The Supreme Court on Tuesday said it will hear the pleas by online gaming companies challenging the 28 per cent Goods and Services Tax (GST) on all forms of online real-money gaming from May 5.
The parties said they would take four to five days to argue the matter, after which the matter was posted for May 5.
In the last hearing, the court had directed the Centre and the GST department to file their response to the pleas by online gaming companies.
The bench then issued notices in pleas filed by online gaming companies such as Head Digital Works, Games24x7, and Dream11, challenging the government’s decision to retrospectively impose the tax on the full value of online bets placed, and not on the gross gaming revenue.
Background
Senior advocate Harish Salve had appeared for the online gaming companies, while Additional Solicitor General Venkatraman had appeared for the GST department and the Union of India.
The Goods and Services Tax (GST) Council in 2023 decided to impose a flat 28 per cent tax on the face value for online gaming, casinos, and horse racing, and accordingly brought amendments to the GST laws (Central Goods and Services Tax Act and Integrated Goods and Services Tax Act) during the monsoon session. The new rule was effective from October 1, 2023. The amendments provide that GST will be levied on entry-level bets on online gaming platforms, and not on what players pay in each game from the winning amount.
The court had said it would consider the case on the government’s decision to impose 28 per cent GST on online gaming companies retrospectively on the full value of the bets placed, and not on the gross gaming revenue.
Online gaming companies had argued that the 28 per cent tax is applicable only from October 1, 2023. Meanwhile, the government said the October 1 revision was only to give clarity to a law that was already in force. The government said the demand for tax dues is not backdated.
The Supreme Court in September 2023 stayed the Karnataka High Court’s ruling quashing the GST authority’s tax demand order of Rs 21,000 crore on Bengaluru-based gaming firm Gameskraft.
The Karnataka High Court on May 11 quashed the Rs 20,989 crore show-cause notice against Gameskraft for alleged GST evasion. This was the biggest such claim in the history of indirect taxation.
The GST notice alleged that Gameskraft allowed its clients to place money bets on games played online, saying the company was promoting online betting through card, casual, and fantasy games like Rummyculture, Gamezy, and Rummytime.
Authorities had, therefore, slapped a 28 per cent tax — applicable on games of chance, betting, and gambling — on the firm on a betting amount of about Rs 77,000 crore.
Source: Business Standard
