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IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 11TH DAY OF MAY 2023 BEFORE THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No. 19570 OF 2022 C/W WRIT PETITION Nos. 22010 OF 2021, 18304 OF 2022
19561 OF 2022, 20119 OF 2022 AND 20120 OF 2022 (T-RES)
IN W.P. No. 19570 / 2022 BETWEEN:
GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED REPRESENTED BY RAMESH PRABHU CHIEF FINANCIAL OFFICERM M/S. GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED B-304, VICTORY HARMONY APRTMENTS SSA ROAD, HEBBELL, BENGALURU.
…PETITIONER (BY SRI. DR. ABHISHEK MANU SINGVI, SENIOR COUNSEL AND SRI. UDAYA HOLLA, SENIOR COUNSEL A/W SRI. SIDDHARTHA H.M., & SRI. SUHAAN MUKERJI, SRI. NIKHIL PARIKSHITH SRI. ABHISHEK MANCHANDA &
SRI. CHANDAN PRAKASH PANDEY &
SRI. L. NIDHIRAM SHARMA SRI. VYASAKIRAN UPADHYA & SRI. MANJUNATH B, SRI. VARUN THOMAS MATHEW , SRI. ONKAR SHARMA, ADVOCATES)
AND:
1. DIRECTORATE GENERAL OF GOODS SERVICES TAX INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK 8, WING 3, 1ST FLOOR SECTOR I, R.K. PURAM DELHI – 110 066.
2. ADDITIONAL DIRECTOR GENERAL DIRECTOR GENERAL OF GOODS OF SERVICES INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK -8, WING NO.6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
3. ADDITIONAL DIRECTOR DIRECTOR GENERAL OF GOODS AND SERVICES INTELLIGENCE (HEADQUARTERS)
WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
4. SENIOR INTELLIGENCE OFFICER DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE (HEADQUARTERS)
WEST BLOKC-8, WING NO.6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
…RESPONDENTS (BY SRI. N.VENKATARAMAN, ADDITIONAL SOLICITOR GENERAL A/W SRI. JEEVAN J NEERALAGI, ADVOCATE SRI. MUKUL ROHTGI, SENIOR COUNSEL A/W SRI. PRADEEP NAYAK & SMT. ANUPAMA HEBBAR SRI. SANKEERTH VITTAL AND SRI. KARAN GUPTA, ADVOCATES FOR IMPLEADING APPLICANT ON IA 1/2022 SRI. ARAVIND DATAR AND SRI. SAJJAN POOVAYYA, SENIOR COUNSEL A/W MISS, RAKSHA AGARWAL SRI. SAMEER SIGH AND SRI. RAVI RAGHAVAN, ADVOCARTES FOR IMPLEADING APPLICANT ON IA 2/2022)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING AND SETTING ASIDE THE SHOW CAUSE NOTICE BEARING DGGI F. NO. 413/INT/DGGI/HQ/2021/1329 AND BEARING DIN CC20220900000000B732 DATED: 23.09.2022 VIDE ANNEXURE-A AND THE PROCEEDINGS THEREUNDER AND ETC.
IN W.P. No. 22010/2021 BETWEEN:
GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED REPRESENTED THROUGH ITS CHIEF FINANCIAL OFFICER MR. RAMESH PRABHU
1ST AND 2ND FLOOR NO. 26/1, IBIS HOTEL, HOSUR ROAD BOMMANAHALLI, BANGALORE KARNATAKA – 560 068 …PETITIONER (BY SRI. DR. ABHISHEK MANU SINGVI, SENIOR COUNSEL AND SRI. UDAYA HOLLA, SENIOR COUNSEL A/W SRI. SIDDHARTHA H.M., & SRI. SUHAAN MUKERJI, SRI. NIKHIL PARIKSHITH SRI. ABHISHEK MANCHANDA &
SRI. CHANDAN PRAKASH PANDEY &
SRI. L. NIDHIRAM SHARMA SRI. VYASAKIRAN UPADHYA & SRI. MANJUNATH B, SRI. VARUN THOMAS MATHEW , SRI. ONKAR SHARMA, ADVOCATES)
AND:
1. DIRECTORATE GENERAL OF GOODS SERVICES TAX INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK 8, WING 3, 1ST FLOOR SECTOR I, R.K. PURAM DELHI – 110 066.
