Many online gaming firms like Games 24×7, Head Digital Works, and the Federation of Indian Fantasy Sports had moved the top court challenging the GST imposition by the GST authorities. Photo: @games24x7, @FIFS_Official via X
The Supreme Court on Friday (January 10, 2025) stayed the operation of showcause notices of ₹1.12 lakh crore issued under the Goods and Services Tax (GST) proceedings against online gaming companies.
A Bench of Justices J.B. Pardiwala and R. Mahadevan passed the order in separate petitions filed by 49 online gaming companies.
Advocate Abhishek A. Rastogi, who represented the companies in court, said a freeze on further action protected his clients from any coercive action and ensured that demands made in the showcause notices were not time-barred.
The court listed the case next on March 18, 2025.
The core dispute in the case concerned the interpretation of GST applicability on online gaming.
The government, represented by Additional Solicitor General N. Venkataraman, argued that 28% GST must apply to the total contest entry amount, effectively taxing the entire prize pool.
However, gaming companies contended that GST should only be levied on their platform fees or commission, as many of these games involve skill rather than chance.
Last year, the top court had transferred to itself 27 writ petitions, pending across nine State High Courts, challenging the levy of 28% GST on all forms of online real-money gaming.
The petitions were tagged with a pending case concerning a decision of the Karnataka High Court, which had quashed a GST showcause notice of ₹21,000 crore while holding that online or electronic or digital Rummy played on Gameskraft, a gaming platform, was not taxable as a betting or gambling activity.
In January 2024, the top court had issued notice to the Centre on a plea filed by the E-gaming Federation against the levy of 28% GST.
The GST Council had in 2023 recommended that online gaming, along with casinos and horse racing, must be taxed at a uniform rate. It had decided against having any distinction between ‘games of skill’ and ‘games of chance’.
Published – January 10, 2025 01:46 pm IST