On January 8, 2024, the Supreme Court of India will hear the petitions from the E-Gaming Federation (EGF) and gaming companies A23 & Games 24×7. The hearing will be conducted by a three-judge bench comprising of the Chief Justice, Justices Pardiwala, and Misra. In the initial hearing last month, the court declined to stay the show-cause notices to online rummy firms or issue any interim relief.
CJI Chandrachud noted that the court already had a similar pending adjudication on the GST issues related to online gaming. He also stated that no interim relief could be granted to online gaming firms at this stage. He was referring to GamesKraft’s case where the Supreme Court stayed the Karnataka High Court’s decision of quashing a Rs 21,000 crore show-cause notice against the online gaming giant.
GamesKraft’s case was also expected to be tagged with these GST cases but it seems that the matter has not been tagged yet. The Supreme Court will look into the legalities of the GST notices and the decision coming out from the ruling could significantly impact India’s online gaming industry.
In his submission on 15 December 2023, senior counsel Harish Salve representing the EGF and the online gaming companies highlighted that the matter has the national significance and show-cause notices worth several times the gaming companies’ turnover are being issued. He further emphasized that if the notices convert into demands, then the companies could face bankruptcy. He also requested the tax department not to take any action on the show-cause notices until further hearing.
After the Supreme Court stayed the Karnataka HC’s decision in Gameskraft’s matter, over 71 show-cause notices have been issued to gaming companies. These notices allege the gaming companies for GST evasion worth Rs. 1.12 lakh crore. While there is a glimmer of hope amidst the gloom, the experts say that any unfavourable verdict from the apex court would be a fatal blow to the gaming industry, which is already grappling with the impact of the 28% GST implemented in October, 2023.
