Retrospective GST on e-gaming firms: SC defers hearing to July 31

Thirty petitions have been filed by real-money gaming companies challenging a demand for over Rs 1.5 lakh crore, calculated at 28% on the face value of bets

The Supreme Court on Thursday adjourned the hearing on a clutch of 27 petitions challenging the imposition of retrospective goods and services tax (GST) on real-money gaming companies.

The next hearing has been fixed for July 31.

In April this year, the apex court had transferred to itself all pending petitions in nine High Courts challenging the notices issued to them by tax authorities. The Supreme Court had said that it called for an “authoritative pronouncement”.

Chief Justice of India (CJI) DY Chandrachud said that the cases would be listed on July 31 only for further directions and would likely be heard on a subsequent date.

The apex court also directed that written submissions by all the parties in the case should be submitted before it, prior to the next date of hearing.

In its 50th meeting held in July 2023, the GST council decided to levy 28 per cent tax -- the highest slab -- on the full face value of online gaming, bringing it on par with casinos and horse racing. The council had decided against having any distinction between 'games of skill' and 'games of chance'. Earlier online gaming was subject to 18 per cent GST.

This new tax regime came into effect from October 1, 2023.

And later, tax authorities issued notices demanding a GST of Rs 1.12trillion in 2022-23 and the first seven months of 2023-24 excluding interest and penalty.

Soon 30 petitions were filed by real-money gaming companies challenging a demand.

Of these, 27 pleas have been transferred to the Supreme Court from various high courts. The original petition was filed by Head Digital Works, Games24x7, and Baazi Games, while one plea by the GST department challenges a Karnataka High Court verdict.

Last year in September, the Supreme Court stayed Karnataka High Court’s judgment, which quashed a GST notice against online gaming company Gameskraft Technology for alleged tax evasion to the tune of Rs 21,000 crore. 

The total GST evasion detected by central GST officers till October, 2023 was Rs 1.51trillion.

CJI Chandrachud had said earlier this year that rather than having different High Courts hear the same issue and potentially deliver conflicting judgments, it would be more effective for the Supreme Court to hear the case and provide an authoritative ruling.

The Centre had also requested the transfer of the petitions from the High Courts to the Supreme Court.