CURRENT AFFAIRS | 29 MAY 2026
On 28 May 2026 (Wednesday), a Supreme Court bench of Justices JB Pardiwala and R Mahadevan upheld the constitutional validity of 28% Goods and Services Tax on the full face value of online money gaming, applied retrospectively under amendments to the CGST Act, 2017 flowing from the October 2023 GST Council recommendations. The verdict revives tax demands estimated at ₹2.5 lakh crore — with single-company exposures of ₹21,000 crore (Gameskraft), ₹40,000 crore (Dream11) and ₹23,204 crore (Delta Corp). For CLAT 2027 aspirants, the judgment ties together GST architecture, the “skill vs chance” jurisprudence stretching back to 1957, and the limits of Article 20(1)’s retrospective-law bar.
The Core Holding
The Court decisively rejected the industry’s argument that “games of skill” (rummy, fantasy sports, poker) deserve a 18% GST treatment as services, distinct from “games of chance” (gambling) which attract 28%. For GST classification purposes, the Court held, all online money gaming — skill or chance — is an “actionable claim” falling within Entry 6 of Schedule III of the CGST Act, and therefore taxable at 28% on the full face value (entry amount), not on Gross Gaming Revenue (GGR). The skill-vs-chance distinction, the Court held, is relevant for criminal/regulatory law (under State of Bombay v RMD Chamarbaugwala, 1957) but not for tax classification under the CGST framework.
Constitutional & Statutory Framework
- Article 246A — concurrent power of Centre and States to levy GST (inserted by 101st Amendment, 2016)
- Article 366(12A) — definition of “goods and services tax”
- Article 20(1) — bar on retrospective application of penal laws only (does not cover tax)
- Article 14 (manifest arbitrariness) & Article 19(1)(g) (right to trade) — both rejected as grounds of challenge
- CGST Act, 2017 §15 — value of taxable supply (full face value upheld over GGR)
- Schedule III, Entry 6, CGST Act — actionable claims excluded from the “neither goods nor services” carve-out for lottery, betting and gambling
- State of Bombay v RMD Chamarbaugwala, AIR 1957 SC 699 — gambling is res extra commercium
- KR Lakshmanan v State of TN, (1996) 2 SCC 226 — horse racing held to be a game of skill
- Skill Lotto Solutions v UoI, (2021) 15 SCC 667 — GST on lottery upheld at full face value
- Mohit Minerals v UoI, (2022) 10 SCC 700 — GST Council recommendations are recommendatory, not binding
- Promotion and Regulation of Online Gaming Act, 2025 (PROG Act) — complete pan-India prohibition on online money gaming
Why This Matters for CLAT 2027
Expect a Legal Reasoning question on the scope of Article 20(1) — a near-certain mistake CLAT aspirants make is assuming all retrospective laws are barred. Article 20(1) covers only ex post facto criminal laws; retrospective taxation is permissible if not arbitrary. The verdict is also a clean illustration of cooperative federalism under Article 246A and the persuasive force of GST Council recommendations after Mohit Minerals. Aspirants should also note the doctrinal distinction between (a) “skill vs chance” for regulatory purposes (the Chamarbaugwala/Lakshmanan line) and (b) “actionable claim” classification for tax purposes (this judgment). A CLAT passage may also weave in Skill Lotto Solutions and ask candidates to apply its valuation principle to online gaming.
Key Facts (Quick Revision)
| Element | Detail |
|---|---|
| Verdict date | 28 May 2026 |
| Bench | Justices JB Pardiwala & R Mahadevan |
| GST rate upheld | 28% on full face value |
| Aggregate tax demand revived | ~₹2.5 lakh crore |
| Largest single notice | Dream11 (~₹40,000 cr) |
| Source of amendment | GST Council, October 2023 |
| Companion statute | PROG Act, 2025 |
CLAT Mnemonic — G-A-S
Gameskraft notice (₹21,000 cr) — the trigger litigation · Actionable claim classification · Schedule III Entry 6 carve-out.
Tip: if the question is about tax, do not get baited into the skill-vs-chance distinction — that is for regulatory law (Chamarbaugwala) only.
Test Yourself: 10-Question Quiz
This quiz covers Article 246A, Article 20(1), Section 15 CGST valuation, the Chamarbaugwala & Lakshmanan precedents, and the Mohit Minerals principle on GST Council recommendations.
Practice Quiz — 10 CLAT-Style Questions
Click an option to reveal the answer and explanation.
Further Reading
- The October 2023 GST Council recommendation (51st meeting) on online gaming.
- Para-by-para reading of Mohit Minerals on the recommendatory nature of Council resolutions.
- Note PROG Act 2025 — the regulatory regime now overlaps with the tax regime.
