Center approaches Supreme Court to Transfer all Online Money Gaming GST Petitions before HCs

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In a significant move, the Indian government has approached the Supreme Court with a transfer petition, urging the consolidation of all pending cases across various High Courts related to GST notices issued to real money gaming companies. This development aims to address the tax ambiguity surrounding online money gaming and provide clarity on their categorization for taxation purposes. Let’s explore the details of this latest development.

During a hearing on March 4, 2024, at the Sikkim High Court, the Deputy Solicitor General informed the court about the transfer petition filed by the Center. According to the information available on the Supreme Court’s online portal, there are currently 27 cases awaiting resolution in the High Courts of Bombay, Gujarat, Rajasthan, Karnataka, Uttar Pradesh, Sikkim, West Bengal, Punjab & Haryana, all linked to the ongoing transfer petition. Notable petitioners involved in these cases include Games 24×7, Head Digital Works, and the industry association EGF.

Objective and Significance
The objective of the transfer petition filed by the Center is to consolidate all the cases related to the same legal issue currently pending in various high courts. This consolidation would facilitate a comprehensive resolution of the prolonged tax ambiguity surrounding real money gaming. It would also provide clarity on whether these activities are categorized as games of skill or chance and determine their classification under the purview of betting and gambling for taxation purposes.

The Legal Saga
This legal saga began with the issuance of a GST notice amounting to INR 21,000 crores to GamesKraft, which was subsequently nullified by the Karnataka High Court. However, the Supreme Court imposed a stay on the operation of the Karnataka High Court’s directions, leading to the issuance of tax notices to other real money gaming companies. This, in turn, prompted a flurry of writ petitions across various High Courts in the country.

Expected Proceedings
A three-member Supreme Court bench, headed by the Chief Justice, is tentatively scheduled to hear the existing cases in April 2024. It is anticipated that the ongoing transfer petition will be consolidated with these cases. The resolution of these cases will provide crucial clarity on the taxation of online money gaming activities and help in creating a more transparent and consistent regulatory framework in this sector.

The Center’s move to file a transfer petition with the Supreme Court to consolidate all pending cases related to online money gaming GST petitions before various High Courts is a significant step towards resolving the tax ambiguity surrounding this industry. The consolidation and eventual resolution of these cases will provide much-needed clarity on the classification and taxation of real money gaming activities. Stakeholders in the online gaming industry, as well as enthusiasts and regulators, will be closely watching the proceedings in the Supreme Court to gain insights into the future of this rapidly growing sector.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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