In a significant development, the Supreme Court of India has issued a stay on showcause notices sent by GST authorities, which total over Rs 1 lakh crore, to various online gaming companies and casinos. This decision was announced following claims of tax evasion made against these firms. The bench, comprising Justices J B Pardiwala and R Mahadevan, has halted all proceedings against the gaming companies pending further hearings, citing the complexity of the issues involved.
Additional Solicitor General N Venkataraman, representing the GST department, acknowledged during the hearing that some of the showcause notices are due to expire in February. The case has been scheduled for further discussion on March 18.
This legal confrontation began when GST authorities issued notices in October 2023 to online gaming platforms accused of evading taxes. The legal contention revolves around changes to the GST law, which, from October 1, 2023, require overseas online gaming companies to register in India. Furthermore, a GST Council decision in August 2023 clarified that a 28% GST would be applied to the full value of bets on these platforms.
Several gaming companies have taken their grievances to various high courts across the country, challenging the demands made by revenue authorities. This led to the Supreme Court consolidating these pleas to deliver a definitive ruling on the imposition of the 28% GST on e-gaming firms, taking over from nine high courts last year.
Notably, the Supreme Court had previously stayed a Karnataka High Court verdict that annulled a GST notification demanding Rs 21,000 crore from an online gaming firm. Major players in the industry, including Games 24×7, Head Digital Works, and the Federation of Indian Fantasy Sports, are among those who have appealed to the apex court challenging the GST levies.
