The Supreme Court on Friday issued a stay on the showcause notices amounting to over Rs 1 lakh crore that were levied by GST authorities against online gaming companies and casinos over accusations of tax evasion. A bench comprising Justices J B Pardiwala and R Mahadevan stated that these matters necessitate a thorough hearing, and all legal proceedings against the gaming companies should remain on hold during this time.
Additional Solicitor General N Venkataraman, who represented the GST department, noted that some of the showcause notices are due to be resolved by February. The case has been scheduled for further consideration on March 18. In October 2023, the GST authorities issued showcause notices to online gaming companies regarding allegations of tax evasion. The government amended the GST legislation, mandating that foreign online gaming companies register in India effective from October 1, 2023.
In August 2023, the GST council made it clear that a GST rate of 28% would be applied to the total value of bets placed on online gaming platforms. In response to such GST demands, various gaming companies have approached different high courts, disputing the claims made by the revenue authorities.
The Supreme Court previously allowed a petition from the Centre and took over the hearings pertaining to the imposition of 28% GST on e-gaming firms, transferring them from nine high courts for a comprehensive ruling. Several online gaming companies, including Games 24×7, Head Digital Works, and the Federation of Indian Fantasy Sports, have sought relief from the top court regarding the GST enforcement. The Supreme Court had also stayed the Karnataka High Court’s decision that annulled a GST notice, amounting to Rs 21,000 crore, issued to one online gaming firm.
