Online gaming firms have received significant relief from the Supreme Court. On Friday, the court stayed GST show-cause notices totaling over Rs 1 lakh crore. This notice was issued to various gaming companies by the Directorate General of GST Intelligence (DGGI). This decision puts a hold on any further actions related to these notices until the final resolution of the case. Key Supreme Court Orders The case was heard by Justices JB Pardiwala and R Mahadevan. The Supreme Court’s stay applies to all the show-cause notices issued, which were related […]
Supreme Court Grants Relief To Online Gaming Firms
Online gaming firms have received significant relief from the Supreme Court. On Friday, the court stayed GST show-cause notices totaling over Rs 1 lakh crore. This notice was issued to various gaming companies by the Directorate General of GST Intelligence (DGGI). This decision puts a hold on any further actions related to these notices until the final resolution of the case.
The case was heard by Justices JB Pardiwala and R Mahadevan. The Supreme Court’s stay applies to all the show-cause notices issued, which were related to alleged tax evasion by online gaming companies. Additionally, the court stayed a decision by the Karnataka High Court, which had previously quashed a Rs 21,000 crore GST notice against an online gaming firm.
In October 2023, the Indian government amended the GST law. This will make it mandatory for foreign online gaming companies to register in India. This amendment followed the GST Council’s decision to impose a 28% tax on the total amount of bets placed on online gaming platforms.
Soon after, the GST department issued show-cause notices to several online gaming firms, accusing them of tax evasion. These notices suggested that companies owed substantial amounts in unpaid GST.
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The GST Council’s move to levy a 28% GST on the full amount of bets placed on online gaming platforms has faced strong opposition. Gaming companies challenged the decision in various High Courts, claiming that the tax burden was excessive.
In response, the central government filed a petition in the Supreme Court, which transferred all related petitions from different High Courts to itself. These petitions were heard on Friday, with gaming firms seeking a stay on the enforcement of the 28% GST.
During the hearing, Additional Solicitor General N Venkataraman presented the GST department’s case. He highlighted that some of the show-cause notices were set to expire in February 2025. However, the Supreme Court bench emphasized the need for a thorough hearing before any action could be taken. Consequently, the bench ordered that all proceedings related to the gaming companies be temporarily stayed.
The GST Intelligence Directorate had issued 71 notices to online gaming firms, accusing them of evading taxes amounting to Rs 1.12 lakh crore. Moreover these excludes interest penalties for financial years 2022-23 and the first seven months of 2023-24.
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The Supreme Court’s intervention provides crucial respite to the online gaming sector, which has been facing increasing scrutiny and challenges from the government. Moreover the stay on the notices will give gaming companies more time to prepare their defense and address the legal complexities of the case.
As the legal process continues, the gaming industry remains on edge, awaiting further developments. Furthermore outcome of the case will have significant implications for future of online gaming in India. This will be a particular concern for the taxation sector.
The stay on GST notices offers temporary relief to gaming companies. But the final decision will determine how the industry adjusts to the new tax regime.
