New Delhi: The Supreme Court on Wednesday upheld the government’s decision to impose retrospective Goods and Services Tax (GST) on online gaming companies. The dispute centred on whether 28 per cent GST could be levied on the entire value of bets placed through online gaming platforms.
A bench comprising Justice JB Pardiwala and Justice R Mahadevan ruled that such taxation is constitutionally valid and does not violate the constitutional framework governing GST.
The apex court observed that the levy is backed by statutory authority under the GST Act. It further stated that the GST tax cannot be declared invalid by referring to rules framed under the Act.
The court also held that online gaming operators are not merely facilitators or intermediaries, but suppliers of actionable claims that fall within the GST framework.
GST Rules to Continue
The Supreme Court upheld the CGST Rules that permit GST to be imposed on the full value of bets placed through online gaming platforms and casinos.
The dispute is expected to have a significant financial impact on the industry. The Directorate General of GST Intelligence (DGGI) had raised tax demands worth nearly Rs 1.12 lakh crore against 71 online gaming companies.
Legal experts estimate that the total liability, including penalties and interest, could rise to nearly Rs 2.3 lakh crore.
Major Companies That Received Notices
Among the major companies that received notices are Gameskraft, facing a demand of around Rs 21,000 crore, Dream Sports with nearly Rs 28,000 crore, and Delta Corp with around Rs 30,000 crore.
Other affected companies include Games24x7, RummyCircle, My11Circle, Head Digital Works, WinZO, MPL, PokerBaazi, Junglee Rummy and A23.
The tax notices also cover the period before October 2023, which has led the industry to object to retrospective taxation.