2. PRINCIPAL ADDITIONAL DIRECTOR GENERAL DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE ( HEAD QUARTERS)
WEST BLOCK – I, WING NO. 6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
3. CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS NORTH BLOCK, DEPARTMENT OF REVENUE MINISTRY OF FINANCE, GOVERNMENT OF INDIA DELHI – 110 001 REP BY MANAGER.
4. ICICI BANK
420, 27TH MIAN ROAD, SECTOR 2
1ST SECTOR, HSR LAYOUT BENGALURU, KARNATAKA – 560 102.
5. HDFC BANK LIMITED POST BOX 5106 SHANKARNARAYAN BUILDING
25/1, M.G. ROAD BANGALORE – 560 001.
REP. BY MANAGER.
6. YES BANK LIMITED GROUND FLOOR PRESTIGE OBELISK MUNICIPAL, NO. 3, KASTURBA ROAD BENGALURU – 560 001.
REP BY MANAGER.
7. RBL BANK NO.8, SBI COLONY
7TH MAIN, 3RD BLOKC KORAMANGALA, BANGALORE – 560 037 REP BY MANAGER.
8. IDFC BANK GROUND FLOOR SIRE NO. 4 & 5, 27TH MAIN 1ST SECTOR, HSR LAYOUT BENGALURU – 560 102 REP BY MANAGER.
…RESPONDENTS ( BY SRI. N. VENKATARAMAN, ADDITIONAL SOLICITOR GENERAL A/W SRI. AMIT ANAND DESHPANDE, ADVOCATE FOR R-
1 TO R-3, SMT. JAI M. PATIL, ADVOCATE FOR R-4)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE INDIAN CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DTD: 30.11.2021 HAVING CBIC DIN 202111CC00000000E6D3 ANNEXED AT ANNEXURE-A WHEREBY THE R-2 HAS UPHELD THE IMPUGNED PROVISIONAL ATTACHMENT ORDERS AND HAS REFUSED TO LIFT THE ATTACHMENT OF THE BANK ACCOUNTS HELD AND MAINTAINED BY THE PETITIONER AND ETC.
IN W.P. No. 18304 / 2022 BETWEEN:
GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED REPRESENTED THROUGH ITS CHIEF FINANCIAL OFFICER MR. RAMESH PRABHU
1ST AND 2ND FLOOR NO. 26/1, IBIS HOTEL, HOSUR ROAD BOMMANAHALLI, BANGALORE KARNATAKA – 560 068 …PETITIONER (BY SRI. DR. ABHISHEK MANU SINGVI, SENIOR COUNSEL AND SRI. UDAYA HOLLA, SENIOR COUNSEL A/W SRI. SIDDHARTHA H.M., & SRI. SUHAAN MUKERJI, SRI. NIKHIL PARIKSHITH SRI. ABHISHEK MANCHANDA &
SRI. CHANDAN PRAKASH PANDEY &
SRI. L. NIDHIRAM SHARMA SRI. VYASAKIRAN UPADHYA & SRI. MANJUNATH B, SRI. VARUN THOMAS MATHEW , SRI. ONKAR SHARMA, ADVOCATES)
AND:
1. DIRECTORATE GENERAL OF GOODS SERVICES TAX INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK 8, WING 3, 1ST FLOOR SECTOR I, R.K. PURAM, DELHI – 110 066.
