GST Dept informed Supreme Court of its intention to file petition seeking transfer of all related cases from High Courts to Supreme Court
The Supreme Court has served notice to the Central Government in response to a plea from online gaming companies challenging tax demands totalling ₹1.5 lakh crore. The three-judge bench, led by Chief Justice D.Y. Chandrachud, has given the government and the tax department a two-week window to provide a response, although no stay on the government’s tax notices has been issued.
Notable entities such as the E-Gaming Federation, Play Games24x7, Head Digital Works, and other gaming startups have jointly filed the petition, contesting retrospective goods and services tax (GST) claims. Earlier reports in September highlighted that the Directorate General of GST Intelligence was issuing notices to online gaming companies for retrospective GST claims covering the last five fiscal years, amounting to almost ₹1.5 trillion.
The controversy began in August when the GST Council amended the law, stating that online games involving bets would incur a 28% tax on the full value of placed bets, effective from October. Gaming companies argue that this tax should only apply from 1 October, while the government asserts that the revision clarified an existing law, making the tax demand non-retrospective.
Finance Minister Nirmala Sitharaman emphasized in a recent Lok Sabha discussion on the GST (Second Amendment) Bill that the 28% tax on entry-level bets on online gaming platforms is effective prospectively. She clarified that the tax rules and the exclusion of winnings are prospective.
Simultaneously, the GST Department has informed the Supreme Court of its intention to file a petition seeking the transfer of all related cases from various high courts to the Supreme Court. In a related development, the Supreme Court had previously stayed a Karnataka High Court ruling that had quashed a GST notice on Gameskraft Technology, a Bengaluru-based gaming company, for alleged tax evasion amounting to ₹21,000 crore in September.
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