“Supreme Court Seeks Consolidation of GST Cases on Real Money Gaming”

Introduction

The Union government’s recent filing of a transfer petition before the Supreme Court to consolidate pending cases challenging GST notices issued to real money gaming companies has sparked significant interest in legal circles. This move comes amidst a backdrop of ongoing legal battles across multiple High Courts regarding the taxation of online gaming platforms. The outcome of these proceedings is anticipated to provide clarity on the taxation framework for such entities and potentially reshape the regulatory landscape for the burgeoning online gaming industry.

Union Government Seeks Supreme Court Transfer for GST Cases on Real Money Gaming

The Union government has filed a transfer petition before the Supreme Court, aiming to consolidate all pending cases across various High Courts challenging GST notices issued to real money gaming companies. During a hearing on March 4, 2024, at the Sikkim High Court regarding a petition by Delta Corp, the Deputy Solicitor General informed the court about this transfer petition.

Pending Cases Across High Courts

According to the online information portal of the Supreme Court, there are currently 27 pending cases before the High Courts of Bombay, Gujarat, Rajasthan, Karnataka, Uttar Pradesh, Sikkim, West Bengal, Punjab & Haryana, all linked to the present transfer petition.

Anticipated Supreme Court Hearing

Earlier reports indicated that the pending cases before a three-member Supreme Court bench headed by the Chief Justice would tentatively be heard in April 2024. The petitioners in these cases include Games 24×7, Head Digital Works, and industry association EGF.

Tax Department’s Intentions

In a previous hearing, the tax department informed the apex court of its intention to file a petition seeking the transfer of all cases related to the same legal issue pending before various High Courts to the Supreme Court. Thus, the current transfer petition is also expected to be tagged with the pending matters.

Resolution of Tax Ambiguity

This case is anticipated to resolve the prolonged tax ambiguity surrounding money gaming, clarifying definitively whether these activities constitute games of skill or chance and whether they fall under the ambit of betting and gambling for taxation purposes. During a hearing in January, senior advocate Harish Salve represented the online money gaming companies, while Additional Solicitor General N. Venkatraman appeared for the GST department and Union of India. ASG Venkatraman mentioned that notices have been served to over 99 companies.

Background of the Issue

The issue emerged with the issuance of a GST notice of INR 21,000 crores to GamesKraft, which was subsequently quashed by the Karnataka High Court. Subsequently, the Supreme Court imposed a stay on the operation of Karnataka High Court directions, leading the tax department to issue notices to other real money gaming companies, prompting a flurry of writ petitions across various High Courts.

Conclusion

The impending transfer of pending GST cases on real money gaming to the Supreme Court marks a significant development in the legal landscape surrounding online gaming taxation. As stakeholders eagerly await the outcome of these proceedings, the decision is expected to have far-reaching implications for the regulatory framework governing the online gaming industry. With clarity on taxation issues and regulatory compliance, this landmark case has the potential to reshape the future trajectory of online gaming in India.