Center Mules Asking SC to Batch Online Gaming GST Cases

08 Nov 2023

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 in legal interpretation on the matter and 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 from actions by GST authorities while the High Court of Gujarat deliberates on their case after Delta Corp and subsidiaries were granted similar freezes by the High Courts of Bombay and Sikkim.

NxCn, the owner of online fantasy sports and real money gaming (RMG) platform Twelfth Man, argues that winning a fantasy sports prize pool is based on skill and is therefore 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 combined worth approaching ₹1 lakh crore have been served across the Indian homegrown online gaming industry, including a ₹25,000 crore notice to Dream11, ₹23,200 crore to Delta Corp, ₹20,000 crore to Play Games24x7, and ₹5,000 to Head Digital Works.