Govt to file plea seeking transfer of all GST-linked online gaming cases to SC

Government to seek transfer of all online gaming cases to SC

The Union government on January 8 undertook to file a petition seeking transfer of all cases pertaining to retrospective imposition of Goods and Services Tax (GST) from various high courts to the Supreme Court.

Additional Solicitor General (ASG) Venkatraman, who appeared for the Union government and the GST department, told the court that the plea will be filed at the earliest. Senior advocate Harish Salve, who appeared for the online gaming companies and  Chief Justice of India (CJI) DY Chandrachud noted that transferring all the cases to the apex court will avoid inconsistencies. Chandrachud further told the lawyers that he is inclined to allow the transfer once the petition is filed.

Venkatraman also clarified that all the arms of the government were working in tandem on online gaming cases and noted that there is no difference in opinions on the issue as reported by the media.

At the hearing, the SC also issued notice in pleas by online gaming companies Head Digital Works and Games 24/7 challenging the government's decision to retrospectively impose 28 percent Goods and Services Tax (GST) on the full value of the bets placed, and not on the gross gaming revenue.

In November 2023, Moneycontrol  had reported that the government is likely to request the Supreme Court to club together all the Goods and Services Tax (GST) online gaming cases that are under litigation on the grounds of a single principle.

“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,” a senior finance ministry official had said.

The GST Council approved 28 percent GST on all online games from October 1, 2023. It also interpreted that between 2017 and October 1, 2023, all online games involving bets, irrespective of skill or chance, needed to pay a GST rate of 28 percent on the full value of the bets placed, as it fell under the category of gambling. As a result of this, the online gaming companies have been issued GST notices valued at Rs 1 lakh crore so far this year.

Several online gaming firms have been engaged in a tussle with the government over this. While the companies have taken a stand that 28 percent tax is applicable only from October 1 of 2023, the government has interpreted that it will apply to the period prior to October 1 as well. According to the government, the October 1 onwards revision only provided clarity to a law that was already in force.

The Bombay HC, the Goa bench of Bombay HC, and the Sikkim HC are hearing cases pertaining to GST notices to online gaming companies and casinos.