Tax uncertainty has resurfaced as a major concern for investors and the gaming industry, following GST notices sent to online gaming and casino businesses. These notices, demanding payments for the past five years, have raised questions about the government’s sudden action. Industry experts are baffled, wondering why these notices have emerged after years of regular filings, audits, and scrutiny.
Delta Corp recently disclosed receiving fresh notices totaling Rs 6,384 crore, adding to the growing list of demands faced by gaming companies. Similar notices were served to other prominent players like Gameskraft, Dream 11, and Games 24X7. Industry insiders and legal experts are questioning the legitimacy of these demands, especially considering recent amendments clarifying GST rules for online gaming. The demands, perceived as arbitrary, have created uncertainty and legal challenges for the industry.
Legal experts argue that the retrospective application of the amended provisions creates constitutional and interpretational challenges, especially concerning the valuation of actionable claims. The industry fears that these demands, if enforced, could jeopardize their survival, as the amounts demanded far exceed their actual revenues.
Criticism has been directed not just at the tax authorities but also at the GST council’s decision to apply tax clarity retrospectively. Experts contend that the council’s decision to make clarifications, which required legal amendments, retroactive is causing confusion and prolonged legal battles. Many believe that a prospective approach would have been more prudent, preventing the current situation of uncertainty and lengthy litigation.
Amidst these challenges, the absence of a functioning GST Tribunal further complicates the situation. Industry observers emphasize the urgent need for the tribunal to handle the anticipated influx of cases. Furthermore, experts stress the importance of clarity, consistency, and fairness in taxation, drawing parallels to previous controversial cases like Vodafone. A balanced approach, ensuring government revenue without stifling business prospects, is seen as crucial for fostering a thriving online gaming ecosystem in India.