CBIC DIN: CC20220900000000B732

DGGI F. No. 413/INT/DGGI/HQ/2021 /1324 - 1335 Dated 23.09.2022

NOTICE TO SHOW CAUSE
(Under Section 74(1) of the CGST Act, 2017)

1. INTRODUCTION

1.1. The present case is related to an investigation conducted by the Officers

of Directorate General of Goods & Service Tax Intelligence, Hqrs., New Delhi
(hereinafter referred to as DGGI (Hqrs.) or ‘this Directorate’), on the basis of a
specific intelligence received, in respect of wilful evasion of GST by M/s.
Gameskraft Technologies Pvt. Ltd. (hereinafter referred to as M/s. GTPL or the
noticee company) having GST registration with the Centre, (GSTIN:
29AAGCG8706N1ZY registered on 12.08.2017) falling under jurisdiction of
Central Tax Range BED-8, East Division - 8, Bengaluru East Commissionerate
and having its registered office at Elnath Block, 2nd Floor, Exora Business
Park, Outer Ring Road, Bengaluru, Bengaluru Urban, Karnataka, 560103, (CIN:
U74999KA2017PTC103635 and PAN: AAGCG8706N) by misclassifying their
supply as services under SAC 998439 instead of actionable claims which are
goods and mis-declaring their taxable value. The activities undertaken by M/s.
GTPL were in the form of betting which is an actionable claim and not a service.

2. BACKGROUND OF THE ASSESSEE

2.1. M/s. GTPL were engaged in providing online gaming services such as
RummyCulture (their platform for card games), Gamezy (their platform with
fantasy games etc.), Rummytime (an infrastructure with which one can build
their own rummy platform) and Nostragamus (A gaming platform with multiple

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casual and fantasy games along with Rummy). Their website url is
www.gameskraft.com.

2.2. The company was founded by Shri Vikas Taneja, Shri Prithvi Raj Singh,
Shri Deepak Jha and Shri Deepak Singh. Shri Deepak Singh and Shri Vikas
Taneja were the founder directors of M/s. GTPL, whereas Shri Prithvi Raj Singh
was CEO-Existing Businesses and Shri Deepak Jha was CEO - New
Businesses. Shri Ramesh Prabhu was employed as Chief Financial Officer of
M/s. GTPL since August 2018, who looks after all the finance and taxation
related aspects of the company. Shri Samir Dharnidharna, was the Head-
Taxation of M/s. GTPL. Further, Shri Umesh Kumar Ram and Shri Rajesh
Lohia were also the directors of M/s. GTPL during 2021.

2.3. The summary of data from the Balance Sheet of M/s. GTPL as provided
by it during the investigations is as under:

TABLE-I

Financial Revenue from Other Income Customers Balance with Banks

Year Operations (Sale Deposits (As on (As on 31st March)
of Services) 31st March)

2017-18 1,39,95,591 - 24,65,914 64,20,746

2018-19 56,77,97,106 98,28,272 26,18,75,518 35,68,45,318

2019-20 4,28,14,24,609 7,45,17,528 29,15,94,802 1,35,40,65,012

2020-21 14,10,53,52,425 11,65,81,966 34,75,90,403 3,91,25,02,730

Total 18,96,85,69,731 20,09,27,766 90,35,26,637 5,62,98,33,806

The balance sheet for FY 2021-22 is not available till the date of issuance of
this notice. The Goods and Services Tax (Hereinafter referred to as GST) data of
M/s. GTPL as filed by them in their GST Returns namely GSTR1M and GSTR3B
has been compiled in Table-II and is as under :

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 TABLE-II

Taxable Value as
Period per GSTR-1M IGST paid CGST paid SGST paid

2017-18 1,55,52,496 - 13,99,723 13,99,723

2018-19 57,77,97,105 - 5,20,01,741 5,20,01,741

2019-20 4,27,84,06,215 - 38,50,56,560 38,50,56,560

2020-21 14,05,60,56,704 - 1,26,50,45,105 1,26,50,45,105

2021-
2022 19,35,18,27,082 1,60,16,38,567 94,08,45,156 94,08,45,156

GRAND
TOTAL 38,27,96,39,601 1,60,16,38,567 2,64,43,48,284 2,64,43,48,284

3. INTELLIGENCE:
3.1. Specific intelligence was received in the office of DGGI. The intelligence
indicated that M/s. GTPL was engaged in evasion of GST by misclassifying their
supply as services under SAC 998439 instead of actionable claims which are
goods and mis-declaring and under-reporting their taxable value. It was
informed that M/s. GTPL did not issue any invoice to the individual user of
service (who was a player/ gamer/ Retail Customer of M/s. GTPL’s gaming
platforms). The invoices were reportedly issued only to business customers who
used their platform/ services for advertising and other services as these service
recipients claimed Input Tax Credit (ITC) on the GST paid by them against such
invoices. The information was further developed by the officers of DGGI, and it
was revealed that the revenue reported by M/s. GTPL in the annual financial
statements for the financial years 2017-18 to 2020-21 was in the form of
commission on rake fee/platform fee collected from the gamers/players. This
commission ranged from 5 to 20 percent on the amount received as rake
fee/platform fee depending on the financial commitment of the player-higher

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the amount lower the commission (i.e. 20% on the smallest stakes to 5% on the
highest stakes; as decided by M/s. GTPL) on every game played online.

3.2. On further examination of the business model of M/s. GTPL, it also

emerged that M/s. GTPL was engaged in betting by allowing its players/
gamers/ retail customers to place bets in the form of money stakes on the
outcome of card games played online on their platforms/ games namely
RummyCulture and Gamezy in the form of a chance to win. It also emerged that
Rummytime and Nostragamus platforms were for providing services to other
companies to host games online and did not deal with players/ gamers/ retail
customers of M/s. GTPL. Further during the investigation it came to light that
although RummyCulture platform was introduced in the very beginning of the
operations by M/s. GTPL, Gamezy platform was started in March 2019 and
accordingly, the investigations were conducted accordingly.

3.3. As has been brought out earlier, that M/s. GTPL was engaged in
providing online gaming services on their various platforms such as
RummyCulture, Gamezy, Nostragamus and Rummytime. However, at the
outset it is being put on record that this show cause notice is limited to the
activities of the noticee company on RummyCulture and Gamezy platforms
only. The personnel of the noticee company confirmed in their statements that
the other two platforms, namely Rummytime and Nostragamus were being
provided to other companies to host games online and did not provide services
to players/ gamers/ retail customers of M/s. GTPL. For these two platforms on
which M/s. GTPL was providing B2B services and raising B2B invoices to their
business customers and discharging tax liability accordingly. The management
of the games on the platforms namely Nostragamus and RummyTime, were
done respectively by the companies, who hosted their online games. Hence,
these two platforms were kept out of the purview of this investigation.

4. SEARCH
4.1. Acting on the intelligence, the officers of Directorate General of Goods and
Services Tax Intelligence (DGGI), Headquarters, New Delhi initiated searches on
various premises related to the company and residences of the concerned
persons on 11.11.2021 under Section 67 as per due authorization by the proper

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officer. The records of the search proceedings were duly recorded in the
Panchnama drawn at the spot, detailed as under:
TABLE-III
Sr. Particulars Addresses Outcome
No.
1 Registered Office M/s Gameskraft The search was conducted as
Technologies Pvt. per the provisions of law on
Ltd., 26/1, Hosur 11th & 12th Nov, 2021 at the
Road, said premises and a
Bommanahalli, 1st & Panchnama was drawn on
2nd floor Ibis Hotel, the spot (RUD-01).
Bengaluru, The 1st and 2nd floor of said
Karnataka-560068 address was rented by a
company namely M/s Regus
Gem Business Centre Pvt.
Ltd. The then Community
Associate Executive of the
said company informed the
departmental officers, during
search, that their company
had rented the 1st and 2nd
floor of Ibis Hotel, 26/1,
Hosur Road, Bommanhalli,
Bengaluru. The 1st and 2nd
floor was further divided/
partitioned into co-working
office spaces which had been
rented out by M/s Regus
Gem Business Centre Pvt.
Ltd. to different firms and the
noticee company was one of
such firms operating from
one such co-working space

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 bearing No. 121 on the first
floor. The said Community
Associate Executive of M/s
Regus Gem Business Centre
Pvt. Ltd. informed that no
person or staff from the
noticee company sat in the
aforesaid office permanently
and the Assistant Manager –
Finance & Accounts of the
noticee company,
occasionally used to visit the
said premises and that he
was their single contact with
the noticee company. The
said Co-working space, being
occupied by the noticee
company, was only about 50
square feet, having one
chamber with a single table
and a chair.
Sh. Siyaram Gupta, Associate
Director (Product) of M/s.
GTPL reached this office and
he assisted officers in getting
the email dump of his own
official email ID and that of
Ms. Neha Gupta’s official
email ID. The statement of
Sh. Siyaram Gupta was
recorded on the spot.
2 Secret office (As 257, 16th Cross The search was conducted as
per the Road, Sector-6, HSR per the provisions of law on

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 intelligence) Layout, Bengaluru, 11th to early hours of 13th Nov,
Karnataka 560102 2021 (about 2 a.m.) at the
said premises and a
Panchnama was drawn on
the spot (RUD-02). Source
Data which was stored by the
company in an online server
located in Mumbai, was
retrieved with the help of
Forensic Engineers and the
company's IT professional,
accompanied by the officers.
Some other relevant data was
also retrieved.
3 M/s. GTPL’s “Wework” Prestige The search was conducted as
Office Atlanta, 80 Feet Rd, per the provisions of law on
Koramangala 1A 11thNov, 2021 at the said
Block, Koramangala premises and a Panchnama
3 Block, was drawn on the spot (RUD-
Koramangala, 03). This was a co-working
Bengaluru, space taken on rent by M/s.
Karnataka 560034 GTPL, where work related to
tele-calling and technical
customer support was
provided. Shri Siyaram Gupta
was present on the premises
who was the Associate
Director (Product) in the
Technical teams. He then left
for the registered office of
M/s. GTPL as critical data
was to be retrieved in his
presence at the registered

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 office.
Nothing objectionable was
recovered or resumed as a
result of the search.
4 Residence of Sh. Flat No. 109, C Search Authorization could
Deepak Singh @ Block, Viracious not be executed as the said
Deepak Singh Enrica Appts, premises was locked and on
Ahlawat. Koramangala 1st enquiry by the visiting team,
Block, Bengaluru- it was revealed that Shri
560047. Deepak Singh Ahlawat was
not residing at the premises.
A visit note to this effect was
prepared by the visiting
officers.
5 Residence of Sh. 604, Purva Vantage, Search Authorization could
Deepak Jha. 19th Main Road, not be executed at the said
Sector-2, HSR premises as some other
Layout, Bengaluru person was residing at that
560102. premises.
6 Residence of Sh. 1055, Prestige Panchnama was drawn on
Vikas Taneja. Shanti Niketan, the spot (RUD-04). One pen
Whitefield, near drive and some documents
ITPL, were resumed which were
Mahadevapura, found to be relevant to the
Bengaluru. ongoing investigations.
7 Residence of Sh. B-304, Victory Panchnama was drawn on
Ramesh Prabhu, Harmony the spot (RUD-05). Some
CFO Apartments, SSA electronic devices and
Road, Hebbal, RT documents were seized being
Nagar, Bengaluru- relevant to the investigations
560032 of the case.
8 Residence of Sh. Flat No. 9134 Panchnama was drawn on
Deepak Singh @ Embassy Pristine, the spot (RUD-06). Shri

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 Deepak Singh Iblur Village, 6th Saurabh Chaudhary, brother-
Ahlawat. main Road, in-law of Shri Deepak Singh
Bellandur, Ahlawat was present at the
Bengaluru, premises. He informed that
Karnataka-560103. Shri Deepak Singh Ahlawat
was not present. Nothing
objectionable was recovered
or resumed as a result of the
search.
9 Residence of 2083, Prestige Panchnama was drawn on
Shri Vikas Pinewood, the spot (RUD-07). Nothing
Taneja Koramangala, objectionable was recovered
Bengaluru. or resumed as a result of the
search.
10 Residence of Sh. 1303, Purva Panchnama was drawn on
Deepak Jha. Vantage, 19th Main the spot (RUD-08). Shri
Road, Sector-2, HSR Deepak Jha was out of town.
Layout, Bengaluru. His wife Ms. Neha Gupta was
present who was also the Vice
President and IT/Tech Head
of M/s. GTPL. Her statement
was recorded on the spot.
Some documents and
electronic devices like hard
disc were seized being
relevant to the investigations
of the matter.

4.2. During the course of search dated 11/12/13 Nov 2021, statements of the
various personnel of M/s. GTPL were recorded, detailed as under:
TABLE-IV
Sr. No. Name (S/Sh/Ms.) Gist
1 Vikas Taneja, Shri Vikas Taneja in his statement dated

Page 9 of 136
 Strategic Advisor 12.11.2021 stated that he was associated with
to the founders M/s. GTPL as Strategic Advisor and in this role
his primary function was to advise the
founders on growth and management
strategies. He explained the revenue and the
Business Model of M/s. GTPL. He submitted
that was in the business of providing skill
based games in mobile apps format both for
free to play and stakes format; that the revenue
for M/s. GTPL was generated by charging a
platform fee or commission from the players
when they participated in a game; that he also
affirmed that they were paying GST on the Net
Commission/rake fee, after deducting the
components of Bonus, Incentives, Refunds etc.
which were awarded to the players in the
course of repeated games. He informed about
the important persons in M/s. GTPL and said
that he was attending the meetings held at
M/s. GTPL. (RUD- 09)
2 Ramesh Prabhu, Shri Ramesh Prabhu in his statement under
Chief Financial section 70 of CGST Act, 2017 tendered on
Officer 12.11.2021 stated that was the CFO of M/s.
GTPL since 2018. He was a Chartered
Accountant by profession and looked after the
accounting and the taxation work for the
company. He stated that GST returns were
prepared and filed by them with assistance
from E & Y.
He explained how the company earned
Commission and also explained the accounting
system. He also admitted that they were paying
GST on the Net Commission/ Rake fee/

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 Platform Fee and not on the gross Commission
received by them.
The audit and the financial statements were
prepared by MDA & Co, who were their
external auditors.
He explained that they calculated the GST
liability of M/s. GTPL after deducting the
bonus, various incentives, tournament
incentives etc. showing as ‘discounts’ in their
accounting and discharged their tax liability
@18% on the net commission amount. (RUD-
10)
3 Neha Gupta, Her statement was recorded on 11.11.2021
VP (Technical) under section 70 of CGST Act, 2017, the spot
at the time of search at the residential
premises, wherein she inter-alia submitted that
she was the VP (Technical) of M/s. GTPL and
her husband Sh. Deepak Kumar Jha was the
Consultant – Domain Expert of M/s. GTPL, the
range of commission on the online games was
between 6% to 15%. She explained the
hierarchy in the Technical vertical of M/s.
GTPL. She informed that she reported to Alok
Divya, the Business head – Rummy Division.
She submitted that Sh. Ramesh Prabhu looked
after finance and taxation.
She further submitted that Shri Prithvi Singh
looked after the day-to-day operations of M/s.
GTPL while Shri Deepak Singh helped different
teams in coordinating better for day-to-day
executions and helped in hiring talent as he
had good exposure for startups hiring. She
submitted that Prithvi Singh participated

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 actively in the meetings and Shri Deepak Singh
guided them on business development. She
also submitted that the company was started
by Sh. Deepak Singh Ahlawat and Sh. Prithvi
Singh and she did not know the amount of
investment with which M/s. GTPL was started.
She provided the names, phone numbers and
email IDs of important persons in M/s. GTPL.
(RUD- 11)
4 Siyaram Gupta, His statement was recorded on the spot on
Associate Director 12.11.2021 under section 70 of CGST Act,
(Product) 2017, at the registered office of M/s. GTPL
wherein he inter-alia submitted as under:
That M/s. GTPL was engaged in the business
of creating online games, such as Gamezy,
Rummyculture, Rummytime. These games
were being played on our company's online
Gaming App (Platform) In these games the
interested players played the games online
from any place in India (except the states
where it was banned)
That he takes care of product improvement and
product development. For example: if the
application required any modification to
improve its experience, then it would be done
after discussing the matter with the technology
team. Apart from that he also got the regular
system generated reports about business and
revenue analysis via email on his id
siyaram.gupta@gameskraft.com. This analysis
report was about hourly business update like
gross revenue involved, commission earned,
no. of games played etc. (RUD- 12)

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5 Naveen Kumara The statement of Shri Naveen Kumara C K,
CK, Assistant Accountant of M/s MDA & Co.
Assistant Bengaluru was recorded on 11.11.2021 under
Accountant of M/s section 70 of CGST Act, 2017, on the spot
MDA & Co. wherein he explained the business and revenue
model of M/s. GTPL. He also stated that M/s.
GTPL deducted a fixed percentage as
commission for providing the gaming platform.
This was the commission income (revenue) for
M/s. GTPL; that M/s. GTPL gave some instant
cash bonus to the player, which was to be used
by the player on the platform itself within a
specific time frame. If the bonus amount was
not used within the specific time frame then
the same was reversed and was added to the
revenue of the company. This cash bonus was
deducted from income of the company.
Further, he stated that if any player faced any
technical glitch during the game and the player
was not able to complete the game then refund
was given to the player and the corresponding
commission was also refunded and the same
was deducted from the commission income.
The net commission (revenue) earned by the
company after deducting all the bonuses,
incentives and refund was taken as taxable
income for the purpose of discharging GST
liability. (RUD- 13)

4.3. During the search proceedings at the premises of M/s. GTPL, the source
data was downloaded from their data servers maintained with Amazon
Warehouse Server, Mumbai with the help of Forensic Experts accompanying
the officers of DGGI and assistance of technical team from M/s. GTPL. The data
dump pertaining to the period September, 2017 to March, 2020 was

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downloaded. Apart from the data dump the accounting data stored in the
Amazon Warehouse Server (AWS) was also downloaded and retrieved during the
search proceedings on External Hard Disc Drives (HDDs) in a Master copy and
a working copy. These HDDs were sealed in the presence and under the
signatures of Signatories to the respective panchnamas.

4.4. The following electronic devices/mobile phones were resumed from the
premises of M/s. GTPL and the premises of other concerned persons:

TABLE-V

Sr. Particulars Description Premises Address

No. belonging to

1 4GB NA Vikas Taneja 1055, Prestige

Pendrive Shantiniketan,
Black Plastic Whitefield Near
Body Make ITPL,
Sony Mahadevpura,
Bengaluru

2 Transcend Store Jet 2.5 No. Deepak 1303, Purva

SATA Hard 10920106034 Kumar Jha Vantage, 19th
Disk Main Road,
Sector-2, HSR
Layout, Bengaluru
560102

3 Seagate CT1BAZD01BPY00BI Deepak 1303, Purva

SATA Disc Kumar Jha Vantage, 19th
drive 500 Main Road,
GB Sector-2, HSR
Layout, Bengaluru
560102

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4 Apple 12 Pro IMEI No. Deepak 1303, Purva
256GB 354121936538830, Kumar Jha Vantage, 19th
354121936500137 Main Road,
Sector-2, HSR
Layout, Bengaluru
560102

5 Redmi Model IMEI No. Deepak 1303, Purva

M2101K6P 868329051066359, Kumar Jha Vantage, 19th
868329051066367 Main Road,
Sector-2, HSR
Layout, Bengaluru
560102

6 Thinkpad PF1HOXFJ Deepak 1303, Purva

Lenovo E- Kumar Jha Vantage, 19th
480 Main Road,
Sector-2, HSR
Layout, Bengaluru
560102

7 Apple Mac FVFCCFHML40Y Gameskraft Regd. Office at

Book Technologies 26/1, Hosur Road,
Pvt Ltd. Bommanhalli, 1st
& 2nd Floors, Ibis
Hotel, Bengaluru,
Karnataka 560068

8 Seagate One NABV1DY5 Gameskraft Regd. Office at

Touch 5 TB Technologies 26/1, Hosur Road,
Pvt Ltd. Bommanhalli, 1st
& 2nd Floors, Ibis
Hotel, Bengaluru,
Karnataka 560068

Page 15 of 136
9 One Iphone Model A1524, IMEI: Ramesh B-304, Victory
355377072710794 Prabhu Harmony
Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

10 One Iphone Model A1784, FCC Id: Ramesh B-304, Victory

BCG-E3092A Prabhu Harmony
Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

11 HTC Phone Model OPLA130 Ramesh B-304, Victory

Prabhu Harmony
Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

12 Sony Xperia FCC Id: PY7PM-0270 Ramesh B-304, Victory

Prabhu Harmony
Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

13 1 WD Hard S.No. WX71AB4JP3KP Ramesh B-304, Victory

Disk with Prabhu Harmony
cable. Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

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14 1 Toshiba S.No. 817HF747SQ11 Ramesh B-304, Victory
Hard Disk 1 Prabhu Harmony
TB Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

15 128 GB NA Ramesh B-304, Victory

Kingston Prabhu Harmony
Pen Drive Apartments, SSA
100G3 Road, Hebbal, RT
Nagar, Bengaluru
560032

16 512 Gb NA Ramesh B-304, Victory

Golden Color Prabhu Harmony
Pen Drive Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

17 Black Color NA Ramesh B-304, Victory

Taped Pen Prabhu Harmony
Drive Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

18 Lenovo Tab NA Ramesh B-304, Victory

Silver Color Prabhu Harmony
Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

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 19 Sony Tab NA Ramesh B-304, Victory
Black Color Prabhu Harmony
Apartments, SSA
Road, Hebbal, RT
Nagar, Bengaluru
560032

The above electronic devices/mobile phones were forensically examined with

the help of forensic experts and it was observed that no data in relation to the
ongoing enquiry was found to be relevant.

4.5. M/s. GTPL voluntarily deposited Rs. 20 crore in cash on 12.11.2021

through Form DRC-03 (ARN: AD291121001726G) and sent the information
about the same in the evening of 13.11.2021 through email (RUD- 14), long
after the officers had left their premises at 02:00 Hrs on 13.11.2021. In the said
email, Shri Ramesh Prabhu, CFO of M/s. GTPL, submitted “Being honest,
cooperative and compliant taxpayers, as a gesture of bona fide, we have agreed
to deposit an amount of Rs 20 Crores (Rupees twenty crores) with the government
exchequer during the pendency of these ongoing proceedings, under protest.”

5. PROVISIONAL ATTACHMENT OF BANK ACCOUNTS U/S 83 OF CGST

ACT, 2017

5.1. Subsequently, the initial investigations indicated towards a GST evasion

of Rs.419 Crores approximately on account of inadmissible deductions claimed
by M/s. GTPL from their taxable value. Keeping in view the likelihood of huge
tax evasion and in order to safeguard the interests of revenue, 9 bank accounts
of M/s. GTPL were provisionally attached in terms of section 83 of CGST Act,
2017 vide DRCs-22 dated 17.11.2021 and 18.11.2021 detailed as under:
(a) Provisional attachment order bearing F. No.
413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC0000008136E2
dated 17 November 2021 pertaining to ICICI Bank A/c No.
035705003792.

Page 18 of 136
(b) Provisional attachment order bearing F. No.
413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC00000000DD28
dated 18 November 2021 pertaining to ICICI Bank No. 035705002660.

(c) Provisional attachment order bearing F. No.

413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC00000000DB31
dated 17 November 2021 pertaining to ICICI Bank A/c No.
035705002657.

(d) Provisional attachment order bearing F. No.

413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC000000830655
dated 17 November 2021 pertaining to ICICI Bank A/c No.
035705500511.

(e) Provisional attachment order bearing F. No.

413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC000000333D86
dated 17 November 2021 pertaining to HDFC Bank A/c No.
50200030856197.

(f) Provisional attachment order bearing F. No.

413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC00000000A856
dated 17 November 2021 pertaining to Yes Bank A/c No.
002281300008970.

(g) Provisional attachment order bearing F. No.

413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC000000166831
dated 17 November 2021 pertaining to RBL Bank A/c No.
409000880151.

(h) Provisional attachment order bearing F. No.

413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC00000081388B
dated 17 November 2021 pertaining to RBL Bank A/c No.
409001330992.

(i) Provisional attachment order bearing F. No.

413/INT/DGGI/HQ/2021 having CBIC-DIN-202111CC00000000D1D4
dated 17 November 2021 pertaining to Yes Bank A/c No.
10044611368.

Page 19 of 136
 All the provisional attachment orders are annexed as RUD- 15.1 to 15.9.
The total balance in these Bank accounts at the time of provisional
attachment was Rs.451 Crores Appx., which was considered to be adequate
to safeguard substantial government tax, interest etc., involved in the matter
at that time.

5.2. M/s. GTPL vide their letter dated 19.11.2021, received in this office on
22.11.2021 (RUD-16), raised their objections on the said provisional
attachment order under Rule 159(6) of the CGST Rules, 2017. A personal
hearing on the same was granted by the competent authority on 23.11.2021
and a detailed speaking order was passed on 30.11.2021 (RUD- 17), turning
down the request of the noticee company.

6. WRIT PETITIONS FILED BY M/s. GTPL

6.1. Aggrieved by the order dated 30.11.2021 on the provisional attachment of
bank accounts under Section 83 of the CGST Act, 2017, M/s. GTPL filed a Writ
Petition before the Hon’ble High Court of Karnataka challenging the Provisional
Attachment orders and the order passed by the competent authority with the
following prayers:
(i) Issue a writ of certiorari or any other writ in the nature of certiorari or
any other order or direction thereby quashing the order bearing F: No.
413 / INT / DGG! / HQ / 2021 / 17090 dated 30 November 2021,
having CBIC DIN 202111CCOOQ000C0ESD3, annexed at Annexure A
whereby the Respondent No. 2 has upheld the impugned Provisional
Attachment Orders and has refused to lift the attachment of the bank
accounts held and maintained by the noticee;

(ii) Issue a writ of certiorari or any other writ in the nature of certiorari or
any other order or direction thereby quashing the nine orders all bearing
F. no. 413/INT/DGGI/ HQ / 2021 dated 17 November 2021, whereby the
Respondent No. 2 has provisionally attached all the bank accounts of the
noticee, held in the banks which are Respondents No. 4 to 8 in the said
petition;

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 (iii) Issue a writ of mandamus or any other writ in the nature of
mandamus or any other order or direction thereby directing the
Respondent No. 2 to issue necessary instructions to the Respondents No.
4 to 8 informing them about the quashing of the provisional attachment
of the bank accounts held and maintained by the noticee in the said
banks;

(iv) Issue a writ of mandamus or any other writ in the nature of

mandamus or any other order or direction thereby restraining the
Respondent No. 1 and Respondent No, 2 and their subordinates from
taking any coercive action against the noticee;

(v) Issue a writ of mandamus or a writ in the nature of mandamus or any

other order or direction, thereby directing the Respondent No. 1,
Respondent No. 2 and / or their subordinates to refund the amount of
INR Twenty crores deposited by the noticee under protest, vide challan
dated 12 November 2021;

(vi) To issue a writ of mandamus or a writ in the nature of Mandamus or

any other writ or direction, thereby directing the Respondents No, 1 and
2 to pay the noticee the cost of interest that will have to be borne by the
latter on account of delayed payment of GST and other statutory dues
due to the Impugned Order and the Impugned Provisional Attachment
Orders. Pass such other orders or grant such other reliefs, as this
Hon’ble Court may deem fit and proper in the facts and circumstances of
this case.

