GST on E-gaming : Supreme Court transfers to itself all pleas against 28% levy

supreme court

GST on E-gaming: The Supreme Court transferred to itself all petitions pending before various high courts challenging the 28% retrospective goods-and-services-tax liability on e-gaming companies. As many as 27 cases that are pending before nine high courts have been transferred before the apex court. Some of these pending challenges are filed by Deltatech Gaming Ltd., Golden Gaming International Pvt., Vision 11 Gaming Pvt., Nxgn Sports Interactive Pvt. and Delta Corp. The tax demands from these companies are running into thousands of crores.

A three-judge bench, led by Chief Justice of India DY Chandrachud, said that to avoid different views that might come from various high courts, it is better that the top court takes a final call on the matter.

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The court will hear all these matters, along with the Gameskraft case, in the first week of May. Earlier this year, the top court had agreed to hear pleas challenging the retrospective application of the revised GST rate of 28% levied against online gaming companies. The e-gaming firms are challenging the tax department’s stance to impose 28% GST on the full-face value of the bets for the period prior to Oct. 1, 2023.

According to changes introduced by the government in the GST Act in August, online gaming was added to the list of actionable claims—along with lottery, betting and gambling—that attract 28% tax. This change was to be made applicable on Oct. 1, 2023.

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It was decided that the tax will be levied at the point when the deposit is made, irrespective of whether the activities are a game of skill or chance, as long as they are played with stakes. The government has taken the stance that this liability was “pre-existing” and that the law has not been amended in this regard but only “clarified.”

The tax department has been issuing GST notices for the period prior to Oct. 1 as well. This has led to a battery of GST notices being slapped on these companies, with demands that are running into multiples of their earnings. It has culminated in a huge difficulty for these companies as they were under the impression that the new rate of tax would be applicable prospectively from Oct. 1, 2023, onwards. Last year, the top court also issued a stay on a Karnataka High Court ruling that quashed a Rs 21,000-crore show-cause notice to Gameskraft Technologies Pvt. by the Directorate General of GST Intelligence.

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