• Notification Date: 15-11-2023
• Notification No: N/A

Govt likely to Request Supreme Court to club all GST Online Gaming Cases

The government is likely to request the Supreme Court to club together all the Goods and Services Tax (GST) online gaming cases that are currently under litigation on the grounds of a single principle, a senior Finance Ministry official said. 

“The online gaming cases are pending in the Supreme Court on the taxability issue. The final decision on it will be taken by the Supreme Court and one cannot have multiple interpretations of the same law. So, the request is to tag all the cases together,” the official reported. 

If the Supreme Court agrees, it will pass an order saying that since the cases are pending before it, all the matters can be tagged instead of multiple orders being passed. “The request is to club these into a single litigation on the principle of it. Some of the earlier major decisions of the Supreme Court are in the name of a company but the list of tagged cases go up to 40-100,” he said. The transfer can only be initiated at the discretion of the Supreme Court. 

Clubbing of all the GST online gaming company cases will save the Central Board of Indirect Taxes and Customs (CBIC) resources and time. 

The request to transfer comes when the Supreme is about to take up the case of Gameskraft, a Bengaluru-based gaming company that was first issued a notice in 2022, to pay Rs 21,000 crore in GST arrears from 2017 to June 30, 2022. The company disputed the order. While the Karnataka High Court quashed the notice, the SC stayed the HC order quashing the notice. The case is expected to be heard by the SC in the coming weeks. 

The GST Council approved 28 percent GST on all online gaming from October 1, 2023. It also interpreted that between 2017 and Oct 1, 2023, all online games involving bets, irrespective of skill or chance, needed to pay a GST rate of 28 percent on the full value of the bets placed, as it fell under the category of gambling. As a result of this, the online gaming companies have been issued GST notices valued at Rs one lakh crore so far this year. 

Several online gaming firms have been engaged in a tussle with the government over this. While the companies have taken a stand that 28 percent tax is applicable only from October 1 of 2023, the government has interpreted that it will apply to the period prior to October 1 as well. According to the government, the October 1 onwards revision only provided clarity to a law that was already in force. 

Currently, the Bombay HC, the Goa bench of Bombay HC, and the Sikkim HC are hearing cases pertaining to GST notices to online gaming companies and casinos. Popular online gaming company, Dream 11’s parent company filed a writ petition against the tax demand, following which several other companies including major players such as Games 24x7 and Head Digital Works, have moved petitions. 

In October, gaming major Delta Corp, said in an exchange filing that the Bombay High Court in Goa has examined the writ petitions submitted by both the company and its subsidiaries regarding the show cause notices issued by tax authorities and issued an order, prohibiting the authorities from making definitive decisions without prior court approval. Similarly, the Sikkim High Court has stayed a GST demand notice of Rs 628 crore against Delta Corp.