6.2. The Hon’ble Court vide order dated 03.12.2021 stayed the operation of
the provisional attachment orders but for a limited purpose of payment of
statutory dues, salaries and to make payments to its customers and vendors.
The operative portion of the order of the Hon’ble High Court is reproduced as
under:
By way of an interim arrangement, the impugned order dated 30.11.2021
at Annexure-A and attachment orders dated 17.11.2021 at Annexure-B

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 series are stayed to a limited extent, subject to the following terms and
conditions:-
(i) noticee is permitted to operate all the bank accounts stated in
Annexures-A and B respectively, for the limited purpose of payment of
statutory dues, salaries and to make payments to its customers and
vendors.
(ii) noticee shall file a statement of accounts before this Court with regard
to payments that are made by the noticee henceforth from the said
accounts on or before the next date of hearing.
(iii) noticee shall also file an Affidavit of Undertaking within a period of one
week from today not to alienate, encumber or create third party rights over
its immovable property bearing Unit Nos.601, 701, 801, 7th Floor, 40392
Sq ft, 'B' Block, Delta, Embassy Tech Square, Bengaluru, until further
orders by the Court.
(iv) noticee also undertakes that its Founders / Senior Executives Mr.
Deepak Singh Ahlawat and Mr. Prithvi Raj Singh will attend the hearing of
the respondents on 06.12.2021 and 08.12.2021.

6.3. In the meanwhile, during the matter of provisional attachment being

pursued in Hon’ble Court M/s. GTPL, in a Rejoinder affidavit filed on
06.01.2022 (RUD-18) before the Hon’ble Karnataka High Court, stated that
99.5 percent of the customer base of the M/s. GTPL comprise of individuals,
the value of supply of services to whom by M/s. GTPL was less than INR Two
Hundred. In situations where the value of supply is less than INR Two
Hundred, Section 31(3)(b) of the CGST Act allowed the taxpayer to not issue an
invoice to the end customer, however, a consolidated daily invoice has to be
issued under proviso to Rule 46 of the CGST Rules, 2017. In their said
rejoinder, M/s. GTPL admitted to not having issued any invoice to their
individual customers/players for any transactions ever. They were issuing
invoices only to their business clients. They have however, termed it as a mere
technical breach and not evasion of tax.

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6.4. The said Writ Petition has been heard by Hon’ble High Court of
Karnataka from time to time. Several affidavits and counter affidavits have been
exchanged.

6.5. M/s. GTPL was issued an intimation of liability of tax in form DRC 01A
dated 08.09.2022 and M/s. GTPL preferred to file another Writ Petition no.
18304 of 2022 dated 13.09.2022 in the Hon’ble High Court of Karnataka,
praying for quashing the intimation notice dated 08.09.2022, restraining the
respondents from levying GST @ 28% on the activity of the petitioner.

7. STATEMENTS RECORDED

7.1. During the course of investigation, voluntary statements of Shri Ramesh

Prabhu were recorded on 17.11.2021 and on 18.11.2021 (RUD-19 & RUD-20)
wherein he inter-alia submitted that the indirect compliance of M/s. GTPL was
outsourced to M/s Ernst and Young (E&Y), Delhi; that the officers of E&Y
involved were Shri Bipin Sapra (Senior Partner), Shri Amit Bubna (Partner) and
Shri Nikhil Dahiya (Manager); that all monthly GST related compliance like
calculation of taxable value, generation of B2B and B2C invoices, return filing
etc were taken care of by E&Y; that E&Y was also providing consulting services
for establishing their international business expansion; that they work through
payment gateways such as razorpay, cashfree, paytm, mobikwik, YesBank UPI
collect etc; that they generate monthly invoices for the customers but these
invoices were generated and distributed to the customers in PDF format on
request only in the customers’ email account; that less than 1% of the
customers request for the invoices; that no invoices were generated if the
customer did not request for it. He also provided the details of other companies
owned, controlled by the founders of M/s. GTPL and explained the role of each
of the Founders/ Advisors/ Consultants. Shri Ramesh Prabhu further stated
that they did not have a robust location tracking system before 2021-22 and
hence they were paying IGST from 2021-22 only.

7.2. Statement of Shri Siyaram Gupta, Associate Director (Product), M/s.

GTPL was once again recorded on 18.11.2021 (RUD-21) wherein he explained
that the contents of the system generated reports he gets on his email ID were

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hourly revenue and business analysis report which was the hourly summary of
total add cash, withdrawal, game settled, gross revenue earned and commission
earned etc. at platform level.

7.3. Statement of Shri Ramesh Prabhu, CFO was once again recorded on
24.11.2021 (RUD-22) wherein he submitted the month-wise data of gross
commission and various discounts along with agreement between M/s. GTPL
and E&Y dated 10.08.2021. He further stated that no entity was engaged for
providing invoice services prior to engaging E & Y in August, 2021. He further
stated that the net commission in 99.5% of the games played on their platform
was less than Rs 200, they have not generated any invoices for them and that
only in those cases where the customer asked for invoice, they have generated
invoices. On being questioned again about the games where net commission of
more than Rs 200 was charged, he stated that they have not generated any
invoice. On being inquired on the agreement between M/s. GTPL and E&Y
which states that M/s. GTPL was issuing almost 10 lakh invoices per month, he
stated that it was only an estimate of the number of invoices and that no
invoices have been issued by them for the B2C category. He further stated that
the instant cash discount was being offered to the customers with a limited
validity and expiry date; that they were deducting the discounts without
issuance of any invoice; that if the customer did not utilise the instant cash
discount within the stipulated date, it got reversed; instant cash was a form of
discount given to players through various schemes like instant cash for adding
certain amount to the platform or instant cash for playing certain number of
games; that for calculating their net income for GST purpose they first deducted
the bonus released from the gross commission and after that they deducted the
instant cash given; that if the commission amount (after deducting bonuses)
was not sufficient to deduct the entire instant cash, they took the net
commission as zero and unabsorbed instant cash on monthly basis was taken
to be marketing expenses in the profit and loss account; that the taxable
income for GST purpose was calculated by them as the net commission which
was arrived at by the following formula

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Net Commission= Gross Commission – Bonus released – Instant Cash adjusted
to the extent of commission+ Instant Cash Reversal – Referral bonus released –
tournament incentives.

7.3.1. Shri Ramesh Prabhu vide email dated 25.11.2021 (RUD-23), filed a
retraction of statement which he claimed to have been forced to be recorded on
24.11.2021 through coercion , stating that ‘I was coerced and/or forced against
my will through threats of arrest to tender/record the following statement - that
“we have not generated any invoices under GST for our business”. This is
completely erroneous and fallacious and contrary to records and I can only
assume that I was coerced to record the same to false implicate/incriminate me
and my company’. His stand was however, contradicted by his own submission
in Hon’ble High Court of Karnataka when he filed Rejoinder dated 06.01.2022,
admitting before the Hon’ble Court on affidavit that they had never issued even
a single invoice to any of M/s. GTPL’s retail customers.

7.4. The statement of Shri Vikas Taneja, Advisor to the founders was recorded
on 30.11.2021 (RUD- 24) wherein he inter-alia stated that his work involved
guiding the founders on growth strategies such as finding new product
initiatives, new geographical expansions, high level product improvements etc.;
that the subsidiary companies of M/s. GTPL were M/s Gameskraft (Telangana)
technologies Pvt. Ltd., M/s KWorks Technologies Pvt. Ltd., M/s KN Support
Services Pvt. Ltd., M/s Rummytime Technologies Pvt. Ltd. And M/s New Age
Digital Marketing Consultants etc.; that there were some companies/firms
owned by him or with him as a director, such as M/s Taneja Properties Pvt.
Ltd., M/s Safehouse Properties Pvt. Ltd., M/s TAV Systems and M/s New Age
Digital Marketing Services; that different payment wallets were being used by
M/s. GTPL such as PayTM, PhonePe, Cashfree, RazorPay and JusPay; that
JusPay was an aggregator that helped M/s. GTPL route and load balance the
transactions based on success rates and commercial terms; that the terms and
conditions of the game were finalized by Shri Ramesh Prabhu, CFO after
discussing it with the legal team of M/s. GTPL; that the system of generation of
invoices was known to Shri Ramesh Prabhu and they worked with E&Y for this
purpose; that before E&Y, the work related to invoicing was handled by the
finance team headed by Shri Ramesh Prabhu, CFO; that on being pointed out

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the difference in the invoices resumed from the premises of M/s. GTPL during
the search and the ones submitted by M/s. GTPL over Google drive, Shri Vikas
Taneja showed his inability to comment on the same as the invoicing work was
being looked after by Shri Ramesh Prabhu, CFO; that the computations
regarding payment of taxes was done by Shri Ramesh Prabhu with the approval
of the founders; that the decisions related to financing and accounting were
decided collectively by the founders and the senior management team.

7.5. The statement of Shri Deepak Jha, Advisor the founder of M/s. GTPL was
recorded on 30.11.2021 (RUD- 25), wherein he inter-alia stated that his role in
M/s. GTPL was to advise the founders on various matters like business
development, new exciting product features, new emerging business lines,
international expansion, PAN India expansion, brand development, selecting
newer trending games to the portfolio etc.; that he was a director in another
firm namely, M/s Poppy Consultancy Pvt Ltd. through which he advised the
founders of M/s. GTPL and there was no other business in the said company;
that M/s. GTPL had invested in other companies such as Nirdesa, Playerspot,
Kouzina Foods etc.; that they calculated GST on the amount remaining after
deducting discounts such as bonus, cashback etc. from the commission and E
& Y was involved in the system of generation of invoices and exact details could
be told by Shri Ramesh Prabhu, CFO of M/s. GTPL; that the whole system of
invoicing was managed by the finance team supervised by Shri Ramesh Prabhu,
CFO of M/s. GTPL; that the decisions related to financing and accounting were
decided collectively by the founders and the senior management team.

7.6. The statement of Ms. Neha Gupta, Vice-President (Technical) was

recorded on 01.12.2021 (RUD- 26), wherein she explained the technical side of
the game and how it was played online; she further stated that although a
player can withdraw the amount present in their withdrawal balance which was
part of winnings and discount bonus, the amount of money added initially by
the player cannot be withdrawn without playing games; that she was not aware
of the invoicing related issues and the same could be explained by Shri Ramesh
Prabhu, CFO who was heading the finance team; that there was no
functionality in the system to download the invoices. She also submitted a Hard

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Drive containing approximately 72.10 lakh invoices before the investigating
officers.

7.7. The statement of Shri Deepak Singh, Founder of M/s. GTPL was recorded
on 06.12.2021 and 07.12.2021 (RUD- 27.1 & 27.2), wherein he inter-alia
stated that he was a director in M/s. Gameskraft Technologies Pvt. Ltd. (2017
to March 2021); that he was one of the directors in the following companies;
i. M/s Anzy Careers Pvt. Ltd.
ii. M/s Purplelabs Search Pvt. Ltd.
iii. M/s KWorks Technologies Pvt. Ltd.
iv. M/s. Gamekraft Technologies Pvt. Ltd.
v. M/s KN Support Services Pvt. Ltd.
vi. M/s. Gameskraft Telangana Technologies Pvt. Ltd.
vii. M/s Platform Next Technology Ventures Pvt. Ltd.
viii. M/s Safehouse Properties Pvt. Ltd.

He further stated that the accounting of each transaction of M/s. GTPL was
being looked after by the finance team headed by Shri Ramesh Prabhu; that the
percentage of commission retained by M/s. GTPL was decided as per industry
benchmark with business viability and growth in mind; that they were paying
GST on the Net Commission which was arrived at after deducting the discounts
from the Gross Commission; that the process of generation of invoices was
being looked after the finance team headed by Shri Ramesh Prabhu, CFO; that
the financial matters were discussed and deliberated upon in the Board
Meetings, which were attended by him, Shri Deepak Jha, Shri Vikas Taneja,
Shri Prithvi Raj Singh and Shri Ramesh Prabhu.

7.8. The statement of Shri Prithvi Raj Singh, Founder of M/s. GTPL was
recorded on 08.12.2021 (RUD- 28), wherein he inter-alia stated that he was one
of the directors in the following companies;
i. M/s Amogh Labs.
ii. M/s New Age Marketing Consultants Pvt. Ltd.
iii. M/s Perfopt Labs.
iv. M/s Safehouse Properties Pvt. Ltd.

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And apart from the above, he was also a beneficiary in a trust named as
Modern Investment Trust; that he takes care of the overall functioning of the
businesses Rummy and Gamezy and that he focussed on making it the best
gaming experience. He also explained the process of login for customers and the
process for playing games on their apps/platforms. He further explained how
the cash was added to the account by a user. He stated that there were two
wallets-deposit wallet and withdrawal wallet; that when the user adds cash to
their platform the balance was added to the deposit wallet; that the player
keeps on playing games, some amount was added to the withdrawal wallet; that
the customer cannot transfer any amount from the deposit wallet to the
withdrawal wallet; that the GST was paid on the Net Commission after
deducting the bonuses and discounts; that the invoicing related work was
handled by the finance team, headed by Shri Ramesh Prabhu, CFO; that he has
also played cash games, but had not received any invoice for the same; that the
customers did not get any invoice; that the commission retained by M/s. GTPL
ranged around 10-15%; that he was not aware of any functionality to generate
invoices for customers, however they can have such a functionality. However, it
also depended on the industry standards.

7.9. Statement of Shri Divya Alok, Business Head of Rummy division was
recorded on 15.12.2021 (RUD-29) wherein he inter-alia submitted that as
business head, he looks after product development, marketing, business and
customer support functions; that he was also shown the set of 26 invoices
resumed from the premises of M/s. GTPL during the search operation on which
he stated that he was not a finance expert and cannot comment upon the
difference in invoices resumed during the search and those submitted later by
Shri Ramesh Prabhu; that the invoice related work was looked after by the
finance team headed by Shri Ramesh Prabhu, CFO of M/s. GTPL. He further
stated that majority of the discounts (98%) were bonus discounts; that most of
the bonus discount was given at the time of adding cash in the wallet; that
more money added to the wallet has better pack; that bonus packs were also
given to user who have been dormant for some time in order to reactivate them
and to help increase frequency in the system; that bonus was also awarded
where user on the platform brought another player who was not there on the

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platform; that no discount was disbursed before the player plays the game or
during the game was being played; that they had a retention team, which on
the basic of data analysis, created personalized offers and sent to customers.

7.10. Statement of Shri Sharath Chandran, Business Head of Gamezy was

recorded on 16.12.2021 (RUD-30) wherein he inter-alia submitted that as
business head, he looked after product development, marketing, business and
customer support functions; that two types of discounts namely, Bonus
discount and instant Cash discounts; that users receive bonus discount via
adding cash and he/she could utilize this discount while joining a game; that
Instant cash discount were given to inactive users to come back and play on
Gamezy; that Bonus discount has an expiry and was adjusted against the
commission chargeable; that he reported to the founder, Shri Prithvi Raj Singh
in M/s. GTPL; that customers were provided invoices only when they
specifically requested for the same; that he was also shown the set of 26
invoices resumed from the premises of M/s. GTPL during the search operation
on which he stated that he was not a finance expert and couldn’t comment
upon the invoices; that there were various kinds of bonuses such as-
● Add cash bonus - this was offered when the customer does an add cash
transaction in Gamezy, provided the add cash amount was liable for a
bonus reward.
● Referral bonus - This was offered to a user when he/she has referred
another user to Gamezy and the referral user has played a cash game.
● Winnings bonus – This was offered to a user when he/she was part of the
winners list in a fantasy game, users can see the rewards an offer for
every rank in the winners list.
● Coupon discount and promo code discount – These bonuses were
applicable only in fantasy sports and were given to users basis certain
segments that they belong to i.e. Inactive in the last 30 days.

7.11. The statement of Shri Amit Bubna, Partner, Ernst & Young was recorded
on 05.01.2022 (RUD-31), wherein he inter-alia stated that they were working
with M/s. Gameskraft Technologies Pvt. Ltd. (M/s. GTPL) Since May 2021; that
their scope of work has been defined in 3 engagement letters dated 4 May 2021,
7 June 2005 & 10 August 2021 which included (A) GST Health Check (B)

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Representation Services and (C) On-going compliance and litigation support
services; that their engagement did not involve examination of any operational
aspect of the company (M/s. GTPL); that they dealt with Shri Ramesh Prabhu
in M/s. GTPL; that their agreement was effective from 19-Aug-2021; that they
were doing the B2B invoicing related work for M/s. GTPL; that they were
assisting M/s. GTPL in raising B2B invoices; that the B2C invoices issuance
was under testing and they had not issued a single B2C invoices for M/s. GTPL
from the E&Y platform; that they had performed a GST review of M/s. GTPL
(The GST Review Report is annexed as RUD-32) wherein certain issues were
identified and pointed out to M/s. GTPL by E&Y as under:

● Under GST law, for a discount to be eligible for deduction, it shall be

pre-agreed as per the terms of agreement and linked to specific
invoices.
● In view of the above, deduction of referral bonus is litigative and likely
to be contended for wrongful deduction from revenue. However,
negligible value.
● Similarly, deduction of instant cash and tournament incentive is likely
to be contended.
● Gameskraft shall ensure proper address mapping against User ID and
charge correct tax type on supplies.

that they were informed by M/s. GTPL that they have an internal system to
generate the invoice; that they had not verified M/s. GTPL’s Invoicing system;
that they were also informed during their review engagement that the invoices
though generated were not issued to the customer (B2C Customers); that since
the GST law requires issuance of invoices, the issue was identified as an area of
improvement for the company. He was also confronted with the statement of
Shri Ramesh Prabhu dated 18.11.21 wherein he had said that “they had
requested EY to generate and download all invoices since Nov’17 and as there
was a system limit for downloading invoices at once and considering the high
volume of invoices they expected to take a lot of time to download the invoices”
to which he categorically stated that no such request was made to them; that
they were not generating B2C invoices for M/s. GTPL and they do not have
relevant data from Nov' 17 to generate such invoices.

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7.12. Statement of Shri Ramesh Prabhu was once again recorded on
07.01.2022 (RUD-33) wherein he inter-alia submitted that the noticee company
was engaged in the business of providing online gaming to retail customers on
its platforms and that their most popular game was Rummy; that in the
rejoinder dated 06.01.2022 filed in Hon’ble High Court of Karnataka at
Bengaluru, M/s. GTPL has submitted that M/s. GTPL was not issuing invoices
to customers where the value of supply was less than INR 200 as per Section
31(3)(b) of the CGST Act in Para 7.2 (b) of their rejoinder filed in Hon’ble
Karnataka High Court. Further in Para 7.2 (c) of the said rejoinder, it was
mentioned that though a consolidated daily invoice has to be issued for such
supplies at the close of each day in respect of all such supplies as provided in
Rule 46 of the CGST Rules read with Section 31(3)(b), no consolidated invoices
have ever been issued. He further stated that in para 7.2 (e) of the said
rejoinder, it has been submitted to the Hon’ble High Court that the noticee
(M/s. GTPL), followed the same practice of non-issuance to users/customers
even for the 0.5% of their supply of service transactions involving a net
commission/platform fees value of more than Rs. 200. He admitted that M/s.
GTPL has not issued any invoices to any customer although, such non-
issuance of invoices does not/has not in any way led to evasion of GST.

He further stated that through E&Y while B2B invoices were being generated,
the B2C invoicing system in still under testing and not put live yet; that the
invoices submitted by them on Google drive and through hard drive were
generated on the date on which it was submitted by extracting the data from
their system for game plays where net commission was more than Rs. 200. The
decision to generate invoices and to submit them during investigation was
collectively made by him, Vikas Taneja and Deepak Singh based on the advice
they had received earlier by E&Y.

7.13. Statement of Shri Ramesh Prabhu was once again recorded on

11.04.2022 (RUD-34) wherein he submitted some data as per the directions of
the Honourable High Court of Karnataka and further stated that M/s. GTPL
has decided to start generating B2C invoices in-house and they were in the
process of generating game level invoices to be supplied to customers; that

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earlier they had a contract with E&Y to generate both B2B and B2C invoices
but now they have decided to generate only B2B invoices through E&Y.

7.14. In his further statements dated, 28.06.2022 and 29.06.2022 (RUD-35 &
RUD-36) , Shri Ramesh Prabhu gave the details of transaction codes of their
data of transactions; that on specifically being asked about the “Add Cash” in
Gamezy and RummyCulture platforms as transaction codes 3 and 1
respectively, he stated that it was the total cash added by the customer to their
wallet meaning it was the total amount deposited by the customer on the M/s.
GTPL’s platforms, which included his ‘buy-in’, ‘commission’ and applicable
taxes; that their business clients who used M/s. GTPL’s platform, technical
solutions and game liquidity to provide Rummy games to their customers, and
such clients managed their transactions with their own customers; that he
submitted the monthly commission data for the period March 2019 to March
2022 for ‘Gamezy’ platform and for the period August 2017 to March 2022 for
‘RummyCulture’ platform; that the noticee company track the geo-location of
their retail customers, whenever the customer starts a fresh game through the
data they receive automatically which comes to them as the customer has to
give certain permissions on his device on which he plays the game while
registering on their platform; till Oct 2021, geo-location was not precisely being
located during the recording of customer data and hence they were treating all
supplies to be made in the state of Karnataka but since October 2021 they
started recording of the location precisely and after that they were paying GST
accordingly; that he further submitted to specific query that a customer cannot
add a bank account to register himself if the bank account was located in a
state where the noticee company’s games were banned even if the particular
customer was trying to register from the state where their games were not
banned; similarly a player cannot play a game if he was physically present in a
state where their games were banned; that he submitted to provide the Add-
cash monthly data through email; that KYC was required in following cases – (a)
single add cash transaction was more than Rs 10,000/-, (b) cumulative add
cash transaction was more than Rs 40,000 in the lifetime on the platform, (c) if
customer withdraws a cumulative amount of Rs 1,000 in his lifetime on the

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platform, and (d) if TDS was applicable on any game transaction of the
customer on the platform.

7.15. Shri Ramesh Prabhu provided the monthly data of Add-cash by the
customers to the noticee company vide email dated 29th June 2022 (RUD-37)
and their email dated 07th Sept, 2022 (RUD-38); the total amount of “Add-
cash” amount by the customer on the noticee company’s platforms is as under:
TABLE-VI

Platform Period Amount of Add-Cash received

on the platform by M/s. GTPL

Rummy Culture August 2017 to 1,95,78,03,04,492

June 2022

Gamezy March 2019 to 6,83,94,24,582

June 2022

Total 2,02,61,97,29,074

Thus the total amount of “Add-cash” received by M/s. GTPL on its platforms
amount to Rupees seventeen thousand seven hundred seventy three crores
forty one thousand one hundred and thirty only.

7.16. Statement of Shri Samir Dharnidharka, Indirect Taxation Head of M/s.

GTPL was recorded on 29.06.2022 (RUD-39) wherein he inter-alia submitted
that he was submitting the hard copies of documents as directed in summons
and emails; that he explained the transaction codes with their details; that he
also explained the calculation of net commission in reference to the transaction
codes; that he explained the requirement of KYC of the individual players in
RummyCulture and Gamezy; that how they controlled the players from those
states, where their games were banned; he also gave the details of transaction
codes of their data of transactions; that on specifically being asked about the
“Add Cash” in Gamezy and RummyCulture platforms as transaction codes 3
and 1 respectively, he stated that it was the total cash added by the customer
to their wallet meaning it was the total amount deposited by the customer on

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the M/s. GTPL’s platforms, which included his ‘buy-in’, ‘commission’ and
applicable taxes; that their business clients who used M/s. GTPL’s platform,
technical solutions and game liquidity to provide Rummy games to their
customers, and such clients managed their transactions with their own
customers; that he submitted and monthly commission data for the period
March 2019 to March 2022 for ‘Gamezy’ platform and for the period August
2017 to March 2022 for ‘RummyCulture’ platform; that the noticee company
track the geo-location of their retail customers, whenever the customer starts a
fresh game through the data they received automatically which comes to them
as the customer has to give certain permissions on his device on which he
plays the game while registering on their platform; that he further submitted to
specific query that a customer cannot add a bank account to register himself if
the bank account was located in a state where the noticee company’s games
were banned even if the particular customer was trying to register from the
state where their games were not banned; similarly a player cannot play a game
if he was physically present in a state where their games are banned.

7.17. Further, during inspection of M/s. GTPL voluntary statement of Shri

Abhishek Upadhyay, Director of Engineering, Rummy Culture Division, M/s.
GTPL was recorded on 21.07.2022 (RUD-40) in the office of the noticee at
Bengaluru, wherein he interalia submitted that he developed the software for
Rummy with Prithvi Singh, Punya Goel, Akhilesh Chuadhary and Alankar
Chaudhary; that he explained about the basic functionality of Rummy Software
its basic architecture and various other aspects; that he provided technical
documents including design, architecture, flow charts, Flow Charts, Product
Review documents of Rummy Software and also provided the copies of ISO
certification, No-bot Certificate, RNG Certificate etc.; that M/s. GTPL charged
commission on buy-in for each game play, irrespective of the buy-in money
coming from the Deposit Wallet of the player/customer or his Withdrawal
Wallet, which contained winnings of the player from previous games; that he
provided a self-attested copy of his current passport.

7.18. The voluntary statement of Shri Deepak Singh, Founder Director, M/s.
GTPL was recorded on 21.07.2022 (RUD-41) in the office of the noticee at
Bengaluru, wherein he interalia submitted that his company took No-Bot

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certificate which proves that the players were playing the games on their
platform with other players. He categorically denied that M/s. GTPL deployed
any bots/ program to play the game; that there was no customization on their
platform and all the players and tables were picked at Random; that there was
no manual intervention during any game-play; that there was a detailed
document of process to follow before any player was considered for ban; that
their platform commission was being charged at every game level, irrespective of
buy-in happening through deposit wallet or withdrawable wallet; that no
incentive was given to the players during game-play and most of their offers
were usually on add-cash etc.; that as a non-technical person he was not able
to comment upon the computer program and the capabilities of it; that he
provided a self-attested copy of his current passport.

7.19. The voluntary statement of Shri Prithvi Raj Singh, Founder & CEO-
Existing Businesses, M/s. GTPL was recorded on 21.07.2022 (RUD-42) in the
office of the noticee at Bengaluru, wherein he interalia submitted that besides
other responsibilities, since Jan 2022 he was also looking after the business of
Pocket52, which was acquired by M/s Gameskraft; that Pocket52 was a mobile
and browsers app for playing online poker by the gamers; that as the CEO-
Existing Business, he works with different heads of the department to make
strategy to grow the business, discuss new features and how to make their
customer experience better in their gaming apps; that there were respective
heads of product, marketing, Business, Design and technology for all the apps;
that as per his knowledge there was no government regulatory authority in
state of Karnataka or in India which was regulating the online gaming industry
in India; that All India Gaming Federation (AIGF) don’t provide any certificate to
M/s Gameskraft for completing with the regulations; that AIGF only
recommends regulations/rules to govern the online gaming business and M/s
Gameskraft follows the same as a member entity; that as far as certification
was concerned, M/s Gameskraft was certified by iTech Labs, ISO and for No
Bots certificate; that iTech Labs has certified M/s Gameskraft with a RNG
(Random Number Generation) certificate which means their card shuffling
algorithm has no bias and correctly shuffles the cards in deck; that they also
have a No Bots certificate which means there were no bots in their system; that

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there were lot of measures in place to ensure that our product/game developers
have not created bots in our game algorithm; that M/s. GTPL had no influence
on the outcome of Rummy/ Gamezy game; that there were no bots playing the
game; that he explained about the measures taken by M/s. GTPL that their
product/ game developers had not created any bots in their game algorithm;
that he denied about any possibility of any manual intervention in their game
play; that they at M/s. GTPL did not have any Intellectual Property Rights or
Copyright for their game code/ algorithm/ programs; that their platform
commission was being charged at every game level, irrespective of buy-in
happening through deposit wallet or withdrawable wallet; that they give
discounts to their players as they play games on their platform; that these
discounts were given to players while they play the games; that the allocation of
the discount were happening during the add cash to the wallets; that they also
give loyalty points for playing the game to their players; that these points can
also be used to get more discounts in the platforms; that some of the users
were also given tournament tickets based on various parameters of game play
in the platform; that these tickets were given for free to the selected users; that
other than discounts which were offered during a game play, to induce the
gamer to continue playing the game, their system by default initiates a new
game if the gamer does not quit in a specified time after the end of the last
game; that the system automatically places the same buy-in amount which was
placed by the player in his last game; that they have dedicated marketing team
which runs marketing campaigns to publicise or advertise our games through
digital advertisements, push notifications, audio-video advertisements in TV
media; that the platform does not differentiate between whether the amount
was coming from the winning or wallet and commission was charged as and
when the game starts; that he provided a self-attested copy of his passport.

