Center Mules Asking SC to Batch Online Gaming GST Cases

Online Gaming GST Cases | Grouping Cases Will Foster Uniformity, Save Time and Resources

A senior official from the Finance Ministry has told reporters that the Center has been considering petitioning the Supreme Court to batch together all active cases related to GST treatment over online gaming, casinos, and horse races and deliver a principal judgment.

Tagging all similar cases under one leading case by the Apex Court would greatly foster uniformity. And it will save significant resources and time for the Central Board of Indirect Taxes and Customs (CBIC). The quoted government official has pointed out.

“The online gaming cases are pending in the Supreme Court on the taxability issue. The final decision on it will be taken by the Supreme Court. And one cannot have multiple interpretations of the same law. So the request is to tag all the cases together,” the source has explained.

“The request is to club these into a single litigation on the principle of it. Some of the earlier major decisions of the Supreme Court are in the name of a company but the list of tagged cases go up to 40-100,” he added.

The first case that will come up in the next weeks is Gameskraft’s action against a ₹21,000 crore show cause notice by the Directorate General of GST Intelligence (DGGI). The High Court of Karnataka struck down the GST Enforcement demand in May, but on September 6, the Apex Court ruled an interim stay on the Karnataka HC decision.

Gujarat HC Issues Another Stay on GST Enforcement

In the meantime, Ahmedabad-headquartered NxGn Sports Interactive was the next online gaming company to get temporary relief. This relief came from actions by GST authorities. The High Court of Gujarat is deliberating on their case. This follows Delta Corp and its subsidiaries, which were granted similar freezes. These freezes were issued by the High Courts of Bombay and Sikkim.

NxCn is the owner of online fantasy sports and real money gaming (RMG) platform Twelfth Man. They argue that winnin a fantasy sports prize pool is based on skill. Therefore it is different from an actionable claim found in lottery, betting, and gambling. While Delta has challenged Section 15(5) of the CGST Act and Rule 31A of the CGST Rules.

“Pending the petition, there shall be ad-interim relief inasmuch as the respondents are restrained from taking any further steps on the adjudication of the show cause notice. It shall, however, be open to the petitioner to file a response to the show cause notice,” the Gujarat HC bench comprising Justice Biren Vaishnav and Justice Mauna M. Bhatt specified and issued a notice returnable on January 17, 2024.

Show cause notices and DRC-01 A forms with a combined worth approaching ₹1 lakh crore have been served across the Indian homegrown online gaming industry. This includes a ₹25,000 crore notice to Dream11. There is a ₹23,200 crore notice to Delta Corp. A ₹20,000 crore notice has been issued to Play Games24x7. Lastly, there is a ₹5,000 crore notice to Head Digital Works.