SC to Hear Challenges Against Retrospective Imposition of 28% GST on Online Gaming Companies - 2024-01-11

The Supreme Court has issued notices in response to pleas filed by online gaming companies Head Digital Works and Games 24/7 challenging the government’s decision to retrospectively imposing 28% Goods and Services Tax (GST) on the total value of bets placed, rather than on the gross gaming revenue. The top court has agreed to hear all the cases pertaining to the taxation of all the online gaming companies together. On January 8, the court directed both the Centre and the GST department to submit their responses to the plea within two weeks. The case is anticipated to be scheduled for a hearing in the coming months. Additionally, the GST department has committed to filing a transfer petition, seeking the consolidation of all cases related to the same legal issue from various high courts to the Supreme Court. Senior advocate Harish Salve represented the online gaming companies, while Additional Solicitor General Venkatraman appeared on behalf of the GST department and the Union of India. As reported by Reuters, GST authorities have issued notices totaling ₹1 lakh crore to online gaming companies, alleging that these firms have engaged in tax evasion. In August 2023, the GST authority implemented a 28% tax on online gaming companies, applying it to the total funds deposited for participating in online games. On December 15, the Supreme Court declined to provide temporary relief against Goods and Services Tax (GST) demand notices issued to online gaming companies Head Digital Works and Games 24/7. In the 50th GST Council meeting held on July 11, 2023, the GST Council recommended levying 28% GST on the full face value on Online Gaming, Casinos & Horse racing, irrespective of whether these activities are considered games of skill or games of chance. This led to an outrage in the gaming industry. Resultantly, the GST Council vide its 51st meeting, stated that the decision will be enforced from Oct. 1, 2023, and will be reviewed after six months of its implementation. In September 2023, the apex court stayed judgment, which quashed a goods and services tax (GST) notice against Bengaluru-based online gaming company Gameskraft Technology for alleged evasion of Rs 21,000 crore.