7.20. The voluntary statement of Shri Ramesh Prabhu, CFO of M/s. GTPL was
recorded on 22.07.2022 (RUD-43) in the office of the noticee at Bengaluru,
wherein he interalia submitted that No-bot certificate were obtained for
RummyCulture and were under process for Gamezy and Playship; that he being
a finance person did not have the complete understanding about technical
aspects; that there were no programs on any of their gaming platforms used to

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replicate a human player to influence the outcome of any game and such
outcome depended on the skill and activities of the real players playing the
game; that there was no customization in their online gaming platforms to
influence the outcome of games; that there was no manual intervention during
the games by M/s. GTPL; that there was no Artificial Intelligence applied in any
of their platforms which was controlled and monitored by M/s. GTPL to make it
different from conventional method of playing games; that their platform
commission was being charged at every game level, irrespective of buy-in
happening through deposit wallet or withdrawable wallet; that on being asked
to submit the source code he replied that since there was a possibility of
intellectual property, copyright etc. involved with the source code, they needed
to discuss the same with their legal team and consultants and requested for a
time of one week to respond to this request.

7.21 Another statement of Shri Ramesh Prabhu, CFO of M/s. GTPL was
recorded on 16.08.2022 (RUD-44), wherein on being asked if there was any
utility or customization in their company’s software to prevent the winning or
buy-in amount for a particular game to go up to or beyond Rs.10,000/-, he
inter alia stated that the winning amount was the outcome of the game table
size and there was no utility in their apps, which restricted the choice of player
in deciding the buy-in or winning amount;

● that their platform matched the players who wanted to play

same stakes on random basis and places on the table with
same stake size, the players with different stakes were not
matched to play on the same table;
● that as a CFO he knew that M/s. GTPL captured phone
number, KYC details where applicable (PAN, Bank details),
location of the player, details of all financial transactions of the
player like add-cash, bonus/incentives, games played,
winnings, losses, withdrawal etc.;
● that regarding providing the source code their legal team would
like to discuss the same with the department regarding it; that
the only criteria for the game size/ denomination was the buy-
in the customer wishes to make;

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● that on being asked whether M/s. GTPL’s platforms provide
insight to a player/ gamer to have information about skill set of
players that he would be playing with on a particular table
allotted to the player by the system he submitted that a similar
question has been asked in the questionnaire sent to them by
the department and that they will answer it through their reply
to the said questionnaire;
● that M/s. GTPL did not make profits out of the games on the
platform provided by it, the only source of revenue was through
the platform service fee it charged from its customers for the
games provided on the platform and said platform service fee
was shown as income in the company’s financial statements;
● that M/s. GTPL earned its income through platform service fee,
it charged its players @ 5% to 12% of the buy-in of each of the
cash games varying for different formats and denominations of
the game and was known as gross revenue, they provided
discounts against the said service fee in forms of bonus,
incentive, instant cash discounts etc., their net revenue was
calculated by deducting discounts given to customers from the
gross revenue and they paid GST on the net revenue;
● that on being asked if M/s. GTPL offered any benefits to its
players for not withdrawing the winning amount from winning
or withdrawal wallet, he replied that he did not have the
sufficient information to answer the question and that a similar
question has been asked in the questionnaire sent to them by
the department and that they will answer it through their reply
to the said questionnaire;
● that on further being asked about whether M/s. GTPL players/
gamers to list a leaderboard for its various games he replied
that he did not have the sufficient information to answer the
question and that a similar question has been asked in the
questionnaire sent to them by the department and that they
will answer it through their reply to the said questionnaire;

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● that on being asked about the lowest buy-in amount and
highest buy-in amount possible on their platforms, about the
method in which the players were allotted tables in the non-
cash or free games as there was no buy-in stakes, about the
method in which M/s. GTPL’s algorithm decided about a player
to be seated at a particular table, about the knowledge of a
player about his chances to win on the basis of his skill when
he joined a game, about M/s. GTPL having any information or
data on the skills of the gamers/ players to indicate as to which
player would win the next game on a particular table, about
whether a player knew about his skill set when he joined a
table to play a game, about whether M/s. GTPL offered any
benefits to players for playing certain number of games on their
platform he replied that he did not have the sufficient
information to answer the question and that a similar question
has been asked in the questionnaire sent to them by the
department and that they will answer it through their reply to
the said questionnaire;
● that since most of the games were being played as cash games
on M/s. GTPL’s platforms, whether he agreed that these games
were being played for monetary stakes without involvement,
knowledge of any skills besides the monetary stakes being
placed by the players that was to say that besides the amount
of financial stake, there was no other consideration while
allotting a table to a set of players he replied that he did not
have the sufficient information to answer the question and that
a similar question has been asked in the questionnaire sent to
them by the department and that they will answer it through
their reply to the said questionnaire;
● that on being asked if monetary stakes for a chance to win on
M/s. GTPL platform amounted to betting he once again replied
that he did not have the sufficient information to answer the
question and that a similar question has been asked in the

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 questionnaire sent to them by the department and that they
will answer it through their reply to the said questionnaire.

7.22 Another statement of Shrti Vikas Taneja , CEO of M/s. GTPL was
recorded on 24.08.2022 (RUD-45), he interalia submitted as under:
● that on being asked if there was any utility or customization in
their company’s software to identify the winning streaks by
players and flagging such players, he inter alia stated that he
was not aware about any such system;
● that if there was any utility or customization in their company’s
software to prevent the winning or buy-in amount for a
particular game to go up to or beyond Rs.10,000/-, he inter alia
stated that he was not aware about any such algorithm or
software or system that prevented the winning or buy-in not to
go above Rs.10,000/-;
● that on further being asked if their gaming platform permitted
their players/ gamers with different buy-in stakes on the same
table for the same game, he conceded that its was the fact for
the cash games, whether played in points, pool or deal format;
that he submitted that gameplays were recorded as they
happened on the platform for audit purpose and he was not
aware about any other information being recorded regarding
gameplays and playing skills;
● that on being asked that besides equal stakes being placed by
the player/ gamer/ retail customer, was there any other
qualifying criteria designed in M/s. GTPL’s algorithm to give
permission to them to p[lay the same game on the same table,
he replied that he was not aware of any other criteria;
● that a player could see last five games of the opponents on the
same table and there was no other detail or insight in the
skillset of the players of the same game on the same table;
● that sources of revenue for M/s. GTPL were the service fee
charged on the gaming platform from the players and that M/s.

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 GTPL provides gaming platform to other organizations for
making revenue and also some investments;
● that he was not aware of any benefit to its players/ gamers for
not withdrawing the winning amount from their winning/
withdrawal wallet;
● that they had free games and paid games and as per his
recollection minimum buy-in was 80 paisa and maximum buy-
in was Rs.12,000/- however, he was not uptodate on such
offerings;
● that in free games, buy-in (based on free coins) was the basis of
allotting a table in a game to the player/ gamer;
● that the player selected the type of game, number of players on
a table and buy-in value, based on this selection, the system
finds available table with an open position from the available
list and he was not aware about how the system allotted a table
in case more than one such tables were available;
● that the players were not aware about the chances to win at the
time of joining the table;
● that M/s. GTPL cannot predict the outcome of a game on a
particular table beforehand;
● that RummyCulture platform had a feature called “challenges”,
he submitted that this feature might have something where a
user was asked to play a certain number of games though he
was not aware about the exact working and/ or benefits offered
in this feature;
● that most games that were played on M/s. GTPL platforms were
cash games and on being asked whether he agreed that such
games were being played for monetary stakes, without
involvement and knowledge of any skills besides the monetary
stakes being placed by the players, he stated that these games
were games of skill, where the skill of the player was important
for the outcome of the game;
● that on being asked whether monetary stakes placed on games
on the gaming platform of M/s. GTPL for a chance to win

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 amounted to betting, he replied that he was not aware about
the definition of betting and he was not the right person to
answer this question, however, in his opinion, it did not
amount to betting.

7.23 Another statement of Shri Deepak Jha, CEO - New Businesses of M/s.
GTPL was recorded on 24.08.2022 (RUD-46), he interalia submitted as under:

● that on being asked if there was any utility or customization in

their company’s software to identify the winning streaks by
players and flagging such players, he inter alia stated that he
was not aware about any such system;
● that whether there was any utility or customization in their
company’s software to prevent the winning or buy-in amount
for a particular game to go up to or beyond Rs.10,000/-, he
replied in the negative;
● that whether the gaming platform of M/s. GTPL permit players/
gamers with different buy-ins or stakes to be sitting on the
same table or the same game, he replied that he did not have
the correct information about that;
● that he was asked to submit about the information being
captured by M/s. GTPL about their players/ gamers regarding
their gameplays and playing skills;
● that on being asked whether besides equal stakes being placed
by the players/ gamers/ retail customers was there any other
criteria, defined in M/s. GTPL algorithm to permit the players to
play the same game on the same table, he replied that he was
not aware of any other such criteria;
● that on being asked if any platform of M/s. GTPL any detail or
insight about skillset of the player on a particular table to the
other players joining the said table, he replied that he was not
aware of any such provisions;
● that on being further asked if M/s. GTPL offered any benefits to
its players for not withdrawing winning amount from winning
wallet, he replied that he was not aware of any such provision;

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● that on being asked about the lowest and highest buy-in for
any cash game on M/s. GTPL platforms, he replied that he was
not aware of it correctly;
● that on being asked about free or non-cash games on M/s.
GTPL, how were the players allotted tables in absence of any
monetary stakes or buy-in, he replied that practice chips
decided which player went to which table;
● that on being further asked about how M/s. GTPL’s algorithm
decided about a player to be seated at a particular table in a
cash game, he replied that it was decided by the buy-in amount
but he was not aware about the algorithm functioning;
● that he was not aware about the provisions about a player
knowing his chances to win at the time of joining a cash game
on the basis of skills of the other players viz a viz his own skills;
● that he categorically submitted that M/s. GTPL did not have
any information or data about the skills of players/ gamers to
indicate the outcome of a cash game beforehand on a particular
table;
● that he was not aware about M/s. GTPL offering any incentives
to the player for continuing playing a certain minimum number
of games on a gaming platform;
● that he was asked to explain the various kinds of bonuses and
incentives being provided by M/s. GTPL to its retail customers,
he denied having correct answer to it;
● that on being asked that most of the games played on M/s.
GTPL platform were cash games being played for monetary
stakes without knowledge or involvement of any skills besides
the monetary stakes being placed by the players, he replied that
these games were skill based games as per his knowledge and
cash games were played for monetary stakes;
● that on being asked whether monetary stakes played on games
of the gaming platform of M/s. GTPL for a chance to win
amounts to betting, he replied that he did not agree that these
games amount to betting.

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8. ANALYSIS OF THE CASE LAWS RELATED TO THE ISSUE

8.1. M/s. GTPL during the various hearings in the Hon’ble High Court of
Karnataka, Bengaluru Bench and in their various written submissions in the
court have referred to many judgements of Hon’ble Supreme Court, various
High Courts and other Courts. This necessitates discussion on various
judgments of the various Hon’ble High Courts and Hon’ble Supreme Court on
the related issues.

8.2. The aspect relating to betting and gambling had come up for consideration
before the various courts in India under various enactments such as the
Karnataka Act No. 28 of 2021 (Amendment Act) amending the Karnataka Police
Act, 1963, Kerala Gaming Act, 1960, Tamil Nadu Gaming and Police Laws
(Amendment) Act, 2021 (Act 1 of 2021) whereby the Tamil Nadu Gaming Act,
1930 was amended etc.

A. There are three important decisions of the Hon’ble Supreme Court

as to what should constitute betting and gambling.

(a) State of Andhra Pradesh vs K. Satyanarayana - Wherein

by para 12 the Apex Court has held as follows:

"It cannot be said that Rummy is a game of chance and there is no

skill involved in it." Upon rendering such finding, the court
nonetheless also held, in the same paragraph, as follows:

"12. ... Of course, if there is evidence of gambling in some other

way or that the owner of the house or the club is making a
profit or gain from the game of rummy or any other game
played for stakes, the offence may be brought home. ..."

Hence, if any High Court Judgement proceeds to hold that a game of

skill would remain a game of skill even if it was played for stakes,
the same would be contrary to the ratio of Hon’ble Supreme Court
in K. Satyanarayana, as referred above.

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 (b) The Hon’ble Supreme Court in the case of Dr. K R
Lakshamanan v State of Tamil Nadu wherein vide para 3 had
extracted Black’s Law Dictionary and observed that according to
Black's Law Dictionary (Sixth Edition) "gambling involves, not
only chance, but a hope of gaining something beyond the
amount played. Gambling consists of consideration, an
element of chance and a reward"...... Gambling in a nut-shell
is payment of a price for a chance to win a prize. Games may
be of chance, or of skill or of skill and chance combined.

Lakhs of people had participated in the online gaming platform of

M/s. GTPL and they apparently had only gambled and played for
monetary stakes. Specific queries were put as to the above
parameters to M/s. GTPL who has failed to produce any evidence
in this regard in spite of specific written queries. Consequently it is
this vital test laid down by the Hon’ble Supreme Court which
apparently stands failed in the instant case. None of the evidence
provided by M/s. GTPL refutes that the platform provided by GTPL
was not indulging in betting.

(c) The subsequent decision of the Hon’ble Supreme Court in M.J.

Sivani And Ors vs State Of Karnataka And Ors vide para 7 refers
to the Black’s Law Dictionary, defining gaming. Further, the
judgement highlights that ordinary people who join platforms, like
the ones offered by M/s. GTPL cannot be credited with skill.

B. Even though both in Dr. K R Lakshamanan and M J Sivani

judgements, reference to para 12 of judgement in Satyanarayana was
made, the vital ratio namely “Of course, if there is evidence of gambling
in some other way or that the owner of the house or the club is
making a profit or gain from the game of rummy or any other game
played for stakes, the offence may be brought home.” had not been
referred to in both these judgements and more importantly, this ratio of
Satyanarayana holds the field even today.

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C. Vide para 50 of Judgement in matter of M J Sivani the Hon’ble
Supreme Court held that “Ordinary common people who join the game
can hardly be credited with skill for success in the game. The forecast is
nothing better than a shot at a hidden target. Whether a particular video
game is a game of skill or a game of chance, or mixed chance or skill
requires to be determined on the main element, namely, skill or chance.
If it is a game of pure chance or mixed chance and skill, it is gaming.
Even if the game is for amusement or diversion of a person from his
usual occupation for entertainment, it would constitute 'gaming'.”

D. In fact the division bench of Karnataka High Court, while deciding

a batch of cases related to All India Gaming Federation vs The State of
Karnataka & Ors had while referring to the decision of Hon’ble Supreme
Court in M. J. Sivani distinguished the same by holding “what heavily
weighed with the court in the said decision was the adverse police report.
It is pertinent to recall Lord Halsbury’s observation in Quinn v. Leatham
that a case is only authority for what it actually decides in a given fact
matrix and not for a proposition that may seem to flow logically from what
is decided. This observation received its imprimatur in State of Orissa v.
Sudhanshu Sekhar Misra.”

E. As per the Law Commission of India Report No. 276 published

in July, 2018, in the case of M/s Gaussian Networks Private Limited v.
Monica Lakhanpal and State of NCT, an application was filed under
Order XXXVI Rule 1 of Civil Procedure Code, 1908 before a District Court
in Delhi, seeking the Court’s opinion whether participants be allowed to
play a game of skill for stakes with the intention of making profit. It was
held that playing skill- based games for money in the virtual space
renders them illegal. The degree of skill that was involved in playing these
games in physical form cannot under any circumstances be equated with
games played online. The Court held that since there was a possibility for
manipulation of outcomes by cheating and collusion in online gambling,
it can be assumed that the degree of chance would also increase. The
court echoed the observations made by the Supreme Court in the M.J.

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Sivani case. On April 21, 2016 while the matter was still subjudice,
Gaussian sought permission to withdraw both the Civil Revision
Application and the original Order XXXVI Application, on the ground that
in light of the decisions in State of Andhra Pradesh v. K. Satyanarayana
& Ors. and K.R. Lakshmanan v. State of Tamil Nadu, the position of law
on the exemption for ‘games of skill’ is already clear.

F. Hon’ble Madras High Court in a Divisional Bench Judgement in

the matter of Director General of Police v Dilibabu held that playing
rummy as such does not constitute an offence but playing it for stakes or
wagers would make it an offence of gambling.

G. The judgement rendered by Kerala High Court in Head Digital

Works V State of Kerala, declaring that “online rummy played either with
stakes or without stakes remains to be a game of skill run totally
contrary to the ratio of the Hon’ble Supreme Court in Satyanarayana
rendered by para 12 “...” the game of rummy or any other game, played
for stakes, the offence may be brought home.

H. Investigations in the instant case revealed that there is no iota of

doubt that M/s. GTPL was providing a platform to its players to play
rummy and other games for stakes and resorts to inducement for its
players to play online rummy for stake. Thus, the M/s. GTPL was
engaging in enticing the players by alluring them with winnings, which
was the inducement of its customers/players to play online rummy with
stakes that clearly amounts to betting.

I. Consequently any reference or reliance by M/s. GTPL on the

following case laws (which were referred to by M/s. GTPL in affidavits in
WP 22010 of 2021 and WP 18304 of 2022), do not have any application
not only because these issues have been decided under other enactments
and not under the provisions of respective GST Acts and also because in
none of the cases a detailed investigation of facts have taken place and
the courts were not offered the necessary assistance in showing the fact
pattern as to how online gaming platforms involving thousands and

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lakhs of users, used the platform for gambling/ playing games for stakes
and how the owners of these platforms made profit or gain out of
conducting such games, all of which according to the Hon’ble SC in
judgement in matter of K. Satyanarayana takes it away from what was
claimed as a game of skill.

J. For the reasons stated above, the ratio replied upon by M/s. GTPL
of the following case laws will not apply and cover the facts and
investigations in question:

(i) All India Gaming Federation v State of Karnataka,

(ii) Junglee Games India Vs. State of Tamil Nadu
(iii) State of Andhra Pradesh Vs. K. Satyanarayana
(iv) Varun Gumber v Union Territory of Chandigarh and Ors
(v) Gurdeep Singh Sachar v Union of India
(vi) Ravindra Singh Chaudhary vs. Union of India & Others
(vii) Head Digital Works v State of Kerala
(viii) K.R. Lakshmanan v. State of Tamil Nadu
(ix) D.Siluvai Venance vs State
(x) Director General of Police v Dilibabu
(xi) Skill Lotto Solutions Pvt. Ltd. v Union of India and Ors.

K. In many of these cases the constitutional validity of some of the

provisions under various state enactments such as the Karnataka Police
Act, 1963, Kerala Gaming Act, 1960, Tamil Nadu Gaming and Police
Laws (Amendment) Act, 2021 had come for consideration. Here again the
courts did not have the opportunity to examine the factual matrix of the
online transactions and as to games have been played of stakes, whether
owners have made profit or gains or if there was any gambling in this.
The detailed investigation made in the present case brings out the facts
which would lead to the inference of betting, making profits and playing
for stakes. These facts have not been considered so far in any of the court
judgements. In many cases, the High Courts have directed the GST
Authorities to examine the taxation issues and left those questions
undecided by it.

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L. Further, under section 70 of CGST Act, 2017, the Division
Bench of Bombay High Court in Criminal Public Interest Litigation Stamp
No. 22 of 2019 (Gurdeep Singh v. Union of India 2019 SCC Online BOM
13059), had decided as to whether online gaming sports would be
gambling under the provision of Public Gambling Act, 1867 and whether
there is alleged evasion of GST payable under the CGST Act read with
Rule 31A of CGST Rules, 2017. This Writ Petition was dismissed on both
grounds by the Bombay High Court on 30.04.2019. The petitioner in the
impugned case preferred SLP (Criminal) Diary No. 43346/2019 before the
Hon’ble Supreme Court. The Union of India preferred SLP Diary No.
41632/2019 against the very same decision challenging the taxability of
online gaming under GST. The Hon’ble Supreme Court, vide order dated
13.12.2019, dismissed the SLP filed by Gurdeep Singh Sachar, (Public
Interest Litigant) (SLP Criminal Diary No. 43346/2019) however, as
against the Union’s appeal in SLP Diary No. 41632/2019, it passed the
following order, ‘It is open for the Union of India to apply for a review in
so far as the GST aspect is concerned before the High Court of Bombay.
‘If this is done within a period of 4 weeks from today the review petition
would be disposed off on merits’. This review petition is still pending in
the Bombay High Court.

Importantly, this very same decision of the Bombay High Court rendered
in CRL PILS No. 22/2019, dated 30.4.2019, was also challenged by the
State of Maharashtra (the State GST Authorities before the Hon’ble
Supreme Court in Special Leave Petition Criminal Diary No. 42282/2019
and Hon’ble Apex Court on 6.3.2020 was pleased to pass the following
orders, ‘until further orders, there shall be a stay of operation of the
impugned judgment and the order passed by the Bombay High Court’.
Therefore, this judgment of the Bombay High Court expressing its view
on online gaming is stayed by the Hon’ble Supreme Court.

In these circumstances, any reference to the decision of the Division

Bench of this Hon’ble Court rendered in the case of All India Gaming
Federation v State of Karnataka (2022 SCC online KAR 435) will be of no
avail as that was a challenge on the Legislative competence and

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 Constitutional validity of the Karnataka Police Act, and Goods and
Service Tax was not even a party to that case and more importantly the
Court has appreciated that factual inquiries and investigations would
indeed make a difference and distinction to a matter after referring to the
judgment of the Hon’ble Supreme Court in the case of M.J. Shivani Vs.
State of Karnataka (1995 6 SCC 289). A detailed factual investigation has
been made in this case and those facts were never before the Division
Bench to consider. More importantly, this very matter came up for
hearing before the Hon’ble Supreme Court in SLP (C) No. 8794–
8805/2022 and on 16.09.2022 and the Hon’ble Supreme Court was
pleased to issue notice and tag the matter with SLP (c) 19981-19988 of
2021. The same issue decided by the Hon’ble Madras High Court in
Junglee Games India Pvt v State of Tamil Nadu (2021 SCC Online Mad
2762), similar to the Division Bench of the Karnataka High Court, has
already been appealed to the Hon’ble Supreme Court in the batch of
cases SLP (C) No. 19981- 19988/2021 and the Hon’ble Supreme Court
has issued notice in the matter on 09.09.2022 and since all the
Respondents took notice (which includes M/s. GTPL), formal notice was
waived. The Hon’ble Supreme Court has granted time to file affidavits
and rejoinders, and listed the matter after ten weeks. It is, therefore,
important to submit that these decisions have not attained any finality
and the Hon’ble Apex Court is yet to pronounce its verdict. In the
alternative, none of the cases have gone into the facts and the angles in
which the DGGI (Hqrs.) has investigated M/s. GTPL and therein the
scope of challenge was limited to the legislations brought into effect by
the respective States. To the contrary, the DGGI (Hqrs.) have carried out
meticulous investigations over the past year into the affairs of M/s.
GTPL.

9. BETTING

9.1. Since the activities being performed by the noticee company were
indicating betting, it would be prudent to understand the concept and
definitions of betting first.

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9.2. Kautilya's Arthshastra defined betting as something that involved
challenges and was concerned with cock fights, animal races and similar
contests. This definition may not be very apt in today's time but it lays basic
principles of defining betting in the course of the emergence of different forms of
wagering.

9.3. Sir William Raynell Anson (1843 -1914), a renowned British jurist has
defined a wager or bet as "A promise to give money or money's worth upon the
determination or ascertainment of an uncertain event.”

9.4. The Finance Act, 1994 defined "Betting or Gambling" under Section 65-
B(15) as: 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.

9.5. Cambridge English Dictionary defines gambling as "the activity of risking

money on the result of something, such as a game or horse race, hoping to
make money.

9.6. According to the Oxford English Dictionary, "Betting can be defined as an

action of gambling money on the outcome of a race, game, or other
unpredictable event"

9.7. According to the Black's Law Dictionary gambling is defined as "the act of
risking something of value for a chance to win a prize." The United Kingdom
Gambling Act, 2005 defined betting as the "making or accepting of a bet on the
outcome of a race, competition or other event or process, the likelihood of
anything occurring or not occurring; or whether anything is or is not true."

9.8. As per www.lawinsider.com/dictionary, Betting means an arrangement

that involves risking money or another valuable thing on an event which has an
uncertain result.

9.9. The new Encyclopaedia Britannica defines gambling as "The betting or

staking of something of value, with consciousness of risk and hope of gain on
the outcome of a game, a contest, or an uncertain event the result of which may
be determined by chance or accident or have an unexpected result by reason of
the betters’ miscalculations".

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9.10. Betting is an agreement between two parties where the one who
makes an incorrect prediction about an uncertain outcome will forfeit
something to the other. Betting is wagering money on the outcome of a game,
race, or other unpredictable events. Betting is typically an agreement between
two parties. This agreement is called a bet or wager. The one who loses has to
pay the agreed amount to the other party. They involve three main elements:
the amount wagered, risk/chance, and the prize.

9.11. The Hon’ble Supreme Court in the case of Dr. K R Lakshamanan v

State of Tamil Nadu wherein vide para 3 had extracted Black’s Law Dictionary
and observed that according to Black's Law Dictionary (Sixth Edition) "gambling
involves, not only chance, but a hope of gaining something beyond the amount
played. Gambling consists of consideration, an element of chance and a
reward"...... Gambling in a nut-shell is payment of a price for a chance to win a
prize. Games may be of chance, or of skill or of skill and chance combined.
Hon’ble High Courts of Karnataka, Kerala and Madras have set aside the
amendments in state laws in order to allow betting on online games of skill.
Further submitted that though “gaming” does not include a lottery but
includes all forms of wagering or betting.

9.12. As regards to GST taxability it is clear that lottery, betting and gambling
are well-known concepts and were regulated and taxed by legislations. CGST
Act, 2017 defines the goods to include actionable claims and includes only
three categories of actionable claims, i.e., lottery, betting and gambling for
purposes of levy of GST. Further, the law is clear that such activities are res
extra commercium.

10. INVESTIGATIONS DONE

10.1. As has been brought out in the preceding paragraphs, on the basis of
specific intelligence indicating evasion of GST by M/s. GTPL, investigations
were initiated against them through conducting searches on various premises
of M/s. GTPL from 11th to 13th November, 2021. Various statements of
personnel of M/s. GTPL were recorded, data related to their transactions were

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resumed, documents and other articles believed to be relating to the suspected
evasion were resumed.

