28% GST on online gaming companies: SC transfers to itself all pleas pending in 9 HCs

New Delhi: The Supreme Court on Friday transferred to itself all pending petitions in nine High Courts challenging the imposition of 28% Goods and Services Tax (GST) on online gaming companies.

A bench of Chief Justice of India D Y Chandrachud, and Justices J B Pardiwala and Manoj Misra decided to hear all the pending matters.

The court passed its order after hearing a plea filed by the Centre seeking the transfer of all 27 petitions pending in nine High Courts across the country.

"We are transferring all the pleas to this court, and will hear all the 27 petitions later on," the bench said.

Numerous online gaming companies, including Gameskraft, Dream 11, Games 24x7, and others, have lodged appeals before the Supreme Court challenging the GST imposition.

In its 50th meeting held in July 2023, the GST council decided to levy a tax rate of 28% on the full face value of online gaming, without making a distinction between games of skill and chance. Similarly, casinos and horse racing were also set to be taxed at 28%. This new tax rate came into effect from October 1, 2023.

The online gaming companies opposed the imposition of a 28% GST on them because previously they were subject to GST at a rate of 18% on gross gaming revenue (GGR). However, they received tax demands based on a 28% rate applied to each bet placed.

In September, GST field officers issued notices totalling over Rs 1.12 lakh crore to online gaming companies for alleged tax evasion, leading to legal challenges.

Minister of State for Finance Pankaj Chaudhary stated in the Rajya Sabha that during the financial years 2022-23 and 2023-24 (up to October 2023), 71 show cause notices amounting to Rs 1,12,332 crore in GST were issued to online gaming companies, pending adjudication.