Appearing before a Bench of Justices J.B. Pardiwala and R. Mahadevan, Additional Solicitor General N. Venkataraman, for the government, said games of skill would continue to be what they were until bets or wagers were placed on them.

"Then it will become gambling, in spite of being a game of skill... Betting on a game of skill is statutorily considered gambling,” Mr. Venkataraman argued.

He contended that betting or wagering on any kind of game, whether chance or skill based, was gambling.

Senior advocate A.M. Singhvi, appearing for one of the companies, said the “fundamental issue” in the case was about an “ancient exception” given to games of skill.

Mr. Singhvi submitted that five judges and seven judge Benches of the constitutional courts have consistently held that games of skill were per se not categorised as chance-based.“Is the government saying that in chess, the moment I put money on it, the game metamorphosises from a game of skill into a game of chance? The character of a game cannot be so changed,” Mr. Singhvi objected to the government’s line of argument.

In January, the apex court had stayed the operation of show-cause notices worth ₹1.12 lakh crore issued under GST proceedings against online gaming companies. About 50 online gaming companies are before the apex court.

The core dispute in the case concerned the interpretation of GST applicability on online gaming. The government has argued that 28% GST must apply to the total contest entry amount, effectively taxing the entire prize pool.

However, gaming companies contended that GST should only be levied on their platform fees or commission, as many of these games involve skill rather than chance.

Last year, the top court had transferred to itself 27 writ petitions, pending across nine State High Courts, challenging the levy of 28% GST on all forms of online real-money gaming.

The petitions were tagged with a pending case concerning a decision of the Karnataka High Court, which had quashed a GST show-cause notice of ₹21,000 crore while holding that online or electronic or digital Rummy played on Gameskraft, a gaming platform, was not taxable as a betting or gambling activity.

In January 2024, the top court had issued notice to the Centre on a plea filed by the e-gaming federation against the levy of 28% GST.

The GST Council had in 2023 recommended that online gaming along with casinos and horse racing must be taxed at a uniform rate. It had decided against having any distinction between ‘games of skill’ and ‘games of chance’.