Legal battle in India gaming sector: Supreme Court will scrutinise 28% GST on bets

Lea Hogg January 16, 2024

Share it :

Legal battle in India gaming sector: Supreme Court will scrutinise 28% GST on bets

Head Digital Works and Games 24/7, key players in the dynamic online gaming space, are gearing up for a legal showdown against the decision of India’s government to impose a hefty 28 percent Goods and Services Tax (GST) on the total value of bets. This departure from the conventional gross gaming revenue model has sparked a legal battle, with the Supreme Court taking notice and scheduling hearings in the upcoming months.

Representation for GST and Union of India

The Supreme Court has issued notices to the Central government and the GST department, instructing them to provide their responses to the petitions within a span of two weeks. As per the latest information from money control, the court is expected to look into into the intricacies of the cases during hearings that are anticipated to take place in the near future.

Representing the interests of the online gaming companies during these legal proceedings was the highly respected senior advocate, Harish Salve. On the opposing side, additional Solicitor General Venkatraman appeared on behalf of the GST department and the Union of India. In a move to streamline the legal process and consolidate the cases spread across different high courts, the GST department has committed to submitting a transfer petition to the Supreme Court.

A crucial development occurred on December 15 when the Supreme Court, while refraining from granting interim relief regarding GST demand notices issued to Head Digital Works and Games 24/7, expressed a keen interest in examining the constitutional validity of the government’s imposition of a 28 percent GST on online gaming companies. This taxation, effective from 1 October applies to the total value of bets rather than the traditional gross gaming revenue model.

Decision impacts gaming industry

The gaming industry, which has been a significant contributor to the digital economy, finds itself entangled in an ongoing dispute dating back to the previous year when the government introduced GST on online gaming. At this time the GST Council (in photo above), recommended on the full face value of bets in online gaming, casinos, and horse racing.?

This move has triggered a series of legal challenges, with industry leaders seeking clarity on the taxation framework and its implications for the burgeoning online gaming sector.

As the legal saga unfolds, the outcomes of these hearings hold significant implications not only for the involved companies but also for the broader online gaming industry, potentially setting a precedent for future tax regulations in this dynamic and rapidly evolving sector. The Supreme Court’s meticulous examination of these cases is awaited with bated breath, as stakeholders anticipate a resolution that could shape the future landscape of online gaming taxation in India.

Raketech faces leadership shift with departure of CEO Mulbach (www.cefyngauden.com)

LiveScore FY23 demonstrates remarkable 48.9% surge in revenue (www.cefyngauden.com)

Norwegian Government investment to battle gambling issues (www.cefyngauden.com)