GST: Karnataka High Court has stayed attachment orders against Gameskraft for non-payment of Rs. 419 crore in GST dues

The Karnataka High Court recently postponed orders from the Directorate General of GST Intelligence to seize the bank accounts of online gaming company Gameskraft for failing to pay pending GST dues (Gameskraft Technology Pvt Ltd v. DG GST Intelligence and ors).

Gameskraft was accused of evading GST payment to the tune of Rs. 419 crore since November 2017, following which provisional and confirmation orders were issued on November 17 and 30, respectively, blocking the company’s bank accounts.

Gameskraft had challenged these rulings in the High Court and had provided a Rs. 130 crore immovable property as temporary security in exchange for being permitted to use its bank accounts to pay its dues to employees and others.

Senior Counsel SS Naganand and Advocate HM Siddhartha, appearing for the petitioner, said that the orders had already had a cascade impact, preventing Gameskraft from paying statutory dues and causing irreparable harm and suffering, in addition to significant financial loss.

The defendants’ lawyer, Amith Anand Deshpande, argued that Gameskraft was not entitled to any interim relief because the value of the property supplied as security was significantly less than the sum due, which Gameskraft had been “continuously dodging.”

After hearing the parties, Justice SR Krishna Kumar came to the conclusion that the investigation was in its early stages and that the respondents had given the orders without taking into account Gameskraft’s objections and documentation. It went on to say,

“…in fact, the respondents assign no reasons, much less valid or cogent reasons, for coming to the conclusion that the GST dues alleged to be payable by the petitioner are about Rs. 419 crores, and that the amount of Rs. 451 crores said to be the bank balance in the petitioner’s bank accounts must be frozen…”

The calculation of the dues was also glaringly absent from the confirmation order, which was a non-speaking and unreasoned order, according to the Court.

As a result, Justice Kumar concluded,

“…I am of the considered judgement that, while the petitioner’s interim remedy is being evaluated, it would be equitable and appropriate to make an interim arrangement allowing the petitioner to run the bank accounts in the interest of justice…”

As a result, the attachment of bank accounts was temporarily suspended to allow Gameskraft to use them for paying dues, salaries, and payments to customers and vendors.

The corporation was also directed to produce a statement of accounts with the Court before the next hearing date, as well as an assurance not to transfer, encumber, or create third-party rights over the immovable property it had pledged as security.

It also requested that the founders and top executives of Gameskraft appear at the GST hearings.

To Read the Judgment Download PDF Given Below :