The Supreme Court on Wednesday upheld the government’s move to impose retrospective Goods and Services Tax (GST) against online gaming companies. The dispute was over whether 28 percent GST could be levied on the full value of bets placed through their platform or not. A bench of Justices JB Pardiwala and R Mahadevan ruled that such a GST is constitutionally valid and does not violate the constitutional scheme governing GST.
The Supreme Court said that this tax is supported by statutory authority under the GST Act. The Supreme Court further said that the GST tax cannot be invalidated by citing the rules made under the Act. The Supreme Court said that online gaming operators are not mere facilitators or intermediaries but suppliers of actionable claims within the ambit of GST.
GST rules will remain intact
The Supreme Court upheld the CGST rules, which empower the levy of GST on the entire value of claims made through online gaming platforms and casinos. This dispute could have significant financial implications for the industry. The Directorate General of GST Intelligence (DGGI) had raised a tax demand of about Rs 1.12 lakh crore against 71 online gaming companies. Legal experts estimate that the total liability including penalty and interest may increase to around Rs 2.3 lakh crore.
Which big companies got notices
The big companies that have received notices include Gameskraft (demand of about Rs 21,000 crore), Dream Sports (about Rs 28,000 crore) and Delta Corp (about Rs 30,000 crore). Other companies affected include Games24x7, RummyCircle, My11Circle, Head Digital Works, WinZO, MPL, PokerBaazi, Junglee Rummy and A23. These tax notices also include the period before October 2023, due to which the industry has raised objection regarding retrospective taxation.
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