More Stories

Informist, Friday, Jan. 10, 2025

 

 

--SC stays proceeding on show-cause notices to online gaming cos till Mar 18 

--SC to hear online gaming cos' case for final hearing on Mar 18 

 

NEW DELHI – The Supreme Court on Friday stayed the proceedings related to show-cause notices issued to online gaming companies by the Directorate General of GST Intelligence, amounting to INR 1.12 trillion. The bench of Justice J.B. Pardiwala and Justice R. Mahadevan has placed the cases for final hearing on Mar. 18.

 

The top court said that the matter was "ripe" for hearing. However, according to the tax department, some of the notices will become time-barred as some of the proceedings arose from assessment year 2017-18 onwards. "In such circumstances, the adjudication of all the show-cause notices will be stayed," said the apex court, listing them for hearing on Mar. 18.

 

The apex court was hearing a bunch of cases in which the government's decision to retrospectively impose a 28% goods and services tax on the full value of the bets placed, and not on the gross gaming revenue, has been challenged. In the hearing on Friday, the tax department said that the delay in action over these show-cause notices to online gaming companies may make them time-barred and the government would not be able to realise the demands. 

 

Some online gaming companies told the court that the issue was pending for a long time. Fearing coercive action by tax authorities, these companies sought a stay on proceedings in the show-cause notices. 

 

Advocate Abhishek A. Rastogi, the founder of Rastogi Chambers, who is representing the gaming companies in the top court, told Informist that the stay not only provides immediate respite to gaming companies from potential coercive action but also safeguards the interests of the revenue authorities. By pausing the proceedings, the apex court has ensured that the demands do not become time-barred during the course of the litigation, preserving the scope for legal clarity without procedural hindrance, said Rastogi.

 

In April, the apex court transferred to itself a batch of pending cases from nine high courts on the same issue. The top court had tagged these petitions with a pending case of INR 210 billion show-cause notice issued to online gaming platform Gameskraft by the Directorate General of GST Intelligence. The apex court was also hearing petitions filed by gaming companies Delta Corp Ltd., Head Digital Works and Play Games 24*7, besides the E-Gaming Federation of India, on the same issue.

 

In the Gameskraft case, the top court had stayed a Karnataka High Court order that quashed the INR-210-bln show-cause notice issued to the company. Most of the show-cause notices were issued after the GST Council in 2023 decided to levy a uniform goods and services tax of 28% on the full face value of the bets placed on all online gaming platforms. The government believes that some of these companies leveraged the lack of clarity on taxation of 'game of chance' and 'game of skill' earlier. Minister of State for Finance Pankaj Chaudhary had told the Rajya Sabha on Dec. 5, 2023, that the government had issued 71 notices worth a cumulative INR 1.12 trillion to online gaming companies between April 2022 and October 2023.

 

 

Rastogi said that the outcome of this case is expected to have far-reaching implications for the taxation framework of the online gaming industry in India. With the sector poised for rapid growth, clarity on tax treatment is crucial for fostering a predictable business environment and ensuring regulatory compliance, Rastogi added.

 

At 1252 IST, the shares of Delta Corp Ltd. were up 7.2% at INR 121.50 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.