10.2. Initially, it was assessed that M/s. GTPL was evading GST to the tune of
Rs. 419 crores for the period Nov, 2017 to Oct, 2021. Keeping in view the
enormous revenue at stake and the non-cooperative attitude of the employees
of M/s. GTPL, in order to safeguard the revenue, the nine bank accounts as
informed by M/s. GTPL were provisionally attached under Section 83 of the
CGST Act, 2017 read with Rule 159 of the CGST Rules, 2017. The noticee filed
objections under Rule 159(5) of the CGST Rules, 2017. The competent
authority, after granting a personal hearing and considering all the facts on
record, did not find it fit to grant any relief as requested by M/PL .

10.3. The noticee company filed a Writ petition dated 02.12.2022 before the
Hon’ble High Court of Karnataka against the provisional attachments and the
order dated 30.11.2021 praying therein for
(a) quashing the order dated 17.11.2021 passed by DGGI
(b) quashing the order dated 30.11.2021 passed by DGGI
(c) refunding the amount of Rs. 20 crore voluntarily paid by them during
search proceedings, and
(d) directing the respondents not to take any coercive action against the
noticee.

10.4. The Hon’ble High Court was pleased to pass an interim order dated
03.12.2021 wherein, they allowed the operation of the nine bank accounts of
the noticee company but to a limited extent of discharging the statutory
liabilities, salaries and making payments to customers.

10.5. During the investigations while recording statements, it emerged that

M/s. GTPL were changing their stand repeatedly with respect to issuance of
invoices and the deductions claimed by them for reaching the taxable value for
payment of GST. In this regard, it is noteworthy to mention that at the time of
the search M/s. GTPL provided 26 numbers of sample invoices which were
issued on a monthly basis. M/s. GTPL was inquired about the legal provision
for missing monthly invoices, instead of invoices for each transaction. Then in
their email dated 25.11.2021, the noticee company submitted more than 29

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thousand invoices shared through Google Drive. These invoices were issued on
the basis of each transaction. Thereafter, the noticee company submitted more
than 72 lakh invoices through a hard drive on 01.12.2021. It is noteworthy that
the noticee company filed a rejoinder dated 06.01.2022 in the Hon’ble High
Court of Karnataka. M/s. GTPL has made an averment in para 7.2(b) of said
rejoinder, whereby it tried to suggest that the law allows the noticee company to
not issue invoices having taxable value below Rs.200/- as per the provisions of
section 31(3)(b) of CGST Act, 2017 read with proviso to Rule 46 of CGST Rules,
2017 and wrongly submitted that the department have acknowledged the said
fact. M/s. GTPL has itself admitted in the said para that “the petitioner adopted
this position and has therefore admittedly not issued invoices to customers.”
Whereas, in the same rejoinder in the beginning of para 7.2(c) M/s. GTPL also
admitted that section 31(3)(b) of CGST Act, 2017 read with proviso to Rule 46 of
CGST Rules, 2017 allows a taxpayer not to issue “any tax invoice” (for all such
transactions below Rs. 200/- at the end of the day) however, a consolidated
daily invoice has to be issued, which M/s. GTPL, now admittedly, has not done
ever. The noticee has further admitted the fact that it does not dispute the
department’s contention that they have failed to issue any such invoice during
the relevant period. Then the noticee goes on to claim this non-compliance as a
merely technical breach and not evasion of tax. The noticee submits that the
same is neither required to be reported nor any specific consequence is
provided for not adhering to the same.

10.6. Similar claims also have also been made in the said rejoinder dated
06.01.2022 in respect of such invoices with taxable value above Rs.200/- each
(to which the proviso to Rule 46 read with section 31(3)(b) of the CGST Act,
2017 does not apply) and the discounts, if any, in such transactions were
admissible as deductible from taxable value only if such discounts were duly
recorded in the invoice issued in respect of such supply of service or goods as
provided in section 15(3) of the CGST Act, 2017. The noticee company has tried
to underplay this contravention of the CGST Act, 2017 by submitting that they
have always been capturing and generating invoicing data and have been filing
GST Returns on the basis of such data.

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10.7. As discussed herein above in detail, M/s. GTPL, during the court
proceedings and while tendering their various statements for investigations,
tried to brush aside the issue of non-issuance of invoices and claiming the
deductions despite not fulfilling the conditions under Section 15(3) in GST Law
as merely technical breach. In this regard, it is evident that M/s. GTPL has
been making inadmissible deductions of amounts claimed to have given away
as bonuses, incentives, instant cash bonuses etc. to its customers to motivate
them to play more and more. The personnel of the noticee company have
admitted in their various statements that the nature of such various types of
bonuses, incentives and cash bonuses was provided to customers mostly, when
the game was completed and the amount used by their customers for ‘buy-in’
for the games was being appropriated. The noticee has been wrongly claiming
such incentives etc. as discounts claiming these to be their marketing
expenses. Such incentives did not qualify to be deductible as discounts.
Further, the provision of section 15(3) in GST law to claim any discount as
deductible from gross earnings to reach a taxable value was that the said
amount claimed as discount shall be duly recorded in the invoice issued in
respect of such supply of service or goods. M/s. GTPL has not issued even a
single invoice at all and this was in gross violation of section 31 of the CGST
Act, 2017 which attracts penalty under section 122, 125 and strict legal action
under various other sections of the Act. The noticee company and its personnel
have been trying to assert that nothing has gone wrong if it has not issued any
invoices. It is a fact beyond doubt that M/s. GTPL may have claimed that it was
merely a technical fault, but it involved lakhs of its customers not receiving any
invoices. Further, being an internet-based technology, having digital money flow
and auto recording of data did not absolve the petitioner from observing the
provisions of law and payment of correct GST. Non-issuance of invoices,
claiming ineligible deductions, evasion of huge amount of revenue and
thereafter creation of invoices when asked for during the investigation
apparently establishes the mens rea of the petitioners to evade GST. By no
stretch of imagination this can be brushed aside as a ‘mere technical error’.

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Whether the activity of M/s. GTPL amounts to Betting:

10.8. The statements of various personnel of M/s. GTPL, indicate as follows;

1. M/s. GTPL has not been issuing any invoices.
2. Despite not having issued any invoice they have claimed deductions
against the provisions of law.
3. M/s. GTPL was paying duty on the net commission which was equal to
the gross commission received minus all the bonuses, discounts etc.
4. M/s. GTPL were giving cash discounts and bonuses in order to induce
the players to play more and more and to spend more time on the
platform and bring back the dormant or inactive customers.
5. that the player who adds more money to the deposit wallet of the
platforms of M/s. GTPL gets a better pack (bonus)
6. that special bonuses and instant cash back were also given to customers
who had been dormant for some time to activate them again to start
playing on M/s. GTPL’s platforms..
7. that bonus packs and instant cash backs were also given to customers
with objectives to increase the frequency of the players on the platforms.
8. that they also used to give referral bonus to the players who bring other
new players not already in the system
9. that commission was charged on each and every buy-in irrespective of
the payment for the same from the winning wallet or deposit wallet of the
player and hence the face value of the bet was actually the buy-in
amount on the platforms of M/s. GTPL.
10. M/s. GTPL never mapped the playing skills of the players/ gamers/ retail
customers

10.9. During the investigation, on the basis of the statements tendered by

personnel of M/s. GTPL and from the online searches on the feedback provided
by the customers of M/s. GTPL (gamers/players) it appeared that they were
inducing the players to play more and more, to spend more time on their
platform and to put more and more stakes on the gameplays. It also appeared
that through their various discounts/bonuses M/s. GTPL was not only

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discouraging the gamers/players to withdraw the amount of money back to
their bank accounts but was inducing such players to spend more and more
time with more money add-ons to their platform to bet on these games. It may
be further concluded that as the platform doesn’t differentiate between whether
the buy-in amount comes from winning wallet or deposit wallet of the player
and commission was charged on each and every buy-in irrespective of the
payment for the same from winning wallet or deposit wallet of the player and
hence the face value of the bet was actually the buy-in amount on the platforms
of M/s. GTPL. This apparently leads the players to play more games, recycling
the amount won by some players in a cyclic fashion to play more games as the
players were able to utilize money in their winning/withdrawal wallet for
playing more games. This discernibly substantiates the fact that although the
‘Add-cash’ amount was approximately Rs.20,262 Crores for the period up to
June 2022, the total ‘Buy-in’ for these platforms during the relevant period
comes to about Rs.77,769 Crores and that shall be the face value of the bet in
terms of Rule 31A of CGST Rules, 2017, as amended. It also appeared that
although the noticee company is claiming the games played on their platforms
as a game of skill, however, there was no mechanism to assess the skillsets of
the competing players in the games being provided by M/s. GTPL.

10.10. In this regard, various judgments of the Hon’ble Supreme Court and
various Hon’ble High Courts were studied. The leading judgment on the game of
rummy is State of Andhra Pradesh v K. Satyanarayana ibid wherein the
Hon’ble Supreme Court while dealing with rummy and holding it to be a game
of skill, proceeded to caveat the following that "if there is evidence of gambling
in some other way or that the owner of the house or the club is making a profit
or gain from the game of rummy or any other games played for stakes, the
offence may be brought home."

10.11. Similarly in the case of M.J. Sivani and Ors vs State Of Karnataka
and Ors, the Hon’ble Supreme Court has specifically stated that Ordinary
common people who join the game can hardly be credited with skill for success
in the game and that when in a game the element of chance strongly
preponderates, it cannot be a game of mere skill. Similarly in the case of Dr. K
R Lakshmanan v. State of Tamil Nadu & Anr the Hon’ble Supreme Court of

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India observed that the throw of the dice, the turning of the wheel, the shuffling
of the cards, were all modes of chance. Further, the Hon’ble Supreme court has
commented that in a game of skill - although the element of chance necessarily
cannot be entirely eliminated - is one in which success depends principally
upon the superior knowledge, training, attention, experience and adroitness of
the player. In the same judgement, the Hon’ble Madras High Court further
observed that “For the purposes of this definiting, wagering or betting shall be
deemed to comprise the collection or soliciting of bets, the receipt of distribution of
winnings or prizes, in money or otherwise, in respect of any wager or bet, or any
act which is intended to aid or facilitate wagering or betting or such collection,
soliciting, receipt or distribution”.

10.12. It is obvious that M/s. GTPL does not provide any information to its
players/ gamers/ retail customers about the game playing skills of other
players on any table, where they were being sent by the M/s. GTPL’s algorithm
to play a game, as admitted by founders and other personnel of M/s. GTPL (in
their statements as referred to in Para 7.21, 7.22 and 7.23 hereinabove).
Further according to these statements of various officials of M/s. GTPL, the
only measure their software follows to determine a table to which a new joining
player was to be sent to, was the financial/ monetary stake which the incoming
player placed as a ‘Buy-in”, irrespective of any other skill of any of the players
on the particular table. This apparently rendered an unmistakable,
incontestable and undisputed chance to the games being organized by M/s.
GTPL.

10.13. In the present case all the three ingredients as provided under the
caveat in the case of State of Andhra Pradesh vs K. Satyanarayana are present
with the noticee company inasmuch as they were earning huge profit and the
games were played for stakes. It is also clear that the noticee company was
inducing the players to play more and more and to put more and more money
on the stakes which satisfies the Hon’ble Supreme Court’s observations in the
matter of Dr. K R Lakshmanan v. State of Tamil Nadu that definiting,
wagering or betting shall be deemed to comprise the collection or soliciting of bets,
the receipt of distribution of winnings or prizes, in money or otherwise, in respect
of any wager or bet, or any act which is intended to aid or facilitate wagering or

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betting or such collection, soliciting, receipt or distribution. It is also clear that
there were no mechanisms at all for the players for identifying the skillsets of
the competing player, thereby bringing in a certain predominance of chance
instead of skills.

10.14. Vide e-mail dated 12.07.2022, this office sought the data regarding the
number of ‘Cash and Non-cash’ games played on their platforms which was
provided by them vide their email dated 14.07.2022 (RUD-47). The
quantification of these numbers of non-cash games vis-a-vis the total games
shows that non-cash games were played by a large number of players/gamers
on the platforms of the noticee company. Yet the company motivates and
induces the players to play cash games by giving them various bonuses which
can be used only when they play the cash games. The fact that non-cash games
were also being played on their platform clearly shows that the cash games
which were being played amounts to betting which also meets the basic premise
as laid down by the Hon’ble Supreme Court in the caveat provided in the
judgment of State of Andhra Pradesh vs K. Satyanarayana.

10.15. Accordingly, it appeared that the activity undertaken by M/s. GTPL was
in the nature of betting. The source data for the period up to March 2020 was
downloaded and resumed during the search operation from 11.11.2021 to
13.11.2021. Further source data for the period April 2020 to October 2021 was
submitted by M/s. GTPL on 25.11.2021 in an external HDD. For further
investigation in the matter, an inspection was conducted on 21.07.2022 and
22.07.2022 by DGGI officers in the office of M/s. GTPL to collect the source
data pertaining to the period Nov, 2021 to June, 2022; to record further
statements and to study the algorithm of the platform of M/s. GTPL, in order to
conclude the investigations efficiently and quickly. Sh. Ramesh Prabhu, CFO of
M/s. GTPL was informed telephonically on 19th July, 2022 about the proposed
visit of Departmental officers for inspection starting from 21.07.2022.

10.16. Summonses were issued to Shri Deepak Singh, Founder-Director; Shri

Vikas Taneja, CEO; Shri Prithvi Raj Singh, Founder and CEO – Existing
Business, M/s. GTPL and Shri Deepak Kumar Jha, Head of New Business,
M/s. GTPL for their presence on 21.07.2022 in the office of M/s. GTPL for

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recording of their statements. M/s. GTPL, vide its email dated 20.07.2022,
informed that Shri Vikas Taneja, CEO and Shri Deepak Kumar Jha will not be
available during the inspection as they were travelling.

10.17. The officers, along with a team of Professor & Research Assistant from
IIT Delhi and Forensic Experts visited the new office of M/s. GTPL which is now
located at Prestige Tech Park II (Exora Business Park), Elnath Block, Wing B,
2nd Floor; Kudubeesanahalli, Bengaluru 560103.

10.18. During the said inspection, the source data for the period November
2021 to March 2022 was retrieved by the expert team accompanying the
officers with the help of technical personnel of M/s. GTPL. Certain other
technical documents including design, architecture, Flow Charts, Product
Review documents of Rummy Software and the copies of ISO, No-bot
Certificate, RNG Certificate were also obtained. Voluntary statements of Shri
Abhishek Updhyaya, Director of Engineering, Rummy Culture Division, M/s.
GTPL; Shri Prithvi Raj Singh, Founder & CEO- Existing Businesses, M/s. GTPL;
Shri Deepak Singh, Founder Director, M/s. GTPL and Shri Ramesh Prabhu,
CFO of M/s. GTPL were recorded under Section 70 of the CGST Act, 2017
during the course of inspection proceedings on 21/22.07.2022, details of which
are given in subsequent paras.

10.19. Statements of Ms. Neha Gupta, Shri Divya Alok and Shri Sharath
Chandran, (tendered on 01.12.2021, 15.12.2021 and 16.12.2021 respectively)
were recorded during the course of investigation. In these statements it was
clearly made out that once a player adds money to its deposit wallet, the player
was not allowed to withdraw it unless he uses the money to play game(s) on
their platform and wins to carry over only the winning amount or discount
bonus given by M/s. GTPL in the winning or withdrawal wallet. This clearly
shows that the noticee company induced their players to necessarily play more
and more to use the money deposited by the players, which in turn gave them
an opportunity to earn more revenue, since they were deducting their
revenue/commission on the basis of face value of each bet on their platform.
Further, the statements also revealed that the player who adds more money to
the deposit wallet of the platforms of M/s. GTPL gets a better pack of bonus. It

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also came to light that bonus packs and instant cash backs were also given to
customers who had been dormant for some time. This scheme was apparently
used to increase the gaming frequency of the players. Another type of
inducement that the noticee company resorted to and which was admitted in
their statements as mentioned in Para 7.5, 7.6, 7.9,7.10 and 7.19 hereinabove,
was that they also used to give referral bonus to the players who brought other
new players not already in the system. It has also been submitted in the
statements that bonuses given by M/s. GTPL to its players were not absolute,
inasmuch as the bonuses expire within a short period and can be adjusted only
against the rake fee/platform fee/commission chargeable from the players for
playing games.

10.20. Further, the data in relation to the ‘add-cash’ wallet (which was the
deposit wallet of a player/gamer/retail customer) was sought during the
recording of the statements of Shri Ramesh Prabhu, CFO and Shri Samir
Dharnidharka, Head-Taxation of the noticee company on 28/29.06.2022. They
submitted the requisite data through e-mail dated 29.06.2022 after obtaining
the same from their office. This directorate sent an e-mail dated 02.07.2022
requesting them to clarify whether add-cash figures were inclusive of GST or
not. M/s. GTPL vide their email dated 04.07.2022 replied in detail that
‘contention of your good office to enquire whether the ‘add cash’ amount is
inclusive of GST appears to be misplaced as the GST liability cannot be assessed
unless the user participates and uses his money balance to play a game.” They
further submitted that add-cash was just a money transaction wherein no
supply takes place through the mere addition of money into the customer’s
wallet. The amount lying in the deposit wallet or winnings wallet of the user
was held in a fiduciary capacity by the company. He further stated that the
event occurs when the customer uses the amount in his deposit wallet towards
‘Buy-in’ for putting stake while playing a game on the gaming platform. He also
stated in his e-mail that the ‘Buy-in’ amount can be bigger than the ‘Add cash’
amount on the platform. The data was provided by the noticee company vide
email dated 11.07.2022 and 15.07.2022.

10.21. Statements of Shri Prithvi Raj Singh, CEO-Existing Businesses, Shri

Deepak Singh, Founder-Director of M/s. GTPL and Shri Ramesh Prabhu, CFO

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of M/s. GTPL (21.07.2022 and 22.07.2022 as detailed hereinabove in para 7.18
to 7.20 respectively) were recorded in the office of M/s. GTPL during the course
of investigation. In these statements they also admitted to using bonuses to
induce the players as detailed in previous para and it was clearly made out that
whenever the next game started then commission would be charged from the
buy-in amount. They also submitted that the platform doesn’t differentiate
between whether the buy-in amount comes from winning wallet or deposit
wallet of the player. This clarifies that commission was charged on each and
every buy-in irrespective of the payment for the same from winning wallet or
deposit wallet of the player and hence the face value of the bet was actually the
buy-in amount on the platforms of M/s. GTPL.

10.22. The ‘Buy in’ qualifies as the actionable claim in the form of chance to
win as the ‘buy-in’ denotes the face value of the bet as the founders of M/s.
GTPL’s personnel have also admitted in their various statements that ……
which comprises the platform fee payable to Gameskraft and contribution
towards pool money distributable to the winner of the game. Hence, it
transpires that the buy-in amount is the face value of the bets (taxable value
under Rule 31A of the CGST Rules, 2017 for betting).

10.23. It, therefore, appears that the noticee company was involved in the act
of inducing and supplying betting as actionable claims as a chance to win in
betting/ gambling in the garb of a game of skill.

10.24. The IIT Delhi experts accompanied the officials of DGGI Headquarters
for Inspection at M/s. GTPL’s office to study the data thoroughly and submit a
report about the main features and attributes in M/s. GTPL’s software
architecture and the details about user behavior traits and characteristics.

10.25. REPORT PROVIDED BY IIT-DELHI:

During the inspection conducted on 21st and 22nd July 2022, the experts from
Indian Institute of Technology, Delhi accompanied the departmental officers to
assist the officers in studying the software architecture and analyse the data for
subsequent period viz November 2021 to March 2022.

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Digital copies of the documents and the literature submitted by Sh. Abhishek
Upadhyay, Director of Engineering, Rummy Culture Division of M/s. GTPL
during the statement, were handed over to the experts from IIT, Delhi for
further examination at their end.

IIT Delhi in its report dated 16.08.2022 listed the following observations:

i. From all such users, who have played more than 5 times in the preceding
two months, 82% users were winners.

ii. IIT Delhi provided a sample list of 7 users, whose abnormal playing
behaviour were observed as under:

a. User ID 8879293 has spent a total amount of Rs.70,42,500 in

a span of 3 months.
b. User ID 7126802 and 43520051 have a very high win rate i.e.
3496 and 2964 respectively.
c. User ID 43520051 spent heavily in M/s. GTPL games for two
months continuously but no records were found for the
preceding month.
iii. They have also observed that many users have played continuously more
than 5 hours per day without break and hence their ID’s need to be verified.

10.26. IIT, Delhi observed that there is a high possibility that a system
can be implemented with that information (regarding users) that can be flagged
automatically, once the user with that particular ID is logged in to the platform.
Accordingly, there is a high chance of manipulating / providing the intended
table to play for their advantages.

The report dated 16.08.2022 of IIT Delhi is placed as RUD-48

10.27. Thereafter, IIT Delhi submitted a further report dated 07th Sept,
2022, which among other things suggests as follows-

There is a high possibility that a system can be implemented with that

information that can be flagged automatically, once the user with that
particular ID is logged in to the platform. Accordingly, there is a high
chance of manipulating / providing the intended table to play for their
advantages.

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The report dated 07th Sep, 2022 of IIT, Delhi is placed as RUD-49

10.28. IITD has flagged some users, who have been active on the M/s.
GTPL’s platforms continuously for many hours; have put on stake heavily with
millions of Rupees; have won games in very high proportions as compared to
the normal users. These traits indicate heavy betting on its platform.

10.29. Further, a questionnaire containing 19 questions was sent to M/s.

GTPL vide email dated 11.08.2022 with a request to submit the reply/ data by
end of day on 13.08.2022. The queries in the said questionnaire were as under:

1. Please give the range of ‘Buy-in’ amounts of various games

(which are played with money stakes) on M/s. GTPL’s
RummyCulture and Gamezy platforms mentioning all the
levels or amounts that a customer/ player/ gamer can play
from the lowest to highest stakes.

2. Are all the players chosen to be seated in a particular table,

playing for the same amount of stakes?

3. Besides the financial stakes, are there any other qualifying

criteria designed in your algorithm in allowing the customer
to play the game at various levels?

4. How does your algorithm decide about a player to be seated

at a particular table?

5. Does M/s. GTPL inform the skillsets of the competing players

seated at a particular table before the commencement of a
particular game?

6. How does your algorithm know, identify and qualify skillsets,

if any, of each of the players seated at a particular table?

7. Does M/s. GTPL provide any option on RummyCulture and

Gamezy Platforms to its customers/ players/ gamers to
check/verify or gather information about the level of game
playing skill of other players against whom he has been
placed by company software/ algorithm, to play the game?

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8. Is M/s. GTPL making profits out of these gaming platforms?

9. Is not placement of monetary stakes the qualification for

allowing any customer to play a game, except in the case of
free games?

10. Does M/s. GTPL offer any benefits to its players for retaining
the winning amount in the M/s. GTPL wallet without
withdrawing the same?

11. Does M/s. GTPL offer any benefits to its players for playing a
certain number of games in a stretch (streaks)?

12. How does M/s. GTPL calculate its revenue?

13. What all heads of amounts credited in M/s. GTPL’s

banks/wallet are shown in bookkeeping as revenue of M/s.
GTPL?

14. How is the amount for a period from July 2017 to March
2022, of ‘Add Cash’ totaling Rs.17,773 Crores and ‘Buy-in’
totaling Rs.68,533 Crores, shown in M/s. GTPL’s books of
account? What is the accounting treatment of these
amounts?

15. Is the amount of “buy-in” totalling Rs.68,533 Crores (as

provided in your email dated 15th July 2022), the total face
value of money stakes put by M/s. GTPL’s customers/
players/ gamers, in playing the games for the period July
2017 to March 2022?

16. Who are the beneficiaries of the amount of Rs.68,533 Crores,

as provided in your email dated 15th July 2022, (the ‘Buy-in’
amount of the M/s. GTPL’s platforms) placed as monetary
stakes/ by customers/ players/ gamers for the period July
2017 to March 2022 ?

17. Does M/s. GTPL maintain a leaderboard of customers/

players/ gamers playing cash or money games (other than
tournaments) on RummyCulture and Gamezy Platforms?

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 18. Email dated 04.08.2022 sent to M/s. GTPL to provide the
month-wise total of the amount credited to the "Winning/
Withdrawal Wallet" maintained by M/s. GTPL of all the
users. Response email-Data to be provided by 12th. Kindly
provide the same.

19. Email dated 04.06.2022 sent to M/s. GTPL to provide the

month-wise total of the amount withdrawn by the customers,
from their Winning/Withdrawal Wallet to their respective
bank account(s).

In the evening of 13.08.2022, the Shri Samir Dharnidharka, Head-Taxation of

M/s. GTPL sought a time of 10 more days. The department vide an email dated
15.08.2022 were informed that all the questions in the said questionnaire are
generic in nature and requiring only facts which shall be well established in
M/s. GTPL. M/s. GTPL were given time till 18.08.2022 to send their reply.

The Head-Taxation of M/s. GTPL, vide an email dated 22.08.2022 submitted

their reply to three (03) questions viz Q. Nos. - 2, 4 and 6, all in the negative.
For the other questions they have replied that “Further we are in the process of
collating the response for the balance questions and shall submit before your
goodself as soon as possible.” M/s. GTPL submitted in the end of the email that
“For abundant clarity, it needs to be understood that a ‘game of skill’ is one
where the outcome is determined predominantly by the skill of players; it doesn’t
need to be between players of comparable degrees of skill. In an international
cricketing tournament, a team like Scotland may play against a much superior
team like India or Australia – the outcome of the game will still be determined by
the skills of players on both sides on that day and it will remain a ‘game of skill’.”
Without going into detail of the argument about this example by M/s. GTPL, the
fact is that even though two teams may have a huge difference in their skillset,
yet each team knows clearly about the skillset of the opposite team and thus
the facts about the players/ teams are declared to all, which is not the fact in
the matter of M/s. GTPL.

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10.30. M/s GTPL vide their email dated 05.09.2022, (RUD-50) submitted the
responses to queries (RUD-51) in the said questionnaire mentioned in para
10.29 hereinabove as under:
1. Please give the range of amount of ‘Buy-in’ of various games
(which are played with money stakes) on GTPL’s RummyCulture and
Gamezy platforms mentioning all the levels or amounts that a
customer/ player/ gamer can play from the lowest to highest stakes.

Response
(i) Rummy Culture (hereinafter referred to as “RC”):
The current range of buy-in for the skill-based rummy games on the
RummyCulture App is Rupees 0.02 to Rupees 10,000. The individual buy-
in amount within this range is based on the current industry trends.
(ii) Gamezy (hereinafter referred to as “GZ”)
The current range of buy-in for the skill-based games on the Gamezy App
is Rupees 1 to Rupees 50,000. The individual buy-in amount within this
range is based on the current industry trends.
2. Are all the players chosen to be seated in a particular table,
play for the same amount of stakes?
Response
We/the platforms don’t choose the games to be played by users/players;
the users/players choose the games based on the amount they want to
stake to match their skills against other players who want to play for a
similar amount.

3. Besides the financial stakes, are there any other qualifying

criteria designed in your algorithm in allowing the customer to play
the game at various levels?
Response
We are a member of the All-India Gaming federation (AIGF) which is the
self-regulating body for skill-based online gaming in India with 56 online
skill-based gaming platforms serving as its members. As a signatory to
AIGF’s charter, our platforms must conform to the standards laid down
therein – our terms of service laying down a detailed criteria for
access/usage of the platforms for each user is in conformity with the said
industry standard prescribed vide the AIGF charter. A copy of the relevant

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charter and a copy of our Terms of Service is enclosed for your kind
reference.

