcomes completely divorced from economic reality.
He contended that taxing the Gross Bet Value (GBV) which includes amounts never received by the operator instead of Gross Gaming Revenue (GGR), distorts the nature of the transaction and creates an unsustainable tax demand. Singhvi emphasized that this approach contravenes principles of proportionality and fairness under constitutional jurisprudence.
Following Dr. Singhvi, Senior Advocate Vikram Nankani began his arguments for the other casino players. Nankani took the court through the deliberations of the 25th GST Council Meeting, highlighting that the expression “face value of the bet” which forms the basis of the current taxation method was originally intended only for horse racing, not casinos.
He submitted that casinos were historically taxed under entertainment tax regimes on the basis of GGR, a globally accepted metric, and that there was no notification issued under Section 15(5) of the CGST Act that would enable the government to adopt a special valuation mechanism for casinos. Without such a notification, Nankani argued, the existing rule lacks statutory backing and is ultra vires the parent legislation. Nankani is expected to continue his submissions tomorrow.
Source: G2G
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