The Supreme Court on December 15 refused to grant an interim relief against Goods and Services Tax (GST) demand notices to online gaming companies Head Digital Works and Games 24/7.
The court, however, indicated that it will consider a case on constitutional validity of the government's decision to impose 28 percent GST on online gaming companies retrospectively on the full value of the bets placed, and not on the gross gaming revenue, from October 1.
Additional Solicitor General (ASG) Venkatraman, who appeared for the government, urged the court to defer hearing in the case as they are yet to receive proper instruction on the same. The court, accordingly, deferred the hearing to January 8.
Online gaming firms are in a tussle over the payment of 28 percent GST instead of 18 percent levied for the period up to October 1, 2023. While the companies feel the 28 percent tax is applicable only from October 1, the government is of the opinion that the October 1 revision only provided clarity to a law that was already in force. As such, the government's stance is that the demand for tax dues is not retrospective in nature.
The GST Council, in August 2023, amended the law to clarify that all online games involving bets, irrespective of skill or chance, will attract a GST rate of 28 percent on the full value of the bets placed, and not on the gross gaming revenue.
Following the Council's decision, online gaming companies have been served with huge tax demands that experts say will likely kill the entire industry. Online gaming companies have been served show-cause notices for alleged tax evasions to the tune of Rs 1 lakh crore so far this year.
Source: Money Control
https://www.moneycontrol.com/news/trends/legal/sc-refuses-interim-relief-to-games-247-head-digital-against-gst-demand-11909271.html