4. How does your algorithm decide about a player to be seated at

a particular table?
Response
In all our platforms/apps, the players choose the games they want to play
and the amounts they want to stake for matching their skills against other
players; the platforms only match the players to available tables based on
that criteria. Players also have the option to hone their skills by playing
free games. Additionally, on the RummyCulture App, a user that has
registered on the platform in the last 7 days or less and is attempting to
play a game of uptoRs 100, is matched with another user matching that
criteria. This is to ensure that new users get adequate opportunities to
hone their skills before attempting to play for higher stakes.

5. Does GTPL inform the skillsets of the competing players

seated at a particular table before the commencement of a particular
game?
Response
Players can choose to play for stakes or play free games (ie., games with no
amounts at stake) to hone their skills further; if they choose to play for
stakes, the players choose the games they want to play and the amounts
they want to stake for matching their skills against other players and
based on those criteria they get allocated to a particular table. On the
RummyCulture App, upon joining a game, information such as date of
joining the platform, points earned in earlier games by a player becomes
available to all users/players playing that game. To the best of our
knowledge, the RummyCulture App is the only app in the industry that
shows such information to the user in a game.

6. How does your algorithm know, identify and qualify skillsets,

if any, of each of the players seated at a particular table?
Response
None of our apps record the level of skills of any user/player.

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For abundant clarity, it needs to be understood that a ‘game of skill’ is one
where the outcome is determined predominantly by the skill of players; it
doesn’t need to be between players of comparable degrees of skill. In an
international cricketing tournament, a team like Scotland may play against
a much superior team like India or Australia – the outcome of the game
will still be determined by the skills of players on both sides on that day
and it will remain a ‘game of skill’.

7. Does GTPL provide any option on RummyCulture and Gamezy

Platforms to its customers/ players/ gamers to check/verify or gather
information about the level of game playing skill of other players
against whom he has been placed by company software/ algorithm, to
play the game?
Response
With respect to the RummyCulture App, upon joining a game, information
such as date of joining the platform, points earned in earlier games
becomes available to users/players and they may decide to continue
playing on that basis.

No information about other players is shared on the Gamezy app.

8. Is GTPL making profits out of these gaming platforms?

Answer
No, it doesn’t profit from the gaming platform but earns its revenue from
the service fee charged from players for access/usage of the platforms to
match their skills with other players.

As explained repeatedly in our past submissions, we wish to reiterate that

the Gameskraft is engaged in the business of operating intermediary
technology platforms to enable any person to match their skill with that of
the skill of another person or persons. The Company earns platform fee
(net of discounts) from the players for providing the technology services. In
addition to the above, the Company also earns revenue from providing its
technology services to third parties for a consideration.

9. Is not placement of monetary stakes the qualification for

allowing any customer to play a game, except in the case of free
games?

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Response
No, it is not.

10. Does GTPL offer any benefits to its players for retaining the
winning amount in the GTPL wallet without withdrawing the same?
Response
The Apps do not offer any benefits to its users for retaining any amount in
the wallet associated with their App-accounts.

11. Does GTPL offer any benefits to its players for playing certain
number of games in a stretch (streaks)?
Response
No, GTPL doesn’t offer any benefits to its players merely for playing a
certain number of games in a stretch. On occasion there may be a loyalty
program based on the number of games played by a user.

12. How does GTPL calculate its revenue?

Response: As mentioned above, GTPL earns its revenue from the service
fee charged from users for access/usage of the platforms to match their
skills with other users.

In addition to the above, Gameskraft also earns revenue from providing its
technology services to third parties against a consideration.

13. What all heads of amounts credited in GTPL’s banks/wallet are

shown in book keeping as revenue of GTPL?
14. How does the amount for a period from July 2017 to March
2022, of ‘Add Cash’ totalling Rs.17,773 Crores and ‘Buy-in’ totalling
Rs.68,533 Crores, shown in GTPL’s books of account? What is the
accounting treatment of these amounts?
Response to Q13 and Q14
The response to question 13 and 14 has been provided jointly for the sake
of avoiding repetition. GTPL earns its revenue from the service fee charged
from users for access/usage of the platforms to match their skills with
other users. In addition to the above, Gameskraft also earns revenue from
providing its technology services to third parties against a consideration.

It is to be noted that the “buy in” for the games hosted over our platforms
comprise of prize pool money and platform fee which is identified before

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the gameplay itself. The buy-in amount to the extent of the prize pool is
not recognized as revenue in the books of accounts. In this context, it may
be noted that our practices are in conformity with the decision laid down
by the Supreme Court confirming the Bombay HC decision in Gurdeep
Singh Sachar v. Dream11 Fantasy Private Limited [2019 (6) TMI 1008
– Bombay High Court] .

The amount credited by the Users to their wallets, i.e., ‘Add Cash’
amounts, is maintained by the Company only in a fiduciary capacity and
treated as a liability since it is not in the nature of any consideration for us
but merely an amount that a user is entitled to use in a gameplay or
withdraw it back to his/her bank account solely at his/her discretion.

Therefore, only the platform fee charged by the Company is treated as

revenue and recognized in its books of accounts. This is in line with
guidelines as laid down by All India Gaming Federation and in conformity
with standard industry practice apropos online skill based gaming
platforms.

15. Is the amount of “buy-in” totalling Rs.68,533 Crores (as

provided in your email dated 15th July 2022), the total face value of
money stakes put by GTPL’s customers/ players/ gamers, in playing
the games for the period July 2017 to March 2022?
Response: The total amount of ‘buy-in’ bought by users by availing the
‘add-cash’ option i.e., through direct deposit is Rs.17,773 crores. The total
‘buy-in’ amount gets increased to Rs.68,533 crores owing to users/players
also using their winning amounts accumulated by then, in addition to the
amounts directly deposited through the ‘add-cash’ option. That is why, the
total amount of buy-in far exceeds the cash being added to their wallets by
the users since the winnings amounts can be used to undertake further
buy-in without requiring any additional deposit of cash subsequently. For
abundant clarity, it is only Rs.17,773 crores that gets deposited with
Gameskraft in a fiduciary capacity and not the entire buy-in amount of
Rs.68,533 crores. This is explained with the help of the illustration below:

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 PLAYER A PLAYER B

Deposit Winning Deposit

Particulars wallet wallet wallet Winning wallet

Add cash 1,000 - 1,000 -

PLAYER A PLAYER B
Game 1

Buy-in -500 - -500 -

Outcome: Player
A wins the game
(10% of total buy-
in assumed as
Gameskraft
platform fee) - 900 - -

Game 2 PLAYER A PLAYER B

Buy-in -500 - -500 -

Outcome: Player
B wins the game
(10% of total buy-
in assumed as
Gameskraft
platform fee) - - - 900

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Game 3 PLAYER A PLAYER B

Buy-in - -500 - -500

Outcome: Player
A wins the game
(10% of total buy-
in assumed as
Gameskraft
platform fee) 900 - -

PLAYER A PLAYER B
Game 4

Buy-in -400 -400

Outcome: Player
B wins the game
(10% of total buy-
in assumed as
Gameskraft
platform fee) - - - 900

otal add cash

(Player A + B) 2,000

Total buy-in
(Player A + B) 3,800

Further, as explained above, ‘buy in’ for the games hosted over our
platforms comprise of prize pool money and platform fee which is

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identified before the gameplay itself. In this context, it may be noted that
our practices are in conformity with the decision laid down by the
Supreme Court confirming the Bombay HC decision in Gurdeep Singh
Sachar v. Dream11 Fantasy Private Limited [2019 (6) TMI 1008 – Bombay
High Court] .

The amount credited by the Users to their wallets, i.e., ‘Add Cash’
amounts, is maintained by the Company only in a fiduciary capacity and
treated as a liability since it is not in the nature of any consideration for
us but merely an amount that a user is entitled to use in a gameplay or
withdraw it back to his/her bank account solely at his/her discretion.

16. Who are the beneficiaries of the amount of Rs.68,533 Crores,

as provided in your email dated 15th July 2022, (the ‘Buy-in’
amount of the GTPL’s platforms) placed as monetary stakes/ by
customers/ players/ gamers for the period July 2017 to March
2022?

Response :

The winning participating users of the online skill-based games for the
period between July 2017 to March 2022 are the principal beneficiaries
of this amount to the extent of the prize pool component of this amount.
Apart from them, a part of this amount has accrued to M/s GTPL as its
platform service fee and a portion thereof has accrued to the government
as tax revenues.

17. Does GTPL maintain a leader-board of customers/ players/

gamers playing cash or money games (other than tournaments) on
RummyCulture and Gamezy Platforms?

Response:

The RummyCulture App publishes leader-boards occasionally.

On the Gamezy app, a leader-board is published for fantasy sports

leagues during certain real time cricket series.

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18. Email dated 04.08.2022 sent to GTPL to provide the month-
wise total of amount credited to the "Winning/ Withdrawal Wallet"
maintained by GTPL of all the users. Response email-Data to be
provided by 12th. Kindly provide the same.

19. Email dated 04.06.2022 sent to GTPL to provide the month-

wise total of amount withdrawn by the customers, from their
Winning/Withdrawal Wallet to their respective bank account(s).

Response to Q18 & Q19

Response - “Already submitted to your good self via email

dated August 15, 2022.”

In essence the responses given by M/s GTPL above have been analysed
and given below:

● It is pertinent to note here that in their response to query 2, M/s

GTPL has submitted that ‘users/players choose the games based
on the amount they want to stake to match their skills against other
players who want to play for a similar amount’, this is their
admission of the fact that all the players on a table play for same
amount of stakes.
● Further, in its response to query 4 wherein they were asked about
how did their algorithm decide about a player, to be seated at a
particular table, they replied that ‘on the RummyCulture App, a
user that has registered on the platform in the last 7 days or less
and is attempting to play a game of up to Rs 100, is matched with
another user matching that criteria’ M/s GTPL has failed to mention
about matching criteria for games with buy-in or games of Rs.100
and above.
● In response to the query at S. No. 5, M/s GTPL has replied that ‘On
the RummyCulture App, upon joining a game, information such as
date of joining the platform, points earned in earlier games by a
player becomes available to all users/players playing that game’.
However, they have not clarified as to whether this information is

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 available for free games or the games played with monetary stakes
or both.
● In response to query no. 6, M/s GTPL has mentioned that none of
their apps record the level of skills of any user/player. They have
further mentioned that ‘it needs to be understood that a ‘game of
skill’ is one where the outcome is determined predominantly by the
skill of players; it doesn’t need to be between players of comparable
degrees of skill.’ However, M/s GTPL has not been able to reply as
to how its algorithms identify and qualify skill sets, if any.
Moreover, admittedly they are not maintaining any record of the
skills or levels of skills of any player.
● In response to query 8, M/s GTPL in its response has mentioned
that ‘we wish to reiterate that the Gameskraft is engaged in the
business of operating intermediary technology platforms to enable
any person to match their skill with that of the skill of another
person or persons.’ M/s GTPL has failed to respond as to how it
achieves the objective of enabling any person to match their skill
with that of the skill of another person or persons, when none of
the players is provided any information about the level of skill of
other players in the same game.
● Further in response to query no 9, M/s GTPL has replied that
placement of monetary stakes is not the qualification for allowing
any customer to play a game, except in the case of free games.
However, they have not mentioned any other qualification for
allowing the customer to play a game.
● Also in response to query 11, M/s GTPL has submitted that ‘On
occasion there may be a loyalty program based on the number of
games played by a user’ while claiming the opposite that M/s
GTPL does not offer any benefit to its players.

11. OVERALL ANALYSIS

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The issues of M/s. GTPL regarding their business activities, correct
classification of their supplies and issues regarding assessment of their taxable
value are analysed as under:

11.1. The business model adopted by M/s. GTPL, as stated by their personnel
during investigations in their statements, is that the players add money to their
online wallet. From the amount added to the wallet, M/s. GTPL deducted a
fixed percentage as commission for providing the gaming platform, whenever
the player plays game(s) on their portal. This was the commission income
(revenue) for M/s. GTPL. The noticee company gave some instant cash bonus to
the player, which was to be used by the player on the platform itself within a
specific time frame. This cash bonus was deducted from the revenue of the
company. If the bonus amount was not used within the specific time frame,
then the same was reversed and was added to the revenue of the company. The
company also provides some other types of bonuses such as Bonus, Referral
bonus, Insta-cash and Tournament incentives to the player which were also
deducted from the revenue of the company. If any player refers to someone and
the person who was being referred joins the platform, the person who had made
the referral gets a referral bonus. This referral bonus was also deducted from
the revenue of the company. The net commission (revenue) earned by the
company after deducting all the bonuses, incentives and refund was taken as
taxable income by M/s. GTPL for the purpose of discharging their GST liability.
The revenue model is further explained by way of an example:

Suppose a player deposits Rs. 1000/- in his online wallet and plays a
game for Rs 1000/-, M/s. GTPL will deduct a fixed percentage for example
10% i.e. Rs. 100 as commission. M/s. GTPL will provide Rs. 20 as cash
bonus to a player that is to be used on the gaming platform itself within a
specific time frame. This amount of Rs. 20 is deducted from the commission
income (Rs. 100). If the player fails to utilize this total cash bonus within
specific time, the remaining cash bonus for e.g. Rs. 10 is reversed and the
same is added back to the commission income. The company also provides
some additional bonus, for e.g. Rs. 20 to the player. This bonus is also
deducted from the commission income of the company. If any player refers

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 someone and the person who is being referred joins the platform, the
person who had made the referral gets a referral bonus. This referral
bonus for e.g. Rs. 10 is also deducted from the commission income of the
company. The net commission income taken as taxable income in the
above example comes to Rs. 60 on which GST is paid by the company.

TABLE-VII

Sr. No. Description Amount

(in Rs.)

1 Amount deposited by player (Buy-in) 1000

2 Commission Income 100

3 Cash Bonus 20

4 Additional bonus 20

5 Referral Bonus 10

6 Bonus Reversed (unutilized bonus) 10

Net Commission (taxable Income)

7 (2-3-4-5+6) 60

11.2. HOW DID M/s. GTPL CALCULATE THEIR GST LIABILITY:

M/s. GTPL submitted that the taxable income for GST purpose was calculated
by them as the net commission which is arrived at by the following formula:

Net Commission= Gross Commission – Bonus released – Instant Cash adjusted

to the extent of commission+ Instant Cash Reversal – Referral bonus released –
tournament incentives.

Further, M/s. GTPL was misclassifying its goods as supply as services under
SAC 998439 instead of actionable claims which were goods. The activities
undertaken by M/s. GTPL was in the form of betting which was an actionable
claim and not a service. M/s. GTPL has been paying GST @18% only on the net

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commission amount; whereas the GST tax is chargeable @ 28% as per the
provisions of law the bet value shall be the total amount of “Buy-in” or stakes
placed on the games on the online platforms of the noticee company since Rule
31A(3) provides that the value of supply of actionable claim in the form of
chance to win in betting, gambling or horse racing in a race club shall be
100% of the face value of the bet or the amount paid into the totalisator.
Hence, the total value of the Buy-in which is 100% of the face value of the bet is
the value of supply of actionable claim and thus the taxable value for the
purpose of charging GST at the rate of 28% as provided under serial number
229 of schedule IV of respective GST Acts, 2017 (CGST Act, 2017; KGST Act,
2017 and Integrated GST Act, 2017), as amended.

INVOICING ISSUE

11.3. In the instant case, M/s. GTPL has not issued any invoice to the
individual users (who were individual gamer/player/retail customer) (B2C). The
same has also been admitted by them in their Rejoinder dated 06.01.2022 filed
before the Hon’ble High Court of Karnataka. The invoices were only issued to
business customers who use their platform/ services for advertising and other
services as these service recipients claim ITC on the GST paid by them against
such invoices.

11.4. Reference is invited towards Section 15(3) of the CGST Act, 2017 which
states as under:
(3) The value of the supply shall not include any discount which is
given–

(a) before or at the time of the supply if such discount has been duly
recorded in the invoice issued in respect of such supply; and

(b) after the supply has been effected, if—

(i) such discount is established in terms of an agreement entered into at or

before the time of such supply and specifically linked to relevant invoices;
and

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 (ii) input tax credit as is attributable to the discount on the basis of a
document issued by the supplier has been reversed by the recipient of the
supply.

11.5. Further the provisions of Section 31(3) of the CGST Act, 2017 although
permit non-issuance of individual invoice to customers/players for value of less
than Rupees two hundred as per Rule 46 of the CGST Rules, however, the
assessee is required to issue consolidated invoice for such transactions. The
affidavit dated 06.01.2022 also admittedly says that the assessee has not
issued any consolidated invoices.

11.6. Section 31(3) of the CGST Act, 2017 states as under:

Section - 31 : Tax Invoice

(3) Notwithstanding anything contained in sub-sections (1) and (2) ––

(a) a registered person may, within one month from the date of issuance of
certificate of registration and in such manner as may be prescribed, issue
a revised invoice against the invoice already issued during the period
beginning with the effective date of registration till the date of issuance of
certificate of registration to him;

(b) a registered person may not issue a tax invoice if the value of the goods
or services or both supplied is less than two hundred rupees subject to
such conditions and in such manner as may be prescribed;

(c) a registered person supplying exempted goods or services or both or

paying tax under the provisions of section 10 shall issue, instead of a tax
invoice, a bill of supply containing such particulars and in such manner as
may be prescribed:

Provided that the registered person may not issue a bill of supply if the
value of the goods or services or both supplied is less than two hundred
rupees subject to such conditions and in such manner as may be
prescribed;

‘Such manner’ has been prescribed under Rule 46 of the CGST Rules, 2017,
which reads as under:

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11.7. Rule - 46 : Tax invoice

Provided also that a registered person, other than the supplier engaged in
making supply of services by way of admission to exhibition of cinematograph
films in multiplex screens,may not issue a tax invoice in accordance with the
provisions of clause (b) of sub-section (3) of section 31 subject to the following
conditions, namely,-

(a) the recipient is not a registered person; and

(b) the recipient does not require such invoice,

and shall issue a consolidated tax invoice for such supplies at the close of
each day in respect of all such supplies.

11.8. The issuance of invoice is sine qua non as per Section 31 of the CGST
Act 2017. Such invoices were necessary in order to claim any deduction from
the taxable value in terms of Section 15 of the Act. However, the noticee
company has not even issued the invoices and has claimed the deductions of
incentives. This fact has been irrefutably established by M/s. GTPLs’
admissions in 7 of the rejoinder affidavit dated 06.01.2022 before Hon’ble
Karnataka High Court, wherein they have categorically admitted that they were
not at all issuing any invoices to their customers.

11.9. M/s. GTPL have irrefutably admitted that they were not issuing any
invoices till March 2022, they have only been trying to mislead the investigation
by propagating falsehood in one statement after another. For example, while on
the one hand they have been stating that invoices have not been issued to the
customers, on the other hand they have supplied more than 72 lakhs invoices
to the investigating officers, which were generated after the investigations were
initiated as during the search they were not able to produce or commit to
produce these invoices. This fact of generation of invoices on the day of their
submission was admitted by Shri Ramesh Prabhu during his statement dated
07.01.2022. The deliberate intention to thwart the investigations is also evident
from the shifting stand of Shri Ramesh Prabhu, CFO of M/s. GTPL with regard
to issuance of invoices. The summary of all the statements of Shri Ramesh
Prabhu, CFO of M/s. GTPL is as under:

Page 81 of 136
 TABLE-VIII

Date Submission

12.11.2021
During his statement Shri Ramesh Prabhu, CFO informed
that they prepare the monthly consolidated invoice for each
user/player, but did not provide these to the user/players,
unless the player specifically requested for it. He further
submitted that M/s Ernst & Young Private Limited were
their vendor for preparing such invoices. However, when
asked for, he could produce only a handful of such invoices.
The sample invoices confirmed that they were paying GST
only on the net amount of Commission/ Rake Fee/ Platform
fee being charged by M/s. GTPL and not on the gross
commission.
17.11.2021 In his statement Shri Ramesh Prabhu, CFO of the noticee
company stated that E&Y was hired by the noticee for
generation of B2C invoices. They were generating and
distributing invoices to their customers only on their
specific request.
Less than 1% of the customers were being issued invoices
18.11.2021 In his statement the CFO stated that they need 1 week’s
time to submit the B2C invoices generated by them. They
have put in place a system to generate invoices on specific
requests of the customers. In cases where customers have
not asked for invoices, they have not generated the invoices.
On the issue of deducting discounts from the taxable value
even when the corresponding invoices have not been
generated, Shri Ramesh Prabhu, CFO could not provide any
reply.
24.11.2021 Shri Ramesh Prabhu, in his statement, stated that they
have not generated any invoices for less than Rs. 200 net
commission per game which in their case, was 99.5% of the

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 total commission earned.
25.11.2021 Vide their email dated 25.11.2021, the noticee company
have submitted more than 29 thousand invoices shared
through google drive.
01.12.2021 The noticee company has submitted more than 72 lakh
invoices through a hard drive.
07.01.2022 Shri Ramesh Prabhu, CFO stated that they have not
generated any invoices as also submitted in their rejoinder
dated 06.01.2022 submitted to the Hon’ble High Court of
Karnataka.

11.10. It is pertinent to mention that during initial investigations Shri Ramesh

Prabhu, CFO of M/s. GTPL stated that their billing is done by M/s Ernst &
Young (E&Y). However, E&Y has categorically stated that they have been only
generating B2B invoices for M/s. GTPL and not even a single B2C invoice has
been generated by them. It has further been informed that they have an
agreement with M/s. GTPL only w.e.f. 19.08.2021.

11.11. Not merely with respect to issuance of invoices, but the officials of M/s.
GTPL, have given contradictory statements almost regularly. This shows that
the noticee company has deliberately evaded the duty and have been always
trying to thwart the investigations on one pretext or another.

11.12. The personnel of M/s. GTPL in their various statements, repeatedly

submitted that they have been issuing invoices to their customers who
requested for the said invoices. However, in the affidavit dated 06.01.2022 filed
by M/s. GTPL has clearly brought out the fact that they have never issued any
invoice, which clearly indicates that they have been non-cooperative with the
investigations so far. Further, they issued about 72.5 lakh invoices in PDF
format, generated after the investigations started on the date these were
submitted to the DGGI. As soon as the noticee company and its personnel
realized that the forensic analysis of such invoices will reveal its dates of
creation and that their impropriety and fraud will be exposed which may lead to
legal action by the department, they filed an affidavit in the Court admitting the
fact of not issuing even a single invoice to their customers. Thus, the contention

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of the noticee company that the matter at hand is merely interpretative is a
blatant lie and misrepresentation of the facts.

11.13. M/s. GTPL has claimed the non-issuance of invoices as a merely

technical breach and not evasion of tax. The bare fact of the matter being that
M/s. GTPL has not complied with any of the provisions of CGST Act, regarding
claiming any deduction as discount from its taxable value even for a single time
and its personnel, including Shri Ramesh Prabhu, CFO (who has signed on the
affidavits of the Writ Petition and the Rejoinder), the founders, advisors to the
founders and other office personnel from the day of search have been mis-
guiding the investigating agency by telling blatant lies that they were issuing
the invoices.

11.14. M/s. GTPL even submitted softcopies of approximately 72.5 lakh

invoices in PDF format, generated after the initiation of investigations,
fraudulently on the date of submission of such invoices to the respondent
department, thereby mis-leading the investigating agency and contravening the
provisions of section 193 of Indian Penal Code 1860 read with section 70 of the
CGST Act, 2017.

11.15. M/s. GTPL in para 7.2(f) of the rejoinder affidavit dated 06.01.2022
stated that such “inadvertent non-issuance” of invoices has not led to any
evasion of GST whatsoever, let alone any wilful evasion.

11.16. Further, reference is drawn towards Notification No. 88/2020 – Central

Tax dated 10th November 2020, by virtue of which e-invoicing has been
mandatory under Rule 48(4) of the CGST Rules, 2017 for all businesses having
an annual turnover more than Rupees one hundred crores w.e.f. 01st January
2021. Another Notification No. 05/2021-Central Tax dated 08th March 2021,
makes e-invoicing mandatory under Rule 48(4) of the CGST Rules, 2017 for all
businesses having an annual turnover more than Rupees fifty crores w.e.f.
01stApril 2021.

11.17. The investigation has revealed that M/s. GTPL is not issuing any
invoices which is the violation of section 31 of the CGST Act, 2017 which
attracts penalty under section 122, 125 and strict legal action under various

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other sections of the Act. The noticee company is trying to assert that nothing
has gone wrong if it has not issued any invoices. It is submitted that the noticee
company may claim that it is merely a technical fault, but it involves lakhs of
its customers not receiving any invoices and GST being evaded.

11.18. Being an internet-based technology, having digital money flow and auto
recording of data does not absolve M/s. GTPL from payment of correct GST.
Non-issuance of invoices, claiming ineligible deductions, evasion of huge
amount of revenue and thereafter creation of invoices when asked for during
the investigation clearly establishes the mens rea of the noticee company to
evade GST. By no stretch of imagination these acts of the noticee company can
be brushed aside as a ‘mere technical error’.

11.19. Shri Deepak Jha, Advisor to the founders of M/s. GTPL in his voluntary
statement dated 30.11.2021 has stated that the decisions on the financial
matter taken by Shri Ramesh Prabhu were approved collectively. Shri Vikas
Taneja, advisor to the founders of M/s. GTPL in his voluntary statement dated
30.11.2021 stated that the computations and the payment of taxes was done by
Shri Ramesh Prabhu in consultation with the founders. Further, Shri Deepak
Singh, co-founder (and now Director) of M/s. GTPL in his voluntary statement
dated 06/07.01.2022 stated that the financial matters were discussed and
deliberated upon in the Board Meetings, which were attended by him, Shri
Deepak Jha, Shri Vikas Taneja, Shri Prithvi Raj Singh and Shri Ramesh
Prabhu. This evidences the fact that all the above-named persons, namely Shri
Deepak Jha, Shri Vikas Taneja, Shri Prithvi Raj Singh and Shri Ramesh Prabhu
have wilfully mis-represented that facts and figures which has resulted in
evasion of huge amount of GST.

11.20. Further the transaction wise data for the period July, 2017 till March,
2022 was called for vide Summons dated 22.02.2022 and 21.03.2022 from
M/s. GTPL in the format given below:

TABLE-IX

Page 85 of 136
 Insta Cash Bonus
Amount of Buy-in

Net Commission

Taxable Value
Transaction

GST Payable
Commission
transaction

by Players

deduction
Any other

GST paid
Incentive
User ID
Date of

Bonus
Gross
No.

11.21. A part of the data was received through a google drive link on
03.04.2022 vide e-mail (RUD-52). The officers were not able to access the same
and Shri Ramesh Prabhu, CFO of the noticee during his statement on
11.04.2022, was also shown the inaccessibility of the data, to which he agreed
in his statement. Same data was sought in an external Hard Disk Drive vide e-
mail dated 12.04.2022 (RUD-53). An External Hard Disk Drive was received in
DGGI vide letter dated 13.04.2022 . The remaining part of the data was again
received through google drive link vide email dated 13.04.2022 and again the
same was not accessible. The same data was sent M/s. GTPL in a Hard Disk
vide letter dated 18.04.2022.

HOW M/s. GTPL IS ENGAGING ITS PLAYERS/ GAMERS/ RETAIL

CUSTOMER IN BETTING:

Betting is an agreement between two parties where the one who makes
an incorrect prediction about an uncertain outcome will forfeit
something to the other. Further, as per the Law Lexicon, Second Edition
compiled by Shri P. Ramanatha Aiyer, betting is a form of wagering contract in
which money or money’s worth is made payable by the parties on the result of
an uncertain event, usually a game or sport. Wager has been defined by the
same Law Lexicon as “Something (especially a sum of money) laid down and
hazarded on the issue of an uncertain event; a stake.”

