The Bombay High Court on December 6 directed the adjudicating officer of the Goods and Services Tax (GST) department not to pass any orders in demand notice issued to online gaming company Playerzpot Media Private Limited without its permission.
“The adjudicating officer may proceed to hear the petitioners (Playerzpot) on the show cause notice, however, final orders on the show cause notice shall not be passed without the leave of this Court,” a division bench of the Bombay HC said in its order.
Playerzpot received a demand notice of over Rs 500 crore from the GST department in September 2023. The company approached the Bombay HC by filing a writ petition, which came up for hearing on December 6.
During the hearing, lawyers for Playerzpot cited the cases of Delta Corp in Sikkim and Goa bench of the Bombay HC where interim orders were passed and urged the court to pass a similar order. The court, accordingly passed an interim order issuing a direction to the adjudicating officer. Playerzpot was represented by a law firm.
Online gaming companies have been served show-cause notices for alleged tax evasions to the tune of Rs 1 lakh crore so far this year. These companies are in a tussle over the payment of 28 percent Goods and Services Tax (GST) instead of 18 percent for the period up to October 1, 2023.
While the companies feel the 28 percent tax is applicable only starting October 1, the government believes that the October 1 revision only provided clarity to a law that was already in force. As such, the government’s stance is that the demand for tax dues is not retrospective.
The GST Council, in August 2023, amended the law to clarify that all online games involving bets, irrespective of skill or chance, will attract a GST rate of 28 percent on the full value of the bets placed, and not on the gross gaming revenue, from October 1.
Currently, the Bombay HC, the Goa bench of Bombay HC, and the Sikkim HC are hearing cases about GST notices to online gaming companies and casinos. In October, gaming major Delta Corp in an exchange filing said that the Goa bench of the Bombay HC examined the writ petitions submitted by both the company and its subsidiaries regarding the show cause notices issued by tax authorities and issued an order, prohibiting the authorities from making definitive decisions without prior court approval. Similarly, the Sikkim HC has stayed a GST demand notice of Rs 628 crore against Delta Corp.