Supreme Court Stays GST Notices, Bringing Relief To Online Gaming Industry.

The Supreme Court of India on Friday stayed the proceedings on show cause notices issued to online gaming companies and casinos by the Directorate General of GST Intelligence (DGGI).

This decision may provide temporary relief to the gaming industry which was facing widespread concerns due to the retrospective taxation policy.

The case involves 51 petitions filed by online gaming companies and casino operators, challenging the government’s decision to impose a 28% Goods and Services Tax (GST) on the entire value of bets placed by players. The petitioners argue that the tax should apply only to the gross gaming revenue, a model used in several other jurisdictions globally.

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Following the court’s decision, Delta Corp’s shares surged by as much as 15.4% on the stock exchanges. The stock price reached an intraday high of Rs 130.8 per share on the BSE and Rs 131.2 per share on the NSE. However, the stock later pared gains to trade around Rs 118 level, up 4.5% on the exchanges at 12:15 PM.

Nazara Technologies’ share price surged 8.4% in early trading but later dropped 1.16% to Rs 979.45 per share on the BSE.

Nazara Tech is an online gaming company that owns popular games like Kiddopia and Classic Rummy. The company, along with others in the industry is challenging the government’s decision to impose a 28% Goods and Services Tax (GST) on online games.

The issue began when the 50th GST Council decided to levy a 28% GST on online games, effective October 1, 2023. This move sparked concerns among gaming companies which argued that the tax should only apply to their revenue, not the total amount contributed by players.

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The had also caused chaos in the industry with companies claiming that the retrospective taxation policy could harm their operations and lead to job losses.

The Rajya Sabha was informed that online gaming companies received 71 show-cause notices related to GST evasion, totalling Rs 1.12 trillion.

The industry is now awaiting a final verdict on the matter, which is scheduled for March 2025. The Supreme Court has stated that “all further proceedings under the show-cause notice shall remain stayed till the case is finally decided.”