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11.22. During the investigations, it was observed that the customers of the
M/s. GTPL were predominantly playing the cash games on M/s. GTPL’s gaming
platforms, by putting-in money as stakes on such games while playing for wins
and gains in monetary terms. It was taken up for investigation to ascertain
whether the activities of M/s. GTPL amounts to betting; the classification of
activities of the noticee in GST Tariff and to ascertain the taxable value of the
supply of goods, leviable rate of Tax and amount GST payable by M/s. GTPL.

The statements of various personnel of M/s. GTPL as detailed in paras 7.1 to

7.23 hereinabove, also indicated that most of the games on their platform were
played for bets and that they were providing various forms of inducement for
playing for more and more time and to wager larger amounts. M/s. GTPL was
also giving bonus packs and instant cash backs to dormant customers to make
them active. Such bonuses were also given to customers to increase the
frequency of the players on the platforms. Referral bonuses were also being
given to customers who brought new customers on the platform. It was also
found during the investigations that commission is charged on each and every
buy-in irrespective of the payment for the same from winning wallet or deposit
wallet of the player. Further, it also appeared that through their various
discounts/bonuses M/s. GTPL was discouraging the gamers/players to
withdraw the amount of money back to their bank accounts in as much as the
player is not allowed to withdraw it unless he uses the money to play game(s)
on their platform and wins to carry over only the winning amount or discount
bonus given by the noticee company in the winning or withdrawal wallet.

In this regard, various judgments of the Hon’ble Supreme Court and various
Hon’ble High Courts were studied. Most of the judgments are on the issue of
whether such online games are a game of skill or a game of chance. Supreme
Court in Dr K R Lakshmanan v. State of Tamil Nadu; State of Andhra
Pradesh v. K Satyanarayana; and M J Sivani And Ors vs State Of Karnataka
And Ors has laid down that a game of chance is where the element of chance
predominates over the element of skill, whereas a game of skill is where the
element of skill predominates over the element of chance.

Page 87 of 136
The leading judgment on the game of rummy is State of Andhra Pradesh v K.
Satyanarayana ibid wherein the Hon’ble Supreme Court while dealing with
rummy and holding it to be a game of skill, proceeded to caveat the following
that "if there is evidence of gambling in some other way or that the owner of the
house or the club is making a profit or gain from the game of rummy or any other
games played for stakes, the offence may be brought home."

All the judgments in this regard have dealt with the penal statutes as made by
the respective state legislatures and have in not at all dealt with the taxation
matter. The issue of betting, whether it is happening or not, has not been dealt
in detail in any of the judgments cited by the assessee. On the contrary, the
judgment of Head Digital Works v State of Kerala indicates that even in a
game of skill betting is possible. None of the judgments cited by the noticee
have dealt with the technology and technical aspect of the game and how it is
played online.

11.23. Karnataka High Court, Kerala High Court and Madras High Court have
set aside the amendments in state laws in order to allow betting on online
games of skill.

11.24. As regards to GST taxability it is clear that lottery, betting and gambling
are well-known concepts and have been in practice in this country since before
independence and were regulated and taxed by different legislations. CGST Act,
2017 defines the goods to include actionable claims and includes only three
categories of actionable claims, i.e., lottery, betting and gambling for purposes
of levy of GST. Further, the law is clear that Constitution makers who set up an
ideal welfare State have never intended to elevate betting and gambling on the
level of a country's trade or business or commerce.

11.25. The State must strive to promote the welfare of the people by effectively
securing and protecting a social order in which justice, social, economic and
political, shall inform all the institutions of national life. The Constitution
Bench in State of Bombay v. R.M.D. Chamarbaugwala and Anr, AIR 1957 SC
699 has clearly stated that Constitution makers who set up an ideal welfare
State have never intended to elevate betting and gambling on the level of a

Page 88 of 136
country's trade or business or commerce. Thus, lottery, betting and gambling
were always regulated and taxed with the aforementioned objective and there is
no hostile discrimination in taxing the lottery, betting and gambling and not
taxing other actionable claims. Hence, there is no violation of Article 14 in Item
No. 6 of Schedule III of the Central Goods and Services Act, 2017.

11.26. In the leading case law of State of Andhra Pradesh v k.

Satyanarayana, the Hon’ble Supreme Court, despite ruling that rummy is a
game of skill, provides for the caveat that the game no longer remains a game of
skill when the following conditions are fulfilled- (a) evidence of gambling in
some other way or that (b) the owner of the house or the club is making a
profit or gain from the game of rummy or any other (c) games played for
stakes. These three elements are ostensibly present in the instant case, as
brought out below:

A. The fact about the condition of evidence of betting/gambling in the

games being organized on the M/s. GTPL’s online gaming
platforms the following facts were unearthed during the
investigations:

i) The Hon’ble Supreme Court observed in the matter of Dr. K

R Lakshmanan that definiting, wagering or betting shall be
deemed to comprise the collection or soliciting of bets, the
receipt of or distribution of winnings or prizes, in money or
otherwise, in respect of any wager or bet, or any act which is
intended to aid or facilitate wagering or betting or such
collection, soliciting, receipt or distribution.

In the present case, it was clearly made out from the voluntary
statements of Ms. Neha Gupta (VP-Technical), Shri Divya Alok
(Business Head of RummyCulture) and Shri Sharath Chandran
(Business Head of Gamezy), (recorded on 01.12.2021, 15.12.2021
and 16.12.2021 respectively) that once a player adds money to the
deposit wallet of M/s. GTPL, he is not allowed to withdraw the
same unless he uses the added money to play game(s) on M/s.
GTPL’s platforms and wins the game(s) to carry over only the

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winning amount or any discount bonus given by the noticee
company in the winning or withdrawal wallet. This shows that
M/s. GTPL was carrying out the collection or soliciting of bets,
the receipt of or distribution of winnings or prizes, in money
or otherwise, in respect of any wager or bet, or any act which
is intended to aid or facilitate wagering or betting or such
collection, soliciting, receipt or distribution. Further, these
statements also revealed that the players who added more money
to the deposit wallet of the platforms of M/s. GTPL gets better
packages of bonuses.

In the statements during investigations, it also came to light that

bonus packs and instant cash backs were also given to customers
who had been dormant for some time.
This scheme was similarly used to increase the frequency of the
games played by the players.
Another type of inducement that the noticee company resorted to
and which was admitted in the statements was that they also used
to give referral bonus to the players who bring other new players to
the platform who were not already in the system.
It has also been submitted in the statements that bonuses given by
M/s. GTPL to its players were not absolute, inasmuch as the
bonuses expire within a short period and can be adjusted only
against the rake fee/platform fee/commission chargeable from the
players for playing games.
These facts establish absolutely that by using various kinds of
bonuses to induce the players, M/s. GTPL was engaged in the
collection or soliciting of bets (in form of actual monetary stakes)
and in the acts which were intended to aid or facilitate wagering or
betting or such collection, soliciting, receipt or distribution and it
commensurate to betting as per Hon’ble Supreme Court’s ruling in
the above referred judgement of Dr. K R Lakshmanan v. State of
Tamil Nadu.

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ii) Hon’ble Supreme Court in the Judgement of State of
Andhra Pradesh v K Satyanarayana distinguished
categorically the game of skill vis-à-vis gambling by listing
three conditions discussed above, the rationale of
judgement given on issues related to game of rummy in the
state legislations, was without considering the caveat in the
said judgement. Many High Courts in their various
judgements on the issues of penal legislations of many
states, have ruled rummy to be a game of skill on the basis
of partial reproduction of para 12 in judgement of State of
Andhra Pradesh v K Satyanarayana by the petitioners. This
case has been investigated thoroughly with the objective of
finding presence or absence of the three conditions
mentioned in the caveat in said judgement. This has
revealed that all the three conditions were apparently
present in the cash games being played on M/s. GTPL’s
online gaming platforms, which qualify the activities in cash
games to be betting/gambling. The Founding Directors,
CEOs, CFO and other responsible personnel of M/s. GTPL
in their respective statements (Refer to specific statements
in paras 7.1 to 7.23), which are detailed herein above, have
clearly admitted the fact that there is no functionality in
their software or system, which could identify, record and
display the skill set of any player on the platform to the
other players in the said game (during the relevant period of
the present notice). They all also admitted unanimously
that the only factor which enabled their system to decide
the table, on which a player should be seated, was
determined only by the amount of money placed on stake or
betted by him. Players playing with the same betting stakes
were placed on the same table for the game. No factor, other
than the monetary stakes, was ever considered by M/s.
GTPL’s algorithms to decide about the tables on which a
new player was seated for the gameplay. It is also clear from

Page 91 of 136
 statements of these personnel that there were no
mechanisms at all for the players for identifying the
skillsets of the competing player, thereby bringing in a
certain predominance of chance instead of skills. These
facts were unequivocally and unanimously admitted and
asserted by all these personnel in their respective
statements clearly establishing that except the monetary
stakes or the amount of bet, there was no other skill of any
player which placed them to play against each other and in
no circumstance, any player was ever informed about the
skill set of other players on the table on which he was
placed to play during the relevant period covered by the
present notice.

The present investigation extensively focuses on the

facts, circumstances, format offered and activities of M/s
GTPL. The said activities are not governed by any
regulation and/or charter. Without any regulation
whatsoever, there would be a critical impact of these
activities on the socio-economic fabric of the country.
That these activities are in the nature of ‘res extra
commercium’ has received legal imprimatur of various
judicial pronouncements of the Hon’ble Courts as already
discussed in Para 10.1 and 10.2 also.

B. In the instant case, it is purportedly clear that the owner of the

platforms, i.e. M/s. GTPL was making a huge profit without any
doubt, beyond the normal service charges which they termed as
Commission. This was the second condition in the caveat in the
judgement of State of Andhra Pradesh V K Satyanarayana by
Hon’ble Supreme Court . As evident from the fact that a total
amount of Rs.2,02,61,97,29,074/- (Rupees Twenty Thousand
Two hundred Sixty one crores Ninety Seven Lakhs Twenty nine
thousand and Seventy Four only) was added in their “Add-Cash”

Page 92 of 136
 wallets by the players/ gamers/ retail customers on the gaming
platforms of M/s. GTPL during the period August 2017 to 30th
June 2022. Whereas, during the same period, the total “Buy-in”
by the players/ gamers/ retail customers on the gaming platforms
of M/s. GTPL was Rs.7,77,69,49,10,262/- (Rupees Seventy
Seven Thousand Seven hundred Sixty Nine crores Forty Nine
Lakhs ten thousand two hundred sixty two only) for which M/s.
GTPL charged and collected service charges/ commission.

In a nutshell, M/s. GTPL received only Rs.20,262 Crores as “Add-cash”

and they promoted their games and platforms in such a way as to
induce/ motivate/ persuade their players/ gamers/ retail customers to
play more and more.

In fact the CFO and founding partners of M/s. GTPL, in their respective
statements (as detailed hereinabove) admitted the fact about using
various kinds of bonuses to induce the players and it was clearly made
out that whenever the next game started then commission would be
charged from the buy-in amount.

They also submitted that the platform didn’t differentiate between

whether the buy-in amount comes from winning wallet or deposit wallet
of the player. This clarifies that commission was charged on each and
every game on buy-in irrespective of the payment from winning wallet or
deposit wallet of the player. Whereas, they charged Commission on the
total amount of buy-in which was Rs.7,77,69,49,10,262/-. Thus, M/s.
GTPL has charged and collected commission on about four times the
amount which was actually added to their platforms. This tantamount
to making huge profit or gains from the games, beyond the normal
proportion. M/s. GTPL induced their players to necessarily play more
and more to use the money deposited by the players, which in turn gave
them an opportunity to earn more revenue as M/s. GTPL is deducting
its revenue/commission on the basis of the face value of each bet on
their platform.

Page 93 of 136
 C. The third condition in caveat in the judgement of State of Andhra
Pradesh v K Satyanarayana was regarding the evidence of the
games played for stakes. The personnel of M/s. GTPL in their
statements have categorically admitted that the players/ gamers/
retail customers of M/s. GTPL, placed monetary stakes while
playing the online games on their platforms. From the data
regarding cash and non-cash games, submitted by Shri Samir
Dharnidharka vide his email dated 12.07.2022 , it is evident that
more than 92% of the games played on the M/s. GTPL’s
platforms were Cash games. This is a fact that establishes
beyond any doubt that the games on M/s. GTPL’s gaming
platforms were being played for monetary stakes during the
relevant period of the present notice and the third condition of
the caveat of Hon’ble Supreme Court was also met.

Taxability of Betting:

11.27. With regards to GST applicability, the debate on the taxable value of
services for betting, lottery, gambling and horse racing has been put to rest by
introduction of Rule 31A to the CGST Rules vide notification no. 03/2018-
Central Tax dated 23.01.2018.

11.28. Rule 31A, sub-rule (3) provides that value of supply shall be 100% of the
face value of the bet or the amount paid to totalisator or calculation of taxable
value, reference is invited towards Rule 31A(3) of the CGST Rules, 2017 which
states as under:

31A. Value of supply in case of lottery, betting, gambling and horse racing. –

(1) Notwithstanding anything contained in the provisions of this

Chapter, the value in respect of supplies specified below shall be determined
in the manner provided hereinafter.

(2) The value of supply of lottery shall be deemed to be 100/128 of the face
value of ticket or of the price as notified in the Official Gazette by the
Organising State, whichever is higher.

Page 94 of 136
 (3) The value of supply of actionable claim in the form of chance to
win in betting, gambling or horse racing in a race club shall be
100% of the face value of the bet or the amount paid into the
totalisator.

11.29. The above-said rule was inserted w.e.f. 23.01.2018 by virtue of

Notification No. 03/2018 - Central Tax dated 23.01.2018.

11.30. It is important to refer to schedule III(6) of CGST Act, 2017 which states
that “actionable claims other than lottery, betting and gambling would qualify as
an activity or transaction which shall be treated neither as supply of goods nor
supply of services”.

11.31. It means actionable claims relating to lottery, betting and gambling are
subject to GST and except for these, no actionable claim will be covered under
GST under schedule III (6) of CGST Act, 2017.

11.32. Resultantly the transactions in lottery, betting and gambling would

qualify as supply for the purpose of GST law. The terms ‘goods’ under section
2(52) includes actionable claims. Services under section 2(102) are defined to
exclude goods. Section 2(52) of the CGST Act, 2017 defines goods as every kind
of movable property other than money and securities but includes actionable
claim, growing crops, grass and things attached to or forming part of the land
which are agreed to be severed before supply or under a contract of supply.

11.33. Further, as per section 2(1) of CGST Act, 2017, actionable claim shall
have the same meaning as assigned to it in section 3 of the Transfer of Property
Act, 1882.

11.34. As per Section 3 of the Transfer of Property Act, 1882, actionable claim
means a claim to any debt, other than a debt secured by mortgage of immovable
property or by hypothecation or pledge of moveable property, or to any beneficial
interest in moveable property not in the possession, either actual or constructive,
of the claimant, which the Civil Courts recognise as affording grounds for relief,
whether such debt or beneficial interest be existent, accruing, conditional or
contingent.

Page 95 of 136
11.35. From a conjoint reading of the legal provisions as given above, it is
absolutely clear that actionable claims, including betting, are goods, and not a
service, as per section 2(52) read with section 2(102) and Schedule III (6) of the
CGST Act, 2017. Accordingly, the actionable claim in the form of chance to win
in betting, gambling and horse racing with reference to the above definitions
will be goods and not services.

11.36. Further, for determining the rate of tax of Central GST, Schedule IV
(GST @ 28%) of the Notification No. 1/2017 dated 28.06.2017 was amended
vide notification No. 6/2018 - Central Tax (Rates) dated 25.01.2018 is referred.
The amendment notification in section D mentions as under:

11.37. After S. No. 228 and entries related thereto, the following serial number
and entries shall be inserted, namely:

Schedule IV - 14%, -

S.No. Chapter / Description of Goods

Heading / Sub-
heading / Tariff
item

"229 Any Chapter Actionable claim in the form of chance to win

in betting, gambling, or horse racing in race
club”

Similar amendments were made in the Karnataka GST Act, 2017 and the
IGST Act, 2017 by virtue of Notification No. 6/2018, dated 25.01.2018and
07/2018-Integrated Tax (Rates), dated 25.01.2018 respectively.

11.38. It is clear that betting was inserted specifically in the GST Tariff as an
“Actionable Claim in the form of chance to win”; with a specific entry in the
Goods and Services Tax Tariff for Goods. Further, the taxable value is
determined under Rule 31A(3) as 100% of the face value of the bet or the
amount paid to the totalizator.

From the above provisions, it transpires that GST is leviable on 100% of the
face value of bet and the rate of tax shall be 28% (14% CGST + 14% SGST in
case of intrastate supply and 28% IGST in case of interstate supply).

Page 96 of 136
11.39. Shri Samir Dharnidharka, Indirect Tax Head of the noticee company,
sent an email dated 04.07.2022 (RUD-54) regarding his explanation on the
‘Add-cash’ amount added on the M/s. GTPL’s gaming platform by its
customers. In the said email Shri Samir Dharnidharka interalia submitted as
under
“the process of adding cash to a wallet is nothing but mere addition of money.
The money so added is credited to the deposit wallet of the customer and can be
used for either of the below:
1. Towards buy-in for playing a game. Buy-in shall comprise of the
platform fee payable to Gameskraft and contribution towards pool money
distributable to the winner of the game
2. Withdrawal and re-credit to the bank account or other financial
instrument (as applicable)
Therefore, the amount denoted as ‘Add cash’ is a transaction in money
wherein no supply takes place through the mere addition of money into the
customer’s wallet. The amount lying in deposit (or winnings) wallet of the user is
held by the Company in a fiduciary capacity i.e. it does not have any right to
appropriate the amount unless the customer participates in a gameplay and
proceeds to use the money for online gaming. This is further corroborated by the
fact that the customer is free to withdraw the money back to his bank account or
other financial instruments without even playing any game whatsoever. It is to be
noted that the definition of ‘goods’ and ‘services’ excludes money from its ambit.
Therefore, the activity of adding money through ‘Add Cash’ is outside the
ambit of GST law.

It may also be noted that the Company’s right to receive platform fee
accrues only when a customer participates in gameplay as per the terms of the
game. Thus, unless and until a user participates in a game, there is no
question of rendering of any service and by extension, treating any
amount as inclusive of GST at any stage prior to such gameplay. In lieu of
facilitating the gameplay, the Company charges a platform fee on which GST is
being duly discharged by us.

Therefore, the contention of your good office to enquire whether the ‘add
cash’ amount is inclusive of GST appears to be misplaced as the GST liability

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cannot be assessed unless the user participates and uses his money balance to
play a game.”

From the email of Shri Samir Dharnidharka, Taxation Head of M/s.

GTPL, it becomes clear that the “Add Cash'' amount is just a transaction of
money wherein the Customers add money to their deposit wallet on gaming
platforms of the noticee company, hence it does not qualify as ‘actionable claim
in the form of chance to win in betting’. That event occurs when the customer
uses the amount in his deposit wallet towards ‘Buy-in’ for putting stake while
playing a game on the gaming platform. If the customer wins a game and his
stake or bet, then he can reuse the amount to play more games or alternatively
he may take a withdrawal of any portion of that amount. Thus, the customer
can use the win amount in his wallet to put stakes again and yet again on his
play or games. Thus the ‘Buy-in’ amount can be bigger than the ‘Add cash’
amount on the platform. The ‘Buy in’ qualifies as the actionable claim in the
form of chance to win as the ‘buy-in’ comprises the platform fee payable to
Gameskraft and contribution towards pool money distributable to the winner of
the game . The pool money is on stake during a play and constitutes an
actionable claim as the right of the winner of the game to claim the stake. Thus
as per the provisions of law the face value of the bet shall be the total amount of
“Buy-in” or stakes placed on the games on the online platforms of the noticee
company. Rule 31A(3) provides that the value of supply of actionable claim
in the form of chance to win in betting, gambling or horse racing in a
race club shall be 100% of the face value of the bet or the amount paid
into the totalisator. Hence, the total value of the Buy-in which is 100% of the
face value of the bet is the value of supply of actionable claim and thus the
taxable value for the purpose of charging GST at the rate of 28% as provided
under serial number 229 of schedule IV of respective GST Acts, 2017 (CGST
Act, 2017; KGST Act, 2017 and Integrated GST Act, 2017), as amended.

11.40. Shri Samir Dharnidharka, Taxation-Head of the noticee company, vide

another email dated 11.07.2022 (RUD-55.1) submitted the details of total “buy-
in” by the customers for the noticee company in response to DGGI’s email dated
07.07.2022, wherein he inter alia provided the monthly data of ‘Buy-in’ for
Gamezy as well as RummyCulture platforms by the customers to M/s. GTPL.

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 Further vide his email dated 07.09.2022 (RUD-55.2), he provided the ‘Add-cash’
and ‘Buy-in’ Data for the period April 2022 to June 2022 for M/s. GTPL the
total amount of “Buy-in” amount by the customer on the noticee company’s
platforms is as under:
TABLE-X
(Amount in Rs.)

Platform Period Amount of Buy-in on the

platform of M/s. GTPL

Rummy Culture August 2017 to 7,50,42,75,55,331

June 2022

Gamezy March 2019 to 27,26,73,54,931

June 2022

Total 7,77,69,49,10,262

Thus the total amount of “Buy-in” on platforms of M/s. GTPL amounts to

Rupees Sixty eight thousand five hundred thirty three crores fifty seven lakhs
fifty one thousand eight hundred forty seven only.

11.41. A. The calculation of Taxable Value and GST leviable on M/s. GTPL
as per the buy-in data provided by them is as under:
TABLE-XI
(Amount in Rs.)

TAXABLE
PERIOD VALUE IGST @ 28% CGST@ 14% SGST@ 14% TOTAL

2017-18 25,31,31,321 3,51,77,570 3,51,77,570 7,03,55,141

2018-19 15,57,53,81,771 2,18,05,53,448 2,18,05,53,448 4,36,11,06,896

2019-20 75,48,76,14,143 10,56,82,65,980 10,56,82,65,980 21,13,65,31,960

2020-21 2,51,08,21,28,097 35,15,14,97,934 35,15,14,97,934 70,30,29,95,867

Page 99 of 136
 2021-22 3,42,90,17,66,392 48,71,87,04,568 23,64,68,95,011 23,64,68,95,011 96,01,24,94,590

2022-23
(upto
30.06.2022) 92,40,01,04,82 22,48,04,98,352 1,69,57,65,500 1,69,57,65,500 25,87,20,29,351

Total 7,77,70,01,26,551 71,19,92,02,920 73,27,81,55,443 73,27,81,55,443 2,17,75,55,13,805

B. Details of payments of GST already made by M/s. GTPL in the relevant

period for this notice, as detailed in their returns is as under:

TABLE-XII
(Amount in Rs.)

PERIOD TAXABLE IGST @ 18% CGST@ 9% SGST@ 9% TOTAL

VALUE AS
DECLARED BY
M/s. GTPL

2017-18 1,55,52,496 13,99,723 27,99,446

- 13,99,723

2018-19 57,77,97,105 5,20,01,741 5,20,01,741 10,40,03,481

-

2019-20 4,27,84,06,215 38,50,56,560 38,50,56,560 77,01,13,120

-

2020-21 14,05,60,56,704 1,26,50,45,105 1,26,50,45,105 2,53,00,90,210

-

2021-22 19,35,18,27,082 1,60,16,38,567 94,08,45,156 94,08,45,156 3,48,33,28,878

2022-23 97,20,47,169
(Upto 5,40,01,72,557 79,84,77,495 8,67,84,837 8,67,84,837
30.06.22)

Total 43,67,98,12,158 2,40,01,16,062 2,73,11,33,121 2,73,11,33,121 7,86,23,82,304

Page 100 of 136

C. Calculation of GST payable by M/s. GTPL in the period from August
2017 to 30th June 2022 (GST LIABILITY minus GST ALREADY PAID) is as
under:
TABLE-XIII
(Amount in Rs.)

PERIOD TAXABLE VALUE IGST CGST SGST TOTAL

2017-18 23,75,78,825 - 3,37,77,847 3,37,77,847 6,75,55,695

2018-19 14,99,75,84,666 - 2,12,85,51,707 2,12,85,51,707 4,25,71,03,415

2019-20 71,20,92,07,928 - 10,18,32,09,420 10,18,32,09,420 20,36,64,18,840

2020-21 2,37,02,60,71,393 - 33,88,64,52,829 33,88,64,52,829 67,77,29,05,658

2021-22 3,23,54,99,39,310 47,11,70,66,002 22,70,60,49,855 22,70,60,49,855 92,52,91,65,712

2022-23 86,99,99,32,270 21,68,20,20,857 1,60,89,80,663 1,60,89,80,663 24,89,99,82,182

(Up to
30.06.22)

Total 7,34,02,03,14,393 68,79,90,86,859 70,54,70,22,321 70,54,70,22,321 2,09,89,31,31,501

11.42. Notwithstanding and without prejudice to the fact that activities of M/s.
GTPL were in the nature of betting, as has been found during investigations
that M/s. GTPL is discharging GST on the taxable value arrived at after
claiming ineligible deductions from the Commission received by them. It has
already been brought out in foregoing paras that M/s. GTPL were not issuing
invoices to their customers/gamers and hence were not eligible for claiming
deductions as per provisions of Section 15(3) of the CGST Act, 2017 read with
Rule 46 of the CGST Rules. Even if the betting is not considered, M/s. GTPL
have evaded GST liability to the tune of Rs. 528 crores, detailed chart is
appended below:
TABLE-XIV
(Amount in Rs.)
Financial Gross Commission GST leviable on GST paid Differential GST
Year Gross Commission

2017-18 2,90,15,368 52,22,766 27,99,446 24,23,320

Page 101 of 136

 2018-19 1,51,14,42,872 27,20,59,717 10,40,03,481 16,80,56,236

2019-20 7,38,72,78,127 1,32,97,10,063 77,01,13,120 55,95,96,942

2020-21 24,98,81,59,755 4,49,78,68,756 2,53,00,90,210 1,96,77,78,546

2021-22 33,70,90,79,454 6,06,76,34,302 3,48,33,28,878 2,58,43,05,424

Total 67,62,49,75,576 12,17,24,95,604 6,89,03,35,135 5,28,21,60,469

12. LEGAL PROVISIONS:

12.1. The details of various Acts governing the provisions pertaining to levy and
collection of GST are as under:

(i) The Central Goods and Services Tax Act, 2017 (CGST Act, 2017)
and the Central Goods and Services Tax Rules, 2017 (CGST Rules,
2017) govern the provisions pertaining to levy and collection of Central
Goods and Services Tax (CGST).

(ii) The Integrated Goods and Services Tax Act ,2017 (IGST Act,
2017) and the Integrated Goods and Services Tax Rules, 2017 (IGST
Rules, 2017) govern the provisions pertaining to levy and collection of
Integrated Goods and Services Tax (IGST).

(iii) Since the taxpayer is located in the state of Karnataka, the

Karnataka Goods and Services Tax Act, 2017 (Karnataka GST Act,
2017) and the Karnataka State Goods and Services Tax Rules, 2017
(Karnataka GST Rules, 2017) govern the provisions pertaining to levy
and collection of Karnataka State Goods and Services Tax (SGST).

