The Supreme Court, led by a three-judge bench headed by Chief Justice D.Y. Chandrachud, has unified multiple petitions contesting the imposition of 28% GST on online gaming companies. In a hearing on Friday, the Court directed the transfer of 27 pending writ petitions from 11 different high courts across the nation to be heard collectively.
These petitions will be consolidated and heard alongside a petition filed by Gameskraft and writs by EGF and Play Games24x7. The Union government has been instructed to submit counter affidavits in all writ petitions within three weeks, with a consolidated hearing scheduled for the last week of April.
This consolidated case is expected to resolve the prolonged tax dispute in the online gaming sector and provide clarity on whether these activities constitute games of skill or chance, potentially falling under the purview of betting and gambling regulations.
Several online gaming companies, including Dream11, Games24x7, and Head Digital Works, have challenged the GST imposition through writ petitions in the Supreme Court. Despite earlier refusals to grant interim stays on tax notices to gaming firms, the Court had previously halted the Karnataka High Court’s judgment that quashed a GST intimation notice amounting to ₹21,000 crore in the Gameskraft case.
The controversy emerged in August when the GST Council amended the law to levy a 28% tax on the “full face value” of bets or entry amounts in online games, effective from October 2023. Gaming companies argue that the tax should apply only from October 1, while the government contends that the revision clarified existing law and thus was not retrospective.
Furthermore, companies dispute that recurring playing amounts should not be subject to tax as actionable claims. The Directorate General of GST Intelligence had reportedly initiated notices to online gaming companies for retrospective GST claims for the past five fiscal years, totaling nearly ₹1.5 trillion.
During previous hearings, senior advocate Harish Salve, representing the gaming industry, objected to categorizing prize pools or total operating values of online games as actionable claims, arguing that gaming companies merely act as intermediaries.
The lack of a stay order against the GST body means tax authorities can continue issuing demands on the online gaming sector, adding to the sector’s financial challenges.
