The Supreme Court on Thursday postponed the hearing of 27 petitions challenging the retrospective imposition of Goods and Services Tax (GST) on real-money gaming companies. The new hearing date is set for July 31. In April this year, the apex court had consolidated all pending petitions from nine High Courts, which were challenging the notices issued by tax authorities. Chief Justice of India (CJI) DY Chandrachud emphasized the need for an “authoritative pronouncement” on the matter.
CJI Chandrachud stated that the cases would be listed on July 31 solely for further directions, with the likelihood of the main hearing occurring at a later date. The Supreme Court also instructed all parties involved in the case to submit their written arguments before the next hearing.
28% GST Imposed on Online Gaming
In its 50th meeting in July 2023, the GST Council decided to impose a 28% tax on the full face value of online gaming, aligning it with the taxation of casinos and horse racing. Previously, online gaming was subject to an 18% GST. The new tax regime became effective from October 1, 2023, eliminating any distinction between ‘games of skill’ and ‘games of chance’.
Following the implementation of the new tax rate, tax authorities issued notices demanding a GST of Rs 1.12 trillion for the period covering 2022-23 and the first seven months of 2023-24, excluding interest and penalties. This led to the filing of 30 petitions by real-money gaming companies challenging the GST demand, with 27 of these transferred to the Supreme Court.
The initial petitions were filed by Head Digital Works, Games24x7, and Baazi Games. Additionally, there is one plea by the GST department challenging a Karnataka High Court verdict. In September of last year, the Supreme Court stayed the Karnataka High Court’s judgment, which had quashed a GST notice against online gaming company Gameskraft Technology for alleged tax evasion amounting to Rs 21,000 crore. As of October 2023, the total GST evasion detected by central GST officers stood at Rs 1.51 trillion.
Supreme Court Centralization of GST Petitions for Consistent Ruling for Real-Money Gaming
CJI Chandrachud noted earlier this year that it would be more effective for the Supreme Court to hear the case and provide an authoritative ruling, rather than having different High Courts hear the same issue and potentially deliver conflicting judgments. The Centre had also requested the transfer of petitions from the High Courts to the Supreme Court to ensure a uniform decision.
The upcoming hearing on July 31 is expected to provide further directions for the case, with the possibility of a subsequent main hearing date. The outcome of these hearings will be critical in determining the future of GST Petitions implementation on the real-money gaming industry in India and its broader implications for the sector. The gaming companies and other stakeholders await the Supreme Court’s verdict, which will have significant financial and operational consequences for the industry.
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