The Union Government has initiated legal action by filing a transfer petition before the Supreme Court, aiming to consolidate all pending cases challenging GST notices issued to real money gaming companies across various High Courts. The move, aimed at streamlining the legal process and ensuring uniform adjudication, reflects the government's proactive stance in addressing taxation issues pertaining to the burgeoning online gaming industry.
During a hearing held on March 4, 2024, before the Sikkim High Court concerning a petition filed by Delta Corp, the Deputy Solicitor General apprised the court about the transfer petition filed before the apex court. The online repository of the Supreme Court indicates that there are currently 27 cases pending before the High Courts of Bombay, Gujarat, Rajasthan, Karnataka, Uttar Pradesh, Sikkim, West Bengal, Punjab & Haryana, all of which are linked to the ongoing transfer petition.
Earlier reports suggested that these pending cases were slated to be heard by a three-member Supreme Court bench, headed by the Chief Justice, tentatively scheduled for April 2024. Notable petitioners involved in these cases include Games 24×7, Head Digital Works, and the industry association EGF.
The impending legal battle seeks to address the longstanding ambiguity surrounding the taxation of real money gaming, particularly in determining whether such activities constitute games of skill or chance and whether they fall within the purview of betting and gambling for taxation purposes.
In a hearing held in January, senior advocate Harish Salve represented online money gaming companies, while Additional Solicitor General N. Venkatraman appeared on behalf of the GST department and the Union of India. During this hearing, ASG Venkatraman disclosed that notices had been issued to over 99 companies, signaling the widespread scope of the tax department's scrutiny.
The genesis of the issue traces back to the issuance of a GST notice amounting to INR 21,000 crores to GamesKraft, a matter that was subsequently challenged and overturned by the Karnataka High Court. However, the Supreme Court intervened by imposing a stay on the operation of the Karnataka High Court's directions, prompting the tax department to issue similar notices to other real money gaming entities, thereby triggering a flurry of writ petitions across multiple High Courts.
The culmination of these legal proceedings is anticipated to provide much-needed clarity on the taxation framework governing real money gaming, offering stakeholders definitive guidance on compliance obligations and regulatory requirements within this rapidly evolving sector.
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