Online gaming firms seek Supreme Court review of 28 per cent GST verdict

NEW DELHI: India’s online gaming industry is rolling the dice once again. Major gaming companies have approached the Supreme Court of India seeking a review of its May 27 judgment that upheld the constitutional validity of the 28 per cent Goods and Services Tax (GST) on online gaming and cleared the way for retrospective tax demands estimated at more than Rs 1.5 lakh crore.

According to the Supreme Court’s case status portal, review petitions have already been filed by Play Games24x7 and Junglee Games, with several other gaming companies expected to follow.

Head Digital Works, which has also filed a review petition, argued that the case involved substantial constitutional questions that should have been referred to a larger Constitution Bench. The company contended that the apex court’s ruling contained errors apparent on the face of the record and warranted reconsideration.

A key argument raised by the gaming companies is that GST should be levied only when winnings are transferred to players, rather than at the time an entry fee is paid to participate in a game. They argued that the court erred in allowing GST to be imposed on the creation of actionable claims instead of limiting the levy to the transfer of winnings.

The review petitions also challenge the Supreme Court’s interpretation of the GST amendments introduced through the so-called “sunrise clause”. According to the companies, the judgment effectively gives retrospective effect to provisions that only came into force in October 2023.

The petitioners argue that the 28 per cent GST regime should apply prospectively from October 2023 rather than to transactions that took place before the amended legal framework became operational. They further contend that the ruling creates inconsistent tax treatment between online and offline gaming despite both involving similar underlying activities.

In addition to the GST dispute, Head Digital Works has sought a review of the Supreme Court’s decision upholding the validity of the online gaming laws enacted by Tamil Nadu and Karnataka.

The company argued that the judgment departs from earlier Constitution Bench and three-judge Bench rulings that recognised games of skill as protected business activities under Article 19(1)(g) of the Constitution. It also claimed the verdict incorrectly equates staking on games of skill with betting and gambling and overlooks jurisdictional issues arising from the Promotion and Regulation of Online Gaming Act, 2025 (PROGA), which established a central regulatory framework for online gaming.

The review petitions follow the Supreme Court’s May 27 verdict dismissing a batch of petitions challenging retrospective GST notices issued to online gaming companies. That ruling upheld the constitutional validity of the 28 per cent levy and paved the way for tax recoveries estimated at around Rs 1.5 lakh crore.

The outcome of the review proceedings will be closely watched by the gaming industry, as it could determine whether the apex court revisits one of India’s largest indirect tax disputes and clarifies the scope and timing of the GST regime for online real-money gaming.