(iv) The officers of Central Tax are authorised to be proper officers for
the purpose of CGST Act, 2017 and IGST Act, 2017 and the Rules
made thereunder these respective Acts. Further, in terms of Section 6
of the Karnataka GST Act, 2017, the Central Tax officers are

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authorised to be proper officers for the purpose of Karnataka GST Act,
2017.

(v) Since the provisions of CGST Act, 2017 and the Rules made there
under are similar to the provisions of Karnataka GST Act, 2017 and
the Rules made there under, a reference to any provision under the
CGST Act 2017 or the rules made there under may be treated as
reference to Karnataka GST Act, 2017 and the rules made there under
to avoid duplication.

(vi) In terms of Section 20 of the IGST Act, 2017, ‘subject to the

provisions of this act and the rules made thereunder, the provisions of
CGST Act, 2017 relating to
(a) scope of supply;
(b) composite supply and mixed supply;
(c) time and value of supply;
(d) input tax credit;
(e) registration;
(f) tax invoice, credit and debit notes;
(g) accounts and records;
(h) returns, other than late fee;
(i) payment of tax;
(j) tax deduction at source;
(k) collection of tax at source;
(l) assessment;
(m)refunds;
(n) audit;
(o) inspection, search, seizure and arrest;
(p) demands and recovery;
(q) liability to pay in certain cases;
(r) advance ruling;
(s) appeals and revision;
(t) presumption as to documents;
(u) offences and penalties;
(v) job work;

Page 103 of 136

 (w) electronic commerce;
(x) transitional provisions; and
(y) miscellaneous provisions including the provisions relating to
the imposition of interest and penalty, shall, mutatis
mutandis, apply, so far as may be, in relation to integrated
tax as they apply in relation to central tax as if they are
enacted under this Act:

12.2. As per Section 15(3) of the CGST Act, 2017, the value of the supply shall
not include any discount which is given––
(a) before or at the time of the supply if such discount has been duly
recorded in the invoice issued in respect of such supply; and
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or
before the time of such supply and specifically linked to relevant invoices;
and
(ii) input tax credit as is attributable to the discount on the basis of a
document issued by the supplier has been reversed by the recipient of the
supply.

12.3. As per Section 31(3) of the CGST Act, 2017 : Tax Invoice
(3) Notwithstanding anything contained in sub-sections (1) and (2) ––
(a) a registered person may, within one month from the date of issuance
of certificate of registration and in such manner as may be prescribed,
issue a revised invoice against the invoice already issued during the
period beginning with the effective date of registration till the date of
issuance of certificate of registration to him;
(b) a registered person may not issue a tax invoice if the value of the
goods or services or both supplied is less than two hundred rupees
subject to such conditions and in such manner as may be prescribed;
(c) a registered person supplying exempted goods or services or both or
paying tax under the provisions of section 10 shall issue, instead of a tax
invoice, a bill of supply containing such particulars and in such manner
as may be prescribed:

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 Provided that the registered person may not issue a bill of supply if the
value of the goods or services or both supplied is less than two hundred
rupees subject to such conditions and in such manner as may be
prescribed;

12.4. Such manners as prescribed in Section 31(3)(c) of the CGST Act, 2017
has been provided in Rule 46 of the CGST Act, 2017. As per Rule 46 of the
CGST Rules, 2017:

46. Tax invoice.- Subject to rule 54, a tax invoice referred to in section 31
shall be issued by the registered person containing the following
particulars, namely,

a. name, address and Goods and Services Tax Identification

Number of the supplier,
b. a consecutive serial number not exceeding sixteen characters, in
one or multiple series, containing alphabets or numerals or
special characters hyphen or dash and slash symbolised as "-"
and "/" respectively, and any combination thereof, unique for a
financial year,
c. date of its issue;
d. name, address and Goods and Services Tax Identification
Number or Unique Identity Number, if registered, of the recipient;
e. name and address of the recipient and the address of delivery,
along with the name of the State and its code, if such recipient is
unregistered and where the value of the taxable supply is fifty
thousand rupees or more; name and address of the recipient and
the address of delivery, along with the name of the State and its
code, if such recipient is unregistered and where the value of the
taxable supply is less than fifty thousand rupees
f. name and address of the recipient and the address of delivery,
along with the name of the State and its code, if such recipient is
unregistered and where the value of the taxable supply is less

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 than fifty thousand rupees and the recipient requests that such
details be recorded in the tax invoice;
g. Harmonised System of Nomenclature code for goods or services;
h. description of goods or services;
i. quantity in case of goods and unit or Unique Quantity Code
thereof;
j. total value of supply of goods or services or both;
k. taxable value of the supply of goods or services or both taking
into account discount or abatement, if any;
l. rate of tax (central tax, State tax, integrated tax, Union territory
tax or cess);
m. amount of tax charged in respect of taxable goods or services
(central tax, State tax, integrated tax, Union territory tax or cess);
n. place of supply along with the name of the State, in the case of a
supply in the course of inter-State trade or commerce; address of
delivery where the same is different from the place of supply;
o. address of delivery where the same is different from the place of
supply;
p. whether the tax is payable on reverse charge basis; and
q. signature or digital signature of the supplier or his authorised
representative:
r. Quick Response code, having embedded Invoice Reference
Number (IRN) in it, in case invoice has been issued in the manner
prescribed under sub-rule (4) of rule 48

Provided that the Board may, on the recommendations of the Council, by

notification, specify

(i) the number of digits of Harmonised System of Nomenclature code for

goods or services that a class of registered persons shall be required to
mention, or

(ii) a class of supply of goods or services for which specified number of

digits of Harmonised System of Nomenclature code shall be required to
be mentioned by all registered taxpayers; and

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 (iii) the class of registered persons that would not be required to mention
the Harmonised System of Nomenclature code for goods or services.''

Provided further that where an invoice is required to be issued under

clause (f) of sub-section (3) of section 31, a registered person may issue a
consolidated invoice at the end of a month for supplies covered under sub-
section (4) of section 9, the aggregate value of such supplies exceeds
rupees five thousand in a day from any or all the suppliers:

Provided also that in the case of the export of goods or services, the invoice
shall carry an endorsement "SUPPLY MEANT FOR EXPORT/SUPPLY TO
SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON
PAYMENT OF INTEGRATED TAX" or "SUPPLY MEANT FOR
EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED
OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT
PAYMENT OF INTEGRATED TAX", as the case may be, and shall, in lieu of
the details specified in clause (e), contain the following details, namely,- (i)
name and address of the recipient; (ii) address of delivery; and (iii) name of
the country of destination:

Provided also that a registered person, other than the supplier engaged in
making supply of services by way of admission exhibition of
cinematograph films in multiplex screens, may not issue a tax invoice in
accordance with the provisions of clause (b) of sub-section (3) of section 31
subject to the following conditions, namely,

(a) the recipient is not a registered person; and

(b) the recipient does not require such invoice,

and shall issue a consolidated tax invoice for such supplies at the
close of each day in respect of all such supplies.

Provided also that the signature or digital signature of the supplier or his
authorised representative shall not be required in the case of issuance of
an electronic invoice in accordance with the provisions of the Information
Technology Act, 2000.

Page 107 of 136

 Provided also that the Government may, by notification, on the
recommendations of the Council, and subject to such conditions and
restrictions as mentioned therein, specify that the tax invoice shall have
Quick Response (QR) code.

12.5. As per Section 2(52) of the CGST Act, 2017 “goods means every kind of
movable property other than money and securities but includes actionable claim,
growing crops, grass and things attached to or forming part of the land which are
agreed to be severed before supply or under a contract of supply”.

12.6. As per section 2(1) of CGST Act, 2017, actionable claim shall have the
same meaning as assigned to it in section 3 of the Transfer of Property Act,
1882.

12.7. As per Section 3 of the Transfer of Property Act, 1882, actionable claim
means a claim to any debt, other than a debt secured by mortgage of immovable
property or by hypothecation or pledge of moveable property, or to any beneficial
interest in moveable property not in the possession, either actual or constructive,
of the claimant, which the Civil Courts recognise as affording grounds for relief,
whether such debt or beneficial interest be existent, accruing, conditional or
contingent.

12.8. As per Section 2(102) of the CGST Act, 2017 stipulates that “services”
means anything other than goods, money and securities but includes activities
relating to the use of money or its conversion by cash or by any other mode, from
one form, currency or denomination, to another form, currency or denomination
for which a separate consideration is charged.

12.9. Rule 31A of the CGST Rules, 2017 states as under:

31A. Value of supply in case of lottery, betting, gambling and horse racing. –
(1) Notwithstanding anything contained in the provisions of this
Chapter, the value in respect of supplies specified below shall be determined
in the manner provided hereinafter.

(2) The value of supply of lottery shall be deemed to be 100/128 of the face
value of ticket or of the price as notified in the Official Gazette by the
Organising State, whichever is higher.

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 (3) The value of supply of actionable claim in the form of chance to
win in betting, gambling or horse racing in a race club shall be
100% of the face value of the bet or the amount paid into the
totalisator.

The above rule was inserted w.e.f. 23.01.2018 by virtue of Notification No.
03/2018- Central Tax dated 23.01.2018.

12.10. The rate of Goods and Services has been notified in Tax Notification No.
6/2018 - Central Tax (Rates) dated 25.01.2018, section D mentions:
After S. No. 228 and entries related thereto, the following serial number
and entries shall be inserted, namely:
Schedule IV - 14%, -
Sr. No. Chapter / Heading / Description of Goods
Sub-heading / Tariff
item
229 Any Chapter Actionable claim in the form of chance
to win in betting, gambling, or horse
racing in race club”

Similarly, for determining the rate of tax of State GST in Karnataka,

Schedule IV (GST @ 28%) of the Notification No. 1/2017 dated 29.06.2022 of
Karnataka Goods and Services Act, 2017 was amended vide notification No.
6/2018, dated 25.01.2018 is referred. The amendment notification in section D
mentions as under:

After S. No. 228 and entries related thereto, the following serial number
and entries shall be inserted, namely:
Schedule IV - 14%, -
Sr. No. Chapter / Heading / Description of Goods
Sub-heading / Tariff
item
229 Any Chapter Actionable claim in the form of chance
to win in betting, gambling, or horse
racing in race club”

Page 109 of 136

 Also for determining the rate of tax of Integrated GST, Schedule IV (GST
@ 28%) of the Notification No. 1/2017 dated 28.06.2022 of Integrated
Goods and Services Act, 2017 was amended vide notification No. 7/2018-
Integrated Tax (Rates), dated 25.01.2018 is referred. The amendment
notification in section D mentions as under:
After S. No. 228 and entries related thereto, the following serial number
and entries shall be inserted, namely:

Schedule IV - 28%, -

Sr. No. Chapter / Heading Description of Goods

/ Sub-heading /
Tariff item

229 Any Chapter Actionable claim in the form of chance

to win in betting, gambling, or horse
racing in race club”

Other Legal Provisions:

12.11. Section 50 of CGST Act, 2017:

(1) Every person who is liable to pay tax in accordance with the
provisions of this Act or the rules made thereunder, but fails to pay the tax
or any part thereof to the Government within the period prescribed, shall
for the period for which the tax or any part thereof remains unpaid, pay,
on his own, interest at such rate, not exceeding eighteen per cent., as may
be notified by the Government on the recommendations of the Council;

Provided that the interest on tax payable in respect of supplies

made during a tax period and declared in the return for the said period
furnished after the due date in accordance with the provisions of section
39, except where such return is furnished after commencement of any
proceedings under section 73 or section 74 in respect of the said period,

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 shall be levied on that portion of the tax that is paid by debiting the
electronic cash ledger.

(2) The interest under sub-section (1) shall be calculated, in such

manner as may be prescribed, from the day succeeding the day on which
such tax was due to be paid.

12.12. Section 74 of CGST Act, 2017:-

(1) Where it appears to the proper officer that any tax has not been paid
or short paid or erroneously refunded or where input tax credit has been
wrongly availed or utilised by reason of fraud, or any wilful-misstatement
or suppression of facts to evade tax, he shall serve notice on the person
chargeable with tax which has not been so paid or which has been
so short paid or to whom the refund has erroneously been made, or who
has wrongly availed or utilised input tax credit, requiring him to show
cause as to why he should not pay the amount specified in the notice
along with interest payable thereon under section 50 and a penalty
equivalent to the tax specified in the notice.

(2) The proper officer shall issue the notice under sub-section (1) at
least six months prior to the time limit specified in sub-section (10) for
issuance of order.

(3) Where a notice has been issued for any period under sub-section
(1), the proper officer may serve a statement, containing the details of tax
not paid or short paid or erroneously refunded or input tax credit wrongly
availed or utilised for such periods other than those covered under sub-
section (1), on the person chargeable with tax.

(4) The service of statement under sub-section (3) shall be deemed to be

service of notice under sub-section (1) of section 73, subject to the condition
that the grounds relied upon in the said statement, except the ground of
fraud, or any wilful-misstatement or suppression of facts to evade tax, for
periods other than those covered under sub-section (1) are the same as are
mentioned in the earlier notice.

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(5) The person chargeable with tax may, before service of notice under
sub-section (1), pay the amount of tax along with interest payable under
section 50 and a penalty equivalent to fifteen per cent. of such tax on the
basis of his own ascertainment of such tax or the tax as ascertained by
the proper officer and inform the proper officer in writing of such payment.

(6) The proper officer, on receipt of such information, shall not serve
any notice under sub-section (1), in respect of the tax so paid or any
penalty payable under the provisions of this Act or the rules made
thereunder.

(7) Where the proper officer is of the opinion that the amount paid
under sub-section (5) falls short of the amount actually payable, he shall
proceed to issue the notice as provided for in sub-section (1) in respect of
such amount which falls short of the amount actually payable.

(8) Where any person chargeable with tax under sub-section (1) pays
the said tax along with interest payable under section 50 and a penalty
equivalent to twenty-five percent of such tax within thirty days of issue of
the notice, all proceedings in respect of the said notice shall be deemed to
be concluded.

(9) The proper officer shall, after considering the representation, if any,
made by the person chargeable with tax, determine the amount of tax,
interest and penalty due from such person and issue an order.

(10) The proper officer shall issue the order under sub-section (9) within
a period of five years from the due date for furnishing of annual return for
the financial year to which the tax not paid or short paid or input tax credit
wrongly availed or utilised relates to or within five years from the date of
erroneous refund.

(11) Where any person served with an order issued under sub-section (9)
pays the tax along with interest payable thereon under section 50 and a
penalty equivalent to fifty per cent. of such tax within thirty days of
communication of the order, all proceedings in respect of the said notice
shall be deemed to be concluded.

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 Explanation 2.–For the purposes of this Act, the expression
“suppression” shall mean non-declaration of facts or information which a
taxable person is required to declare in the return, statement, report or any
other document furnished under this Act or the rules made thereunder, or
failure to furnish any information on being asked for, in writing, by the
proper officer.

12.13. Section 83(1) of the Central Goods and Services Tax Act, 2017:
“where, after the initiation of any proceeding under Chapter XII, Chapter
XIV or Chapter XV, the Commissioner is of the opinion that for the purpose
of protecting the interest of the Government revenue it is necessary so to
do, he may, by order in writing, attach provisionally, any property,
including bank account, belonging to the taxable person or any person
specified in sub-section (1A) of section 122, in such manner as may be
prescribed.”

12.14. Section 122 (1) of the Central Goods and Services Tax Act, 2017, any
taxable person who –
(i) supplies any goods or services or both without issue of any
invoice or issues an incorrect or false invoice with regard to any
such supply;
(ii) issues any invoice or bill without supply of goods or services or both
in violation of the provisions of this Act or the rules made thereunder;
(iii) ……….;
(iv) ……….;
(v) ………..;
(vi) ……….;
(vii) takes or utilizes input tax credit without actual receipt of goods or
services or both either fully or partially, in contravention of the
provisions of this Act or the rules made thereunder;
(viii) ……….;
(ix) ………...; etc.

he shall be liable to pay a penalty of ten thousand rupees or an amount

equivalent to the tax evaded or the tax not deducted under section 51 or

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 short deducted or deducted but not paid to the Government or tax not
collected under section 52 or short collected or collected but not paid to the
Government or input tax credit availed of or passed on or distributed
irregularly, or the refund claimed fraudulently, whichever is higher.

12.15. Section 122(1A) of CGST Act, 2017:- Any person who retains the
benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-
section (1) and at whose instance such transaction is conducted, shall be liable to
a penalty of an amount equivalent to the tax evaded or input tax credit availed of
or passed on.

12.16. Section 122 (2) of the CGST Act, 2017:

‘any registered person who supplies any goods or services or both on
which any tax has not been paid or short-paid or erroneously
refunded, or where the input tax credit has been wrongly availed or
utilised,—
(a) for any reason, other than the reason of fraud or any wilful
misstatement or suppression of facts to evade tax, shall be liable to a
penalty of ten thousand rupees or ten per cent. of the tax due from such
person, whichever is higher;

(b) for reason of fraud or any wilful misstatement or suppression

of facts to evade tax, shall be liable to a penalty equal to ten
thousand rupees or the tax due from such person, whichever is
higher.

12.17. Section 122(3) of the CGST Act, 2017:-

Any person who---
(a) aids or abets any of the offences specified in clauses (i) to (xxi) of
sub-section (1)
(b) ----------;
(c )-----------;
(d) -----------;
(e) -----------;

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 shall be liable to a penalty which may extend to twenty-five thousand
rupees.

12.18. Section 125 of the CGST Act, 2017:-Any person, who contravenes
any of the provisions of this Act or any rules made thereunder for which no
penalty is separately provided for in this Act, shall be liable to a penalty which
may extend to twenty-five thousand rupees.

13. DISCUSSION, ANALYSIS & FINDINGS

13.1. As has been discussed at length herein above that Various High Courts
such as Karnataka High Court, Kerala High Court and Madras High Court have
set aside state laws in order to allow betting on online games of skill. It may
be further noted that though “gaming” does not include a lottery but
includes all forms of wagering or betting.

13.2. It has already also been brought out that Betting is wagering money on the
outcome of a game, race, or other unpredictable events. Betting is typically an
agreement between two parties. This agreement is called a bet or wager. The
one who loses has to pay the agreed amount to the other party. They involve
three main elements: the amount wagered, risk/chance, and the prize. Betting
is an agreement between two parties where the one who makes an
incorrect prediction about an uncertain outcome will forfeit something to
the other.

13.3. As regards to GST taxability it is clear that CGST Act, 2017 defines the
goods to include actionable claims and included only three categories of
actionable claims, i.e., lottery, betting and gambling for purposes of levy of GST.

13.4. Section 2(52) of the CGST Act, 2017 defines goods inasmuch that goods
means every kind of movable property other than money and securities but
includes actionable claim, growing crops, grass and things attached to or forming
part of the land which are agreed to be severed before supply or under a contract
of supply.

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Further, as per section 2(1) of CGST Act, 2017, actionable claim shall have the
same meaning as assigned to it in section 3 of the Transfer of Property Act,
1882.

And as per Section 3 of the Transfer of Property Act, 1882, actionable claim
means a claim to any debt, other than a debt secured by mortgage of immovable
property or by hypothecation or pledge of moveable property, or to any beneficial
interest in moveable property not in the possession, either actual or constructive,
of the claimant, which the Civil Courts recognise as affording grounds for relief,
whether such debt or beneficial interest be existent, accruing, conditional or
contingent.

Section 2(102) of the CGST Act, 2017 stipulates that “services” means anything
other than goods, money and securities but includes activities relating to the use
of money or its conversion by cash or by any other mode, from one form, currency
or denomination, to another form, currency or denomination for which a separate
consideration is charged.

From a conjoint reading of the legal provisions as given above, it is absolutely

clear that actionable claims, including betting, are goods, and not a service, as
per section 2(52) read with section 2(102) and Schedule III (6) of the CGST Act,
2017.

13.5. For determining the value of the betting, there is a statutory provision
contained in Section 15, Central Goods and Services Act, 2017 read with Rule
31A, Central Goods and Services Tax Rules, 2017. When specific statutory
provisions are enumerating what should be included in the value of the supply
and what shall not be included in the value of the supply; prize money cannot
be abated for determining the value of taxable supply as sought by the noticee
company. Rule 31A, sub-rule (3) provides that value of supply shall be 100% of
the face value of the bet or the amount paid to totalisator or calculation of
taxable value, reference is invited towards Rule 31A(3) of the CGST Rules, 2017
which states as under:
31A. Value of supply in case of lottery, betting, gambling and horse racing. –

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 (2) Notwithstanding anything contained in the provisions of this
Chapter, the value in respect of supplies specified below shall be determined
in the manner provided hereinafter.
(2) The value of supply of lottery shall be deemed to be 100/128 of the face
value of ticket or of the price as notified in the Official Gazette by the
Organising State, whichever is higher.

(3) The value of supply of actionable claim in the form of chance to

win in betting, gambling or horse racing in a race club shall be
100% of the face value of the bet or the amount paid into the
totalisator.

The above-said rule was inserted w.e.f. 23.01.2018 by virtue of Notification No.
03/2018- Central Tax dated 23.01.2018.

13.6. Further, for determining the rate of tax of Central GST, Schedule IV (GST
@ 28%) of the Notification No. 1/2017 dated 28.06.2022 was amended vide
notification No. 6/2018 - Central Tax (Rates) dated 25.01.2018 is referred. The
amendment notification in section D mentions as under:

After S. No. 228 and entries related thereto, the following serial number and
entries shall be inserted, namely:
Schedule IV - 14%, -

S.No. Chapter / Description of Goods

Heading /
Sub-heading /
Tariff item

"229 Any Chapter Actionable claim in the form of chance to

win in betting, gambling, or horse racing in
race club”

Similar amendments were made in the Karnataka GST Act, 2017 and the IGST
Act, 2017 by virtue of Notification No. 6/2018, dated 25.01.2018and 07/2018-
Integrated Tax (Rates), dated 25.01.2018 respectively.

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Betting was inserted specifically in the GST Tariff as an “Actionable Claim in the
form of chance to win”; with a specific entry in the Goods and Services Tax
Tariff for Goods. Further, the taxable value is determined under Rule 31A(3) as
100% of the face value of the bet or the amount paid to the totalizator.

13.7. From the above provisions, it transpires that GST is leviable on 100% of
the face value of bet and the rate of tax shall be 28% (14% CGST + 14% SGST
in case of intrastate supply and 28% IGST in case of interstate supply).

13.8. From the email dated 11.07.2022 of Shri Samir Dharnidharka, indirect
Taxation Head of M/s. GTPL, it becomes clear that the ‘Add Cash’ amount is
just a transaction of money wherein the Customers add money to their deposit
wallet on gaming platforms of the noticee company, and hence it does not
qualify as ‘actionable claim in the form of chance to win in betting’. This
particular event occurs when the customer uses the amount in his deposit
wallet towards ‘Buy-in’ for putting stake while playing a game on the gaming
platform. If the customer wins a game and his stake or bet, then he can reuse
the amount to play more games or alternatively he may take a withdrawal of
any portion of that amount. Thus, the customer can use the win amount in his
wallet to put stakes again and yet again on his play or games. Thus the ‘Buy-in’
amount can be bigger than the ‘Add cash’ amount on the platform. The ‘Buy in’
is the event which qualifies as the actionable claim in the form of chance to win
as the buy-in comprises the platform fee payable to Gameskraft and contribution
towards pool money distributable to the winner of the game.

13.9. As discussed in detail in para 11.1 to 11.42, it appears that M/s. GTPL
has deliberately evaded huge amounts of GST on supply of betting as an
actionable claim by wrongly classifying the goods as services. Further, it
appears that they wilfully mis-declared the taxable value in their GSTR-3B and
GSTR-1M returns under-reporting their value of outward supplies.

13.10. Thus as per the provisions of law the bet value shall be the total
amount of “Buy-in” or stakes placed on the games on the online platforms of
the noticee company. Rule 31A(3) provides that the value of supply of
actionable claim in the form of chance to win in betting, gambling or
horse racing in a race club shall be 100% of the face value of the bet or

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the amount paid into the totalisator. Hence, the total value of the Buy-in
which is 100% of the face value of the bet is the value of supply of actionable
claim and thus the taxable value for the purpose of charging GST at the rate of
28% as provided under serial number 229 of schedule IV of respective GST
Acts, 2017 (CGST Act, 2017; KGST Act, 2017 and Integrated GST Act, 2017), as
amended.

14. ANALYSIS OF DATA AND QUANTIFICATION OF TAXABLE VALUE

AND GST LEVIABLE:

14.1. The source transaction data for the period up to March 2020 resumed
during the search, for the period April 2020 to October 2021 submitted by M/s.
GTPL during investigation and for the period Nov 2021 to June 2022 further
resumed during inspection, was extracted, organized and analysed and details
regarding total gross commission and bonuses disbursed to the players/
gamers/ retail customers was tabulated. Further, the data submitted by the
noticee company in its various communications over emails and in hard copy
during the investigations, has been cross checked from the analysed source
data for its correctness and genuineness.

14.2. The noticee company has been paying GST at the rate of 18% on the rake
fee/ platform fee/ commission charged by it as a percentage of the stakes/ buy-
in by the players/ customers. They were deducting bonuses, incentives and
Insta-Cash in the form of discounts. As per section 15(3)(a) read with section
31(3)(b) of the CGST Act, 2017 and Rule 46 of the CGST Rules, 2017, that the
value of the supply shall not include any discount which is given–

(a) before or at the time of the supply if such discount has been
duly recorded in the invoice issued in respect of such supply.
……
It means that any discount shall be available as deduction only if the same is
duly recorded in the invoice issued for that transaction. In the present case, the
noticee company, categorically admitted in a rejoinder dated 06.01.2022, filed

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by it through its CFO in Hon’ble High Court of Karnataka that they have not
issued even a single invoice ever to any of their retail customers. Thus no
deductions on account of any discount is available to them and the value of
supply shall be the total Gross Commission/ Rake Fee/Platform Fee charged by
them from its retail customers. Therefore, all the deductions on account of
discounts in form of ‘bonus’, ‘referral bonus’, other instant cash discounts’ etc
are not valid and thus not allowed.

14.3. Extensive data analysis was done on the data received from M/s. GTPL
through their four emails from Shri Ramesh Prabhu and Shri Samir
Dharnidarka two emails dated 28.06.2022; and other emails dated 29.06.2022
& 30.06.2022 (RUD-56.1 to 56.4). The calculations were made with respect to
the Gross Commission received by them and disallowing any sort of deductions.
The source data resumed from the premises of M/s. GTPL by the officers of
DGGI was converted into readable format and the data so received from the
noticee company was also cross-checked from the source data. A year wise
chart of actual taxable value as per data recovered is prepared to calculate
differential assessable value on which GST was not paid. The GST payable by
M/s. GTPL was, thereafter, calculated on the basis of the applicable rate of duty
during the relevant period. A summary of GST which would have been leviable
as per the discussion above is given as below:-

TABLE-XV
(Amount in Rs.)

Financial Gross GST leviable GST paid Differential

Year Commission on Gross GST
Commission

2017-18 2,90,15,368 52,22,766 27,99,446 24,23,320

2018-19 1,51,14,42,872 27,20,59,717 10,40,03,481 16,80,56,236

2019-20 7,38,72,78,127 1,32,97,10,063 77,01,13,120 55,95,96,942

2020-21 24,98,81,59,755 4,49,78,68,756 2,53,00,90,210 1,96,77,78,546

2021-22 33,70,90,79,454 6,06,76,34,302 3,48,33,28,878 2,58,43,05,424

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 Total 67,62,49,75,576 12,17,24,95,604 6,89,03,35,135 5,28,21,60,469

14.4. As brought out in para 12.5 to 12.18 hereinabove, the investigation was
further conducted with respect to provisions of Section 15(1) of the CGST Act,
2017 and Rule 31A of the CGST Rules, 2017 read with CGST Notification No.
1/2017-CT (Rates) dated 28.06.2017 (as amended) and corresponding
provisions in Karnataka GST Act, 2017 and IGST Act, 2017 (as amended).

