Online gaming companies including Play Games24x7, Junglee Games and Sachiko Gaming have moved the Supreme Court seeking a review of its judgment that upheld the 28 percent GST levy on online gaming and rejected challenges to retrospective tax demands worth over INR 1.5 lakh crores, according to information available on the Supreme Court website.
A two judge bench of the apex court dismissed the gaming industry’s writ petitions, transferred cases and special leave petitions, holding that “online gaming activities, including fantasy sports and other games played on digital platforms, involving staking upon uncertain outcomes, constitute betting and gambling for the purpose of GST framework”.
The Court held that the character of betting and gambling “does not depend exclusively upon whether the underlying activity is a game of skill or a game of chance, but upon the existence of stakes placed upon uncertain future contingencies”.
On the tax question, the bench ruled that “the levy of GST on the supply of actionable claims arising from betting and gambling is constitutionally valid, clearly traceable to Article 246A of the Constitution, and does not constitute a direct tax on the activity of betting and gambling simpliciter”.
For the retrospective demands, the Court found that the 2023 amendments, including changes to Entry 6 of Schedule III and insertion of Rules 31B and 31C, “are clarificatory and explanatory in nature and shall operate retrospectively in the manner indicated hereinabove”.
The review petitions are a narrow bid to reopen the judgment, and they can succeed only if the petitioners can show a patent error or some other exceptional ground the Supreme Court will accept at review stage.