2. ADDITIONAL DIRECTOR GENERAL DIRECTOR GENERAL OF GOODS OF SERVICES INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK -8, WING NO.6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
…RESPONDENTS (BY SRI. N.VENKATARAMAN, ADDITIONAL SOLICITOR GENERAL A/W SRI. JEEVAN J NEERALAGI, ADVOCATE)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND SET ASIDE THE INTIMATION NOTICE ISSUED IN FORM GST -1A BEARING CASE ID
413/INT/DGGI/H1/2021/943 DTD: 8 SEPTEMBER 2022 AND ETC.
IN W.P. No. 19561/2022 BETWEEN:
RAMESH PRABHU AGED 43 YEARS CHIEF FINANCIAL OFFICER M/S. GAMESKRACT TECHNOLOGIES PRIVATE LIMITED B-304, VICTORY HARMONY APARTMENTS SSA ROAD, HEBBEL, BENGALURU.
…PETITIONER (BY SRI. DR. ABHISHEK MANU SINGVI, SENIOR COUNSEL AND SRI. UDAYA HOLLA, SENIOR COUNSEL A/W SRI. SIDDHARTHA H.M., & SRI. SUHAAN MUKERJI, SRI. NIKHIL PARIKSHITH SRI. ABHISHEK MANCHANDA &
SRI. CHANDAN PRAKASH PANDEY &
SRI. L. NIDHIRAM SHARMA SRI. VYASAKIRAN UPADHYA & SRI. MANJUNATH B, SRI. VARUN THOMAS MATHEW , SRI. ONKAR SHARMA, ADVOCATES)
AND:
1. DIRECTORATE GENERAL OF GOODS AND SERVICES TAX INTELLIGENCE ( HEADQUARTERS) WEST BLOCK 8, WING 3, 1ST FLOOR SECTOR I, R. K PURAM DELHI – 110 066.
2. ADDITIONAL DIRECTOR GENERAL DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE (HEAD QUARTERS)
WEST BLOCK- 8, WING NO. 6
2ND FLOOR, R.K. PURAM DELHI – 110 006.
3. ADDITIONAL DIRECTOR DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
4. SENIOR INTELLIGENCE OFFICER DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK – I, WING NO. 6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
…RESPONDENTS (BY SRI. N.VENKATARAMAN, ADDITIONAL SOLICITOR GENERAL A/W SRI. JEEVAN J NEERALAGI, ADVOCATE)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND SETTING ASIDE THE SHOW CAUSE NOTICE BEARING DGGI F NO. 413/INT.DGGI/HQ/2021/1324 AND BEARING DIN NO. CC20220900000000B732 DTD: 23.09.2022 ANNEXURE-A AND THE PROCEEDINGS AND ISSUED BY R-1 AND ETC.
IN W.P. No. 20119/2022 BETWEEN:
1. MR. PRITHVI RAJ SINGH AGED ABOUT 38 YEARS S/O SRI. DIWN SINGH MAHAR CHIEF EXECUTIVE OFFICER EXISTING BUSINESS & FOUNDER OF M/S. GAMESKFRAFT TECHNOLOGIES PRIVATE LIMITED J-203, BREN UNITY, CHINNAPPANAHLLI MAIN ROAD, MARATHAHALLI BENGALURU – 560 037.
2. MR. DEEPAK SINGH AGED ABOUT 36 YEARS S/O SRI. GAJENDRA SINGH FOUNDER – DIRECTOR OF M/S. GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED, 9134, EMBASSY PRISTINE, BELLANDUR BENGALURU – 560 103.
…PETITIONERS (BY SRI. DR. ABHISHEK MANU SINGVI, SENIOR COUNSEL AND SRI. UDAYA HOLLA, SENIOR COUNSEL A/W SRI. SIDDHARTHA H.M., & SRI. SUHAAN MUKERJI, SRI. NIKHIL PARIKSHITH, SRI. ABHISHEK MANCHANDA &
SRI. CHANDAN PRAKASH PANDEY & SRI. L. NIDHIRAM SHARMA, SRI. VYASAKIRAN UPADHYA & SRI. MANJUNATH B, SRI. VARUN THOMAS MATHEW, SRI. ONKAR SHARMA, ADVOCATES)
AND:
1. DIRECTORATE GENERAL OF GOODS SERVICES TAX INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK 8, WING 3, 1ST FLOOR SECTOR I, R.K. PURAM DELHI – 110 066.