14.5. As brought out in earlier paras, the noticee company vide another email
dated 11.07.2022 submitted the monthly data of ‘Buy-in’ for Gamezy as well as
RummyCulture platforms by the customers. The total amount of “Buy-in”
amount placed on stake by the customers on the noticee company’s platforms
and the total GST payable thereon, is as under:
The total amount of “Buy-in” amount by the customers on the RummyCulture
platform of M/s. GTPL and the total GST payable thereon is as under:

TABLE-XVI
(Amount in Rs.)
PERIOD TAXABLE VALUE IGST @ 28% CGST@ 14% SGST@ 14% TOTAL

2017-18 -
(25.01.2018 24,79,15,032 3,47,08,104 3,47,08,104 6,94,16,209
to
31.03.2018

2018-19 15,57,53,20,550 - 2,18,05,44,877 2,18,05,44,877 4,36,10,89,754

2019-20 75,39,01,20,396 - 10,55,46,16,855 10,55,46,16,855 21,10,92,33,711

2020-21 2,47,63,93,51,865 - 34,66,95,09,261 34,66,95,09,261 69,33,90,18,522

2021-22 3,26,74,84,82,811 45,59,91,60,966 22,94,52,07,111 22,94,52,07,111 91,48,95,75,187

2022-23 84,82,63,64,677 20,53,30,84,609 1,60,91,48,750 1,60,91,48,750 23,75,13,82,110

(upto
30.06.2022)

Total 7,50,42,75,55,331 66,13,22,45,575 71,99,37,34,959 71,99,37,34,959 2,10,11,97,15,493

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 The total amount of “Buy-in” amount by the customers on the Gamezy platform
of M/s. GTPL and the total GST payable thereon is as under:

TABLE-XVII
(Amount in Rs.)
PERIOD TAXABLE VALUE IGST @ 28% CGST@ 14% SGST@ 14% TOTAL

2017-18 - - - -

2018-19 61,221 - 8,571 8,571 17,142

2019-20 9,74,93,747 1,36,49,125 1,36,49,125 2,72,98,249

2020-21 3,44,27,76,232 48,19,88,672 48,19,88,672 96,39,77,345

2021-22 16,15,32,83,581 3,11,95,43,602 70,16,87,900 70,16,87,900 4,52,29,19,403

2022-23
(upto 7,57,37,40,150 1,94,74,13,742 8,66,16,750 8,66,16,750 2,12,06,47,242
30.06.2022)

Total 27,26,73,54,931 5,06,69,57,345 1,28,39,51,018 1,28,39,51,018 7,63,48,59,380

The total amount of “Buy-in” amount by the customers on the RummyCulture

and Gamezy platforms of M/s. GTPL and the total GST payable thereon is as
under:
TABLE-XVIII
(Amount in Rs.)
PERIOD TAXABLE VALUE IGST @ 28% CGST@ 14% SGST@ 14% TOTAL

2017-18 24,79,15,032 3,47,08,104 3,47,08,104 6,94,16,209

(25.01.2018 to
31.03.2018)

2018-19 15,57,53,81,771 2,18,05,53,448 2,18,05,53,448 4,36,11,06,896

2019-20 75,48,76,14,143 10,56,82,65,980 10,56,82,65,980 21,13,65,31,960

2020-21 2,51,08,21,28,097 35,15,14,97,934 35,15,14,97,934 70,30,29,95,867

2021-22 3,42,90,17,66,392 48,71,87,04,568 23,64,68,95,011 23,64,68,95,011 96,01,24,94,590

2022-23 (upto
30.06.2022) 92,40,01,04,827 22,48,04,98,352 1,69,57,65,500 1,69,57,65,500 25,87,20,29,351

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Total 7,77,69,49,10,262 71,19,92,02,920 73,27,76,85,977 73,27,76,85,977 2,17,75,45,74,873

14.6. Further, it is stated that prior to 25.01.2018, the taxable value shall be
the gross commission received by M/s. GTPL as the Entry No. 229 was inserted
vide Notification No. 6/2018-Central Tax (Rate) dated 25.01.2018. This shall be
charged to 18% GST as per Entry no. 453 (Residuary Entry) as the taxability for
the same was nowhere defined before 25.01.2018. Hence the details of the tax
payable prior to 25.01.2018 is as under:

TABLE-XIX
(Amount in Rs.)

PERIOD TAXABLE IGST @ CGST@ 9% SGST@ 9% TOTAL

VALUE 18%

1,06,854
Nov-17 9,617 9,617 19,234

12,06,564
Dec-17 1,08,591 1,08,591 2,17,181

Jan-18
(01.01.2018 to
24.01.2018) 30,21,578 2,71,942 2,71,942 5,43,884

Total 52,16,290 - 4,69,466 4,69,466 9,38,932

14.7. In view of the above, the total GST liability of M/s. GTPL for the period
August, 2018 to 30th June 2022 is detailed in the consolidated table as under:

TABLE-XX
(Amount in Rs.)
PERIOD TAXABLE VALUE IGST @ 28% CGST@ 14% SGST@ 14% TOTAL

2017-18 25,31,31,321 3,51,77,570 3,51,77,570 7,03,55,141

2018-19 15,57,53,81,771 2,18,05,53,448 2,18,05,53,448 4,36,11,06,896

Page 123 of 136

 2019-20 75,48,76,14,143 10,56,82,65,980 10,56,82,65,980 21,13,65,31,960

2020-21 2,51,08,21,28,097 35,15,14,97,934 35,15,14,97,934 70,30,29,95,867

2021-22 3,42,90,17,66,392 48,71,87,04,568 23,64,68,95,011 23,64,68,95,011 96,01,24,94,590

2022-23
(upto
30.06.2022) 92,40,01,04,827 22,48,04,98,352 1,69,57,65,500 1,69,57,65,500 25,87,20,29,351

Total 7,77,70,01,26,551 71,19,92,02,920 73,27,81,55,443 73,27,81,55,443 2,17,75,55,13,805

Details of total GST payments, already made by M/s. GTPL in their monthly
returns are as under:

TABLE-XXI
(Amount in Rs.)

PERIOD TAXABLE IGST @ 18% CGST@ 9% SGST@ 9% TOTAL

VALUE AS
DECLARED
BY M/s. GTPL

2017-18 1,55,52,496 13,99,723 13,99,723 27,99,446

2018-19 57,77,97,105 5,20,01,741 5,20,01,741 10,40,03,481

2019-20 4,27,84,06,215 38,50,56,560 38,50,56,560 77,01,13,120

2020-21 14,05,60,56,704 1,26,50,45,105 1,26,50,45,105 2,53,00,90,210

2021-22 19,35,18,27,082 1,60,16,38,567 94,08,45,156 94,08,45,156 3,48,33,28,878

2022-23 97,20,47,169

(Upto 5,40,01,72,557 79,84,77,495 8,67,84,837 8,67,84,837

30.06.22)

Total 43,67,98,12,158 2,40,01,16,062 2,73,11,33,121 2,73,11,33,121 7,86,23,82,304

Details of total GST payable, by M/s. GTPL (GST Liability in (Table XX) minus
GST Already paid (Table-XXI) is as under:

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 TABLE-XXII
(Amount in Rs.)

TAXABLE
PERIOD VALUE IGST CGST SGST TOTAL

2017-18 23,75,78,825 3,37,77,847 3,37,77,847 6,75,55,695

2018-19 14,99,75,84,666 2,12,85,51,707 2,12,85,51,707 4,25,71,03,415

2019-20 71,20,92,07,928 10,18,32,09,420 10,18,32,09,420 20,36,64,18,840

2020-21 2,37,02,60,71,393 33,88,64,52,829 33,88,64,52,829 67,77,29,05,658

2021-22 3,23,54,99,39,310 47,11,70,66,002 22,70,60,49,855 22,70,60,49,855 92,52,91,65,712

2022-23 (Upto 86,99,99,32,270 21,68,20,20,857 1,60,89,80,663 1,60,89,80,663 24,89,99,82,182

30.06.22)

Total 7,34,02,03,14,393 68,79,90,86,859 70,54,70,22,321 70,54,70,22,321 2,09,89,31,31,501

The monthly calculation charts are enclosed as Annexure-II.

15. CONTRAVENTIONS

Whereas, it appears from the scrutiny of records, analysis of evidence and the
depositions made by Shri Ramesh Prabhu, CFO of M/s. GTPL; Shri Prithvi Raj
Singh, CEO - Existing Businesses and Shri Deepak Singh, Director, (both
founders of M/s. GTPL); Shri Vikas Taneja CEO & Director and Shri Deepak
Jha, CEO - New Businesses; Ms. Neha Gupta, Vice-President (Technical) of
M/s. GTPL; Shri Siya Ram Gupta, Associate Director (Product) of M/s. GTPL;
Shri Amit Bubna, Partner of Ernst & Young, Shri Naveen Kumar C.K., Assistant
Accountant of M/s MDA & Co.; Shri Sarath Chandran, Business Head
(Gamezy) of M/s. GTPL and Shri Divya Alok, Business Head (RummyCulture) of
M/s. GTPL as discussed in the preceding paragraphs, that M/s. GTPL have
contravened the provisions of -

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 (i) Section 9(1) of the CGST Act, 2017/ Karnataka GST Act,
2017/IGST Act, 2017 in as much as they failed to pay appropriate
CGST/SGST/IGST on the goods supplied by them;

(ii) Section 15(1) of the CGST Act, 2017/ Karnataka GST Act,
2017/IGST Act, 2017 in as much as they failed to compute correct
taxable value of the goods supplied by them;

(iii) Rule 31A(3) of the CGST Act, 2017/Karnataka GST Act, 2017/IGST
Act, 2017 w.e.f. 25.01.2018 in as much as they failed to compute
correct taxable value of the goods supplied by them in the form of
actionable claim i.e. betting

(iv) Sec. 31 of the CGST Act read with Rule 46 of the CGST Rules and
corresponding provisions of SGST Act/Rules, in much as they have
not issued invoices for supply of goods, in the prescribed manner;

(v) Section 37 of CGST Act read with Rule 59 of CGST Rules and
corresponding provisions of SGST Act/Rules in as much as they
failed to declare the correct details of goods supplied by them, in
their periodic returns in prescribed time and manner;

(vi) Section 49 of CGST Act read with Rule 85 of CGST and

corresponding provisions of SGST Act/Rules in as much as they
failed to pay their tax liabilities properly in prescribed time and
manner;

(vii) Section 59 of the CGST Act and corresponding provisions of SGST

Act in as much as they had not properly self-assessed their GST
liability correctly on the goods supplied by them.

16. APPLICABILITY OF EXTENDED PERIOD OF LIMITATION AND PENAL

PROVISIONS:-

16.1. M/s. GTPL have not paid GST amounting to Rs. 2,09,89,31,31,501/-
(IGST Rs.68,79,90,86,859/- + CGST - Rs.70,54,70,22,321/- + SGST
Rs.70,54,70,22,321/-) on the supply of goods and services to their players/

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gamers/ retail customers from their platform during the period from August
2017 to 30th June 2022 as detailed in para 14.5 to 14.7 herein above.

16.2. In view of the discussions at Paras 11.1 to 11.42 and 13.1 to 13.10 herein
above, it appears that M/s. GTPL has deliberately evaded huge amount of GST
on supply of betting as an actionable claim by wrongly classifying the goods as
services. Further, it appears that they wilfully mis-declared the taxable value in
their GSTR-3B and GSTR-1M returns under-reporting their value of outward
supplies. As per explanation 2 to the Section 74 of the CGST Act,
2017/Karnataka GST Act, 2017 “For the purposes of this Act, the
expression “suppression” shall mean non-declaration of facts or
information which a taxable person is required to declare in the return,
statement, report or any other document furnished under this Act or the
rules made thereunder, or failure to furnish any information on being
asked for, in writing, by the proper officer”.

16.3. It was only after specific intelligence gathered and subsequent

investigations carried out by the officers of DGGI, it has been established with
overwhelming evidence that M/s. GTPL have indulged in evasion of GST on the
actionable claims as goods without issuance of proper invoices, under wrong
classification and declaring the wrong taxable value and have contravened
various provisions of CGST Act, 2017/Karnataka GST Act, 2017/IGST Act,
2017. The said irregularities would not have come to light but for the present
investigations conducted by the department officers. Hence it appears that M/s.
GTPL have fraudulently short paid the applicable GST, wilfully mis-stated
and suppressed the facts and contravened the aforesaid provisions of the
CGST Act, 2017/ Karnataka GST Act, 2017 and the Rules made there under
with intent to evade payment of Goods and Services Tax.

16.4. As observed by the Hon’ble High Courts of Telangana [WP No.4764 of

2019], Calcutta [CRM 1259 of 2020] and various other judicial fora, such acts
are ‘a threat to the very implementation of a law within a short duration of its
inception’ and constitute grave economic offences that are white collar crimes
which deal great damage to national economy and national interests. In other
words, the inquiry at hand is neither merely a case of short-payment of tax

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arising from a calculation error nor is it dealing with highly technical issues like
classification etc. or issues involving interpretation of statute. An economic
offence of such scale is ‘committed with cool calculation and deliberate design
with an eye on personal profit’. It certainly pervades and apparently involves
supplier and the upper echelons of the company because short listing,
procurement, contracting, engagement, communication, coordination, etc.
cannot be done without the explicit approval, guidance, involvement, consent
and connivance of the Directors of the company who are responsible for day-to-
day operations of the company and overall business of the company.

16.5. M/s. GTPL have wilfully suppressed and mis-stated facts as discussed at
paras 11.1 to 11.42 and 13.1 to 13.10 herein above and contravened various
provisions of CGST Act, 2017/ Karnataka GST Act, 2017/ IGST Act, 2017 &
Rules made thereunder with intent to short pay the applicable GST. Hence, it
appears that the GST short paid/not paid by M/s. GTPL is recoverable under
Section 74(1) of the CGST Act, 2017/ Karnataka GST Act, 2017/ IGST Act,
2017 along with interest at applicable rates in terms of Section 50 and penalty
under Section 122(1)(i), 122(1A) read with Section 122(2)(b) of the CGST Act,
2017 / Karnataka GST Act, 2017/ IGST Act, 2017 for supply of services
without issuance of invoices, in violation / contravention of the provisions of
these Acts and the rules made thereunder.

16.6. M/s. GTPL is also liable for penalty under Section 125 of the CGST,
2017 and the corresponding provisions of Karnataka GST Act, 2017/ IGST Act,
2017 for contravention of the various statutory provisions as discussed above.

16.7 Shri Ramesh Prabhu, CFO in his voluntary statements dated 12.11.2021
admitted and stated that he was looking after all the Indirect Tax compliance,
GST compliance, statutory compliance and the financial accounting of the
noticee company during the relevant period. He along with others tried to mis-
guide the investigations in his statements dated 17.11.2022, 18.11.2022,
07.01.2022, 11.04.2022, 28.06.2022, 29.06.2022, 21.07.2022 and 16.08.2022.
It has been irrefutably submitted by various personnel of the noticee company
such as Shri Vikas Taneja, Shri Deepak Singh, Shri Deepak Jha, Shri Prithvi
Raj Singh and Ms. Neha Gupta in their voluntary statements that the invoicing

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and taxation related work was being looked after by the finance team headed by
Shri Ramesh Prabhu, CFO of M/s. GTPL. Further, M/s. GTPL had also
authorized Shri Ramesh Prabhu to file legal papers/documents before the
Hon’ble Karnataka High Court in relation to their Writ Petition. instrumental
and abetted the noticee company in short payment of GST in not classifying its
goods properly as discussed in paras 8.1, 8.2, 10.8 to 10.30, 11.1 to 11.10 and
16.2 hereinabove on proper taxable value as provided under section 15(1) of
CGST Act, 2017 read with Rule 31A(3) of CGST Rules, 2017. Therefore, it
appears that Shri Ramesh Prabhu, CFO of M/s. GTPL has rendered himself
liable for penalty under Section 122(3)(a), 122(3)(b) and 122(3)(e) of the CGST
Act, 2017/ Karnataka GST Act, 2017 read with Section 20 of the IGST Act,
2017.

16.8. As discussed at para 4.2, 7.4, 7.5, 7.7, 7.8, 7.18, 7.19, 7.22 & 7.23
above, Shri Deepak Singh, Shri Deepak Jha, Shri Vikas Taneja and Shri Prithvi
Raj Singh were instrumental and abetted the noticee company in short payment
of GST in not classifying its goods properly as discussed in paras 8.1, 8.2, 10.8
to 10.30, 13.1 to 13.10 and 16.2 hereinabove on proper taxable value as
provided under section 15(1) of CGST Act, 2017 read with Rule 31A(3) of CGST
Rules, 2017. Therefore, it appears that Shri Deepak Singh, Shri Deepak Jha,
Shri Vikas Taneja and Shri Prithvi Raj Singh have rendered themselves liable
for penalty under Section 122(3)(a), 122(3)(b) and 122(3)(e) of the CGST Act,
2017/ Karnataka GST Act, 2017 read with Section 20 of the IGST Act, 2017.

16.9. Now, therefore, M/s. Gameskraft Technologies Private Limited having

their principal place of business at Elnath Block, 2nd Floor, Exora Business
Park, Outer Ring Road, Bengaluru, Bengaluru Urban, Karnataka, 560103 are
hereby called upon to show cause to the Joint/ Additional Commissioner of
Central Tax, Bengaluru East GST Commissionerate, (hereinafter referred as
the Adjudicating Authority) within 30 days from the receipt of this notice, as
to why:
i) an amount of Rs.68,79,90,86,859/- (Rupees six
thousand eight hundred seventy nine crores ninety lakhs
eighty six thousand eight hundred fifty nine only) being
IGST amount not paid by them/short payment of GST by

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 not classifying its goods properly as discussed in paras
8.1, 8.2, 10.8 to 10.30, 13.1 to 13.10 and 16.2
hereinabove on proper taxable value as provided under
section 15 of CGST Act, 2017 read with Rule 31A(3) of
CGST Rules, 2017, during the period from August 2017 to
June 2022 (as detailed at para 14.7 supra), should not be
demanded and recovered from them under the provisions
of Section 74(1) of the CGST Act, 2017 read with Section
20 of the IGST Act 2017;

ii) an amount of Rs.70,54,70,22,321/- (Rupees Seven

thousand fifty four crores seventy lakhs twenty two
thousand three hundred twenty one only) being CGST
amount not paid by them/short payment of GST by not
classifying its goods properly as discussed in paras 8.1,
8.2, 10.8 to 10.30, 13.1 to 13.10 and 16.2 hereinabove on
proper taxable value as provided under section 15 of CGST
Act, 2017 read with Rule 31A(3) of CGST Rules, 2017,
during the period from August 2017 to June 2022 (as
detailed at para 14.7 supra), should not be demanded and
recovered from them under the provisions of Section 74(1)
of the CGST Act, 2017;

iii) an amount of Rs.70,54,70,22,321/- (Rupees Seven

thousand fifty four crores seventy lakhs twenty two
thousand three hundred twenty one only) being SGST
amount not paid by them/short payment of GST by not
classifying its goods properly as discussed in paras 8.1,
8.2, 10.8 to 10.30, 13.1 to 13.10 and 16.2 hereinabove on
proper taxable value as provided under section 15 of CGST
Act, 2017 read with Rule 31A(3) of CGST Rules, 2017,
during the period from August 2017 to June 2022 (as
detailed at para 14.7 supra), should not be demanded and
recovered from them under the provisions of Section 74(1)
of the Karnataka SGST Act, 2017;

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iv) Interest on the amount demanded at (i) above should not
be recovered from them under Section 50 of the IGST Act,
2017 read with Section 20 of the IGST Act, 2017;

v) Interest on the amount demanded at (ii) above should not

be recovered from them under Section 50 of the CGST Act,
2017;

vi) Interest on the amount demanded at (iii) above should not

be recovered from them under Section 50 of the Karnataka
SGST Act, 2017;

vii) Penalty equal to the amount of GST not paid on supply of

services without issuance of invoices at (i), (ii) and (iii)
above should not be imposed on them under Section
122(1)(i) and 122(1A) of the CGST Act, 2017 / Karnataka
GST Act, 2017 read with Section 20 of the IGST Act, 2017
for contravention of the Acts and Rules made thereunder
as discussed in paras supra;

viii) Penalty in terms of Section 74 (1) of the CGST Act, 2017/

Karnataka SGST Act, 2017 read with Section 122(1)(xv),
122(1)(xviii) and Section 122(2)(b) of the CGST Act, 2017/
Karnataka SGST Act, 2017 read with Section 20 of the
IGST Act, 2017, should not be imposed on amounts
demanded at Sl. No (i), (ii) & (iii) above;

ix) Penalty should not be imposed on them in terms of

Section 125 of the CGST Act, 2017 / Karnataka GST Act,
2017/ IGST Act, 2017 (read with section 20 of the Act,
ibid) for contravention of various statutory provisions as
detailed in paras supra;

x) The amount of Rs. 10,00,00,000/- (Rupees ten crores

only) being CGST amount voluntarily deposited by them
under Section 74(5) of the CGST Act, 2017 vide DRC-03

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 dated 12.11.2021 should not be appropriated against
their CGST demand in para (ii) above.

xi) The amount of Rs. 10,00,00,000/- (Rupees ten crores

only) being SGST amount voluntarily deposited by them
under Section 74(5) of the CGST Act, 2017 vide DRC-03
dated 12.11.2021 should not be appropriated against
their SGST demand in para (iii) above.

16.10. Therefore, Shri Ramesh Prabhu, Chief Financial Officer of M/s. GTPL
and resident of B-304, Victory Harmony Apartments, SSA Road, Hebbel,
Bengaluru is hereby called upon to show cause to the Adjudicating Authority
within 30 days from the receipt of this notice, as to why
i) Penalty should not be imposed on him under provisions of
Section 122(3)(a), 122(3)(b) and 122(3)(e) of the CGST Act,
2017/TSGST Act, 2017/ IGST Act, 2017 (read with Section
20 of Act, ibid) for his acts and deeds detailed supra;

16.11. Therefore, Shri Vikas Taneja, Director & CEO and Founder of M/s.
GTPL and son of Shri Raj Kumar Taneja and resident of 2083, Prestige
Pinewood Apartments, Koramangala 1st Block, Bengaluru is hereby called upon
to show cause to the Adjudicating Authority within 30 days from the receipt of
this notice, as to why
i) Penalty should not be imposed on him under provisions of
Section 122(3)(a), 122(3)(b) and 122(3)(e) of the CGST Act,
2017/TSGST Act, 2017/ IGST Act, 2017 read with Section
20 of Act, ibid) for his acts and deeds detailed supra.

16.12. Therefore, Shri Deepak Jha, CEO – New Businesses and Founder of
M/s. GTPL and son of Shri Amar Nath Jha and resident of 1304, Purva
Vantage Apartments, 25th Cross, 19th Mai, HSR Layout, Sector 2, Bengaluru
560102 is hereby called upon to show cause to the Adjudicating Authority
within 30 days from the receipt of this notice, as to why
i) Penalty should not be imposed on him under provisions of
Section 122(3)(a), 122(3)(b) and 122(3)(e) of the CGST Act,

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 2017/TSGST Act, 2017/ IGST Act, 2017 read with Section
20 of Act, ibid) for his acts and deeds detailed supra.

16.13. Therefore, Shri Deepak Singh, Founder-Director of M/s. GTPL and

son of Shri Gajendra Singh and resident of 9134, Embassy Pristine, Bellandur,
Bengaluru 560103 is hereby called upon to show cause to the Adjudicating
Authority within 30 days from the receipt of this notice, as to why
i) Penalty should not be imposed on him under provisions of
Section 122(3)(a), 122(3)(b) and 122(3)(e) of the CGST Act,
2017/TSGST Act, 2017/ IGST Act, 2017 read with Section
20 of Act, ibid) for his acts and deeds detailed supra.

16.14. Therefore, Shri Prithvi Raj Singh, CEO-Existing Businesses and

Founder of M/s. GTPL and son of Late Shri Diwan Singh and resident of J-
203, Bren Unity, Chinnapanahalli Main Road, Marathahalli, Bemgaluru,
560037 is hereby called upon to show cause to the Adjudicating Authority
within 30 days from the receipt of this notice, as to why
i) Penalty should not be imposed on him under provisions of
Section 122(3)(a), 122(3)(b) and 122(3)(e) of the CGST Act,
2017/TSGST Act, 2017/ IGST Act, 2017 read with Section
20 of Act, ibid) for his acts and deeds detailed supra.

17. M/s Gameskraft Technologies Pvt. Ltd., Bengaluru; Shri Ramesh Prabhu,
CFO of M/s. GTPL, Shri Deepak Singh, Founder Director of M/s. GTPL, Shri
Prithvi Raj Singh, Founder Director of M/s. GTPL, Shri Vikas Taneja, CEO &
Director of M/s. GTPL and Shri Deepak Jha, CEO-New Businesses to the
Founders of M/s. GTPL are further directed to produce at the time of showing
cause all the evidence upon which they / he intend / intends to rely in support
of their / his defence.

18. M/s Gameskraft Technologies Pvt. Ltd., Bengaluru; Shri Ramesh Prabhu,
CFO of M/s. GTPL, Shri Deepak Singh, Founder Director of M/s. GTPL, Shri
Prithvi Raj Singh, Founder Director of M/s. GTPL, Shri Vikas Taneja, CEO &
Director of M/s. GTPL and Shri Deepak Jha, CEO-New Businesses of M/s.
GTPL should indicate in their / his written reply as to whether they / he

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desire/ desires to be heard in person before the case is adjudicated. If no
mention is made in their / his written reply to the show cause notice, it would
be presumed that they / he do / does not desire to be heard in person.

19. If no cause is shown against the action proposed to be taken within 30

days of receipt of this notice or they/he do/ does not appear before the
adjudicating authority when the case is posted for hearing, the case will be
decided ‘ex-parte’.

20. This notice is issued without prejudice to any other action that may be
initiated under the provisions of the IGST Act, 2017, CGST Act, 2017 and
Karnataka GST Act, 2017 and the rules made there under or any other law for
the time being in force in India.

21. The department reserves the right to add, amend, modify, delete any part
or portion of this notice and any such addendum, amendment, modification,
deletion, if made, shall be deemed to be part and parcel of this notice.

22. Prior to issuance of this notice, M/s. GTPL were served with an
intimation of tax dues as ascertained by this office vide form DRC 01A dated
08.09.2022 and were provided with an opportunity to file submission, if any.
Vide the said DRC 01A, M/s. GTPL were also put to notice that they can avail
the benefit of paying reduced penalty in terms of Section 74(5) of the CGST Act,
2017/ Karnataka GST Act, 2017 read with Section 20 of the IGST Act 2017.
However, M/s. GTPL has neither responded to the notice nor discharged the tax
liability.

23. M/s. GTPL is hereby further informed that in terms of Section 74(8) of
the CGST Act 2017/Karnataka GST Act 2017 read with Section 20 of the IGST
Act 2017, the proceeding initiated in the instant notice stands concluded
provided the tax dues, applicable interest and penalty equivalent to twenty five
percent of the tax is paid within a period of thirty days from the date of receipt
of this notice.

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