The Supreme Court on Friday decided to centralise the legal battle over the 28 per cent Goods and Services Tax (GST) levied on online gaming companies, previously scattered across various High Courts in the country. The apex court, led by Chief Justice DY Chandrachud along with Justices JB Pardiwala and Manoj Misra, agreed to consolidate 27 writ petitions that were originally filed in eleven different High Courts.
These cases are now set to be heard alongside an existing petition by GamesKraft, a leading name in the online gaming sector, which is already under the Supreme Court’s review. This consolidation follows a successful transfer plea by the Union of India, aiming for a unified hearing slated for the last week of April 2024.
Hefty GST Demands
The controversy centres around the hefty GST demands placed on online gaming firms, a sector that has seen rapid growth and evolving regulatory challenges. Companies such as Dream 11, Games 24×7, and Head Digital Works have also sought the apex court’s intervention against the GST levy, marking a concerted industry pushback against what they view as an onerous tax burden.
The focal point of this legal contestation was highlighted in a previous interim order by the Supreme Court, which paused the enforcement of a Karnataka High Court judgment. This earlier judgment had nullified a GST Intimation Notice seeking approximately Rs 21,000 crore from GamesKraft, underscoring the high stakes involved.
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Lack Of Actionable Claim
During a preliminary session in January 2024, Senior Advocate Harish Salve, representing the online gaming companies, challenged the tax imposition rationale.
He argued against the applicability of GST on the entire amount of bets or contributions to totalisators, citing a lack of ‘actionable claim’ — a technical term implying a claim to unsecured debts or beneficial rights not in possession. The upcoming hearings in April are anticipated to further delve into these complex legal arguments, potentially setting a precedent for taxation within the burgeoning online gaming industry.
