The revenue department filed a Special Leave Petition in the Supreme Court in July 2023 against the Karnataka High Court ruling in the Gameskraft case, according to the chairman of the Central Board of Indirect Taxes and Customs. The next date of hearing is listed for October 101.
The Karnataka High Court had quashed the show cause notice served on online gaming company Gameskraft in September 2022 for recovery of Rs 21,000 crore in Goods and Services Tax1. The company had approached the court after receiving the notice1.
The petition is part of a wider enforcement push. CBIC chairman Sanjay Kumar Agarwal said on September 28, 2023 that e-gaming companies have been issued show cause notices for alleged GST evasion, and that the tax demanded is based on analysis of data1. A show cause notice served on casino operator Delta Corp the previous week was for alleged short payment of taxes worth Rs 16,800 crore1.
"The show cause notice which is going is as per legal provision... The department is taking a uniform stand in the interpretation of the law and accordingly show cause notices are being issued"
The notices follow a GST Council decision to treat online gaming, casinos and horse racing as taxable actionable claims, attracting 28% GST on full bet value1. Parliament passed amendments to the Central GST and Integrated GST laws last month, but the finance ministry has not yet notified the appointed date for implementation1. About a dozen states have passed the amendments in their assemblies, while a similar number are understood to have brought in an ordinance to allow implementation from October 11. The Council proposed a review of the implementation after six months, in April 20241.
| Company | Notice | Amount |
|---|---|---|
| Gameskraft | September 2022 | Rs 21,000 crore |
| Delta Corp | September 2023 | Rs 16,800 crore |
What it means for players
The dispute concerns how tax is calculated on money wagered, not on winnings or on the fee a platform charges. If the 28% rate on full bet value stands, operators face a tax bill far larger than under the previous interpretation, and the notices already issued show the amounts at stake. The outcome of the Supreme Court case will determine whether the Gameskraft notice, and by extension the approach behind similar notices, survives. For players in India, the practical questions are whether platforms pass on higher costs, change their formats or withdraw from the market. None of that has been reported. The rules on gambling in India and the wider gambling laws in Asia set out which forms of play are permitted in each jurisdiction.
What happens next
The Supreme Court has listed the next hearing for October 101. The amended GST provisions were due to take effect from October 1, with the finance ministry still to notify the appointed date and some states yet to pass the amendments1. A review of the implementation was proposed for April 20241.
