online gaming industry breathed a sigh of relief as the Supreme Court on Friday halted coercive action by tax authorities, staying show cause notices demanding ₹1.12 lakh crore in GST. The Court’s decision paves the way for a fair and comprehensive adjudication of the matter.
BY PC Bureau
The Supreme Court on Friday temporarily stayed show cause notices issued to over 50 online gaming companies, demanding a staggering ₹1.12 lakh crore. The Court also ensured that the notices would not lapse due to the ongoing litigation, with the next hearing scheduled for March 18. The apex court has ordered the consolidation of all related cases and directed that further proceedings under these notices remain suspended until the matter is fully resolved.
Abhishek A. Rastogi, founder of Rastogi Chambers and counsel for the gaming companies, described the stay as a significant relief. He stated that it offers immediate protection to the gaming firms from potential coercive actions while also safeguarding the interests of the Revenue authorities. The stay effectively prevents the demands from becoming time-barred during the litigation, preserving the opportunity for legal clarity without procedural hindrances.
The online gaming sector had expressed concerns about aggressive recovery actions by tax authorities based on the notices, which could disrupt their operations, especially given the contentious GST demands. The Supreme Court’s intervention allays these fears, ensuring that the gaming companies receive a fair hearing.
The central issue in the dispute revolves around the interpretation of GST applicability on online gaming. The government insists that a 28% GST should apply to the entire contest entry amount, taxing the full prize pool. In contrast, gaming companies argue that GST should only apply to their platform fees or commissions, as many of the games involve skill rather than chance.
Rastogi emphasized that the outcome of this case could have significant implications for the online gaming industry’s tax framework in India. As the sector continues to grow, clarity on tax treatment is vital for creating a stable business environment and ensuring regulatory compliance. The Supreme Court’s eventual ruling is expected to shape the future of the online gaming industry in India.