2. ADDITIONAL DIRECTOR GENERAL DIRECTOR GENERAL OF GOODS OF SERVICES INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK -8, WING NO.6
2ND FLOOR, R.K. PURAM, DELHI – 110 066.
3. ADDITIONAL DIRECTOR DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE (HEADQUARTERS), WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM, DELHI – 110 066.
4. SENIOR INTELLIGENCE OFFICER DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE (HEADQUARTERS)
WEST BLOKC-8, WING NO.6
2ND FLOOR, R.K. PURAM, DELHI – 110 066.
…RESPONDENTS
SRI. JEEVAN J NEERALAGI, ADVOCATE)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND SET ASIDE THE SHOW CAUSE NOTICE BEARING DGGI F. NO. 413/INT/DGGI/HQ/2021/1324 AND BEARING DIN CC20220900000000B 732 DATED: 23.09.2022 VIDE ANNEXURE-A AND THE PROCEEDINGS THEREUNDER AND ETC.
IN W.P. No. 20120/2022 BETWEEN:
1. MR. VIKAS TANJEA AGED ABOUT 39 YEARS S/O RAJ KUMAR TANEJA DIRECTOR & CHIEF EXECUTIVE OFFICER & FOUNDER, M/S. GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED
2083, PRESTIGE PINEWOOD APRTMENTS KORAMANGALA 1ST BLOCK, BENGALURU .
2. MR. DEEPAK JHA AGED ABOUT 40 YEARS S/O SRI. AMAR NATH JHA CHIEF EXECUTIVE OFFICER NEW BUSINESS & FOUNDER M/S. GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED, 1304, PURVA VANTAGE APARTMENTS
25TH CROSS, 19TH MAIN, HSR LAYOUT SECTOR -2, BENGALURU – 560 102.
…PETITIONERS (BY SRI. DR. ABHISHEK MANU SINGVI, SENIOR COUNSEL AND SRI. UDAYA HOLLA, SENIOR COUNSEL A/W SRI. SIDDHARTHA H.M., & SRI. SUHAAN MUKERJI, SRI. NIKHIL PARIKSHITH, SRI. ABHISHEK MANCHANDA &
SRI. CHANDAN PRAKASH PANDEY &
SRI. L. NIDHIRAM SHARMA, SRI. VYASAKIRAN UPADHYA &
SRI. MANJUNATH B, SRI. VARUN THOMAS MATHEW , SRI. ONKAR SHARMA, ADVOCATES)
AND:
1. DIRECTORATE GENERAL OF GOODS SERVICES TAX INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK 8, WING 3, 1ST FLOOR SECTOR I, R.K. PURAM DELHI – 110 066.
2. ADDITIONAL DIRECTOR GENERAL DIRECTOR GENERAL OF GOODS OF SERVICES INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK -8, WING NO.6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
3. ADDITIONAL DIRECTOR DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE (HEADQUARTERS)
WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
4. SENIOR INTELLIGENCE OFFICER DIRECTORATE GENERAL OF GOODS AND SERVICES INTELLIGENCE (HEADQUARTERS)
WEST BLOKC-8, WING NO.6
2ND FLOOR, R.K. PURAM DELHI – 110 066.
…RESPONDENTS (BY SRI. N.VENKATARAMAN, ADDITIONAL SOLICITOR GENERAL A/W SRI. JEEVAN J NEERALAGI, ADVOCATE)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND SET ASIDE THE SHOW CAUSE NOTICE BEARING DGGI F. NO. 413/INT/DGGI/HQ/2021/1324 AND BEARING DIN CC20220900000000B 732 DATED: 23.09.2022 VIDE ANNEXURE-A AND THE PROCEEDINGS THEREUNDER AND ETC.
