Gaming cos get no relief in SC on tax claims exceeding Rs1 trillion

livemint.com:

NEW DELHI : The Supreme Court declined to grant a stay order on show-cause notices issued by tax authorities to online gaming companies, and adjourned the hearing to 8 January. The E-Gaming Federation (EGF), along with gaming companies including Play Games24x7 and Head Digital Works, had petitioned against retrospective goods and services tax (GST) claims collectively exceeding Rs1 trillion. With the petition for a stay declined, the companies fear more such notices could be issued even as the legal debate on gambling versus skill-based online gaming remains unsettled.

A Supreme Court bench led by Chief Justice DY Chandrachud refused to issue a notice on the gaming industry’s appeal, noting that the government’s counsels, headed by additional solicitor general N Venkataraman, had not yet received a copy of their petition. Senior lawyer Harish Salve, appearing on behalf of EGF and the gaming firms, urged the court to provide interim protection restraining tax authorities from issuing further notices until the matter is heard again. “Companies are not being taxed on just their earnings—(the authorities) are also including entry amounts played repeatedly by users, including their winnings," Salve said.

This, he argued, exceeded the turnovers of the gaming firms by several times. “For a company that filed a turnover of Rs1,000 crore in one year, the tax demands being made go up to nearly Rs15,000 crore. Companies are also being asked to respond shortly, but this can push the companies towards bankruptcy," Salve said.

Games24x7 declined to respond to a text query on the ongoing petition. An EGF spokesperson could not be reached immediately. On 27 September, Mint reported that the Directorate General of GST Intelligence (DGGI)