THESE PETITIONS ARE BEING HEARD AND RESERVED ON
17.11.2022 COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
The main question/issue that arises for consideration in these petitions is, whether offline/online games such as Rummy which are mainly/preponderantly/substantially based on skill and not on chance, whether played with/without stakes tantamount to ‘gambling or betting’ as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017.
I. FACTUAL MATRIX M/s.Gameskraft Technologies Pvt. Ltd., (for short ‘the GTPL’) claims to be an Online Intermediary Company incorporated in June 2017, who runs technology platforms that allow users to play skill based online games against each other. Petitioner - GTPL contends that it has over 10 lakh users from across India and is headquartered in Bangalore and registered under the Central Goods and Services Tax Act, 2017 (for short ‘ the CGST Act’) and the Karnataka Goods and Services Tax Act, 2017 (for short ‘the KGST Act’). It is contended that the said company is a legally compliant company, who has been duly filing GST returns and has paid GST and is a bonafide tax payer having paid tax returns on a timely basis and has paid substantial tax to the tune of Rs.1,600/- crores under GST and Income Tax Laws upto June 2022.
2. During the period between 11.11.2021 and 13.11.2021, the respondents – Revenue undertook search and seizure operations of the premises of GTPL, during which, various documents and devices were seized and panchanamas were issued. On 17.11.2021, respondents passed Provisional Attachment Orders attaching the Bank accounts of GTPL under Section 83 of the CGST Act, to which, objections were filed by GTPL, pursuant to which, respondents passed an Attachment Confirmation order dated 30.11.2021.
3. W.P.No.22010/2021 is preferred by GTPL challenging the aforesaid attachment orders and on 03.12.2021, this Court passed an interim order permitting the petitioner to operate the Bank accounts for limited purposes mentioned in the said order.
4. Meanwhile, the officials / founders / employees of GTPL were summoned by the respondents for recording of statements and the same continued upto August, 2022. On 02.08.2022, in addition to the interim order passed earlier in W.P.No.22010/2021, this Court directed that no precipitative action be taken against the petitioner – GTPL and the matter was heard finally and reserved for orders on 07.09.2022 by continuing the interim orders / directions.
5. Subsequently, on 08.09.2022, respondents issued Intimation Notice under Section 74(5) of the CGST Act, calling upon GTPL to deposit a sum of Rs.2,09,89,31,31,501/- along with interest and penalty by 16.09.2022. The said Notice is challenged in W.P.No.18304/2022, in which, this Court passed an interim order of stay dated 23.09.2022.
6. Immediately thereafter, the respondents issued the impugned Show Cause Notice under Section 74(1) of the CGST Act to the petitioner – GTPL as well as its Founders, CEOs and CFOs, who have preferred W.P.No.19570/2022, W.P.No.19561/2022, W.P.No.20119/2022 and W.P.No.20120/2022. Accordingly, the details of the instant writ petitions are as under:
(a) W.P.No.22010/2021 has been preferred by GTPL challenging the Attachment orders dated 17.11.2021 and 30.11.2021;
(b) W.P.No.18304/2022 is preferred by GTPL against the Intimation Notice dated 08.09.2022 issued under Section 74(5) of the CGST Act;
(c) W.P.No.19570/2022 is filed by GTPL assailing the impugned Show Cause Notice (SCN) dated 23.09.2022;
(d) W.P.No.19561/2022 is preferred by the Chief Financial Officer of GTPL challenging the impugned SCN dated 23.09.2022;
(e) W.P.No.20119/2022 is preferred by the Founders of GTPL challenging the impugned SCN dated 23.09.2022;
(f) W.P.No.20120/2022 is preferred by the Chief Executive Officers of GTPL challenging the impugned SCN dated 23.09.2022;
7. At the outset, it is relevant to state that the impugned Attachment orders having been passed on 17.11.2021 and 30.11.2021, the period of one year prescribed in Section 83 of the CGST Act having expired during the pendency of the subse
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