Plea Challenging GST SCN Issued To Online Gaming Company Playerzpot Media: Bombay High Court Issues Notice Dept.

The Bombay High Court has issued the notice to the department on a plea challenging the GST show cause notice (SCN) issued to online gaming company Playerzpot Media.

The bench of Justice G. S. Kulkarni and Justice Jitendra Jain has ordered the GST authorities to refrain from passing any final orders on the SCN without leave of the Court.

The petitioner or assessee has assailed the SCN on various grounds. The assessee pleaded that it is not a supplier of “actionable claims in the nature of chance to win in betting and gambling” but only maintains and provides a platform that enables players to play “games of skill” with each other. Accordingly, Rule 31A of the CGST Rules (which prescribes a levy of GST at 28% on the entire amounts wagered by players against each other as opposed to 18% GST only on the platform fees earned by the online gaming platform) cannot be invoked.

The vires of Rule 31A of the CGST Rules and Section 15(5) of the CGST Act have been challenged. The petitioner submitted that Rule 31A is against provisions of the CGST Act, specifically Sections 15(1) and 15(5). Alternatively, it also argues that Rule 31A is not applicable to online gaming in as much as the new amendments with effect from October 1, 2023, brought into the CGST Act and the valuation provisions under the CGST Rules, more specifically Rule 31 B and Rule 31 C inserted in the CGST Rules with effect from October 1, 2023, have for the first time sought to levy GST on online money gaming. Since no amendment has been carried out in Rule 31A of the CGST Rules, online platforms facilitating players playing games of skill against each other can be argued not to be covered by the earlier provisions on which the impugned SCN has been issued.

The assessee, for the purpose of an interim stay, relies on the recent interim orders issued by the various High Courts admitting petitions involving similar challenges and granting interim orders with specific instructions for non-issuance of any order by the adjudicating authority until the pendency of the writ petitions.

The court issued the notice to the Attorney General, returnable on January 17, 2024, insofar as the challenge to the provisions of Section 15(5) of the CGST Act, 2017 being unconstitutional and violative of Articles 246A and 366(12) of the Constitution of India was prayed for.

Counsel For Petitioner: Bharat Raichandani

Counsel For Respondent: Jyoti Chavan

Case Title: M/s. Playerzpot Media Pvt Ltd & Anr. Versus Union of India & Ors.

Case No.: Writ Petition (L) No.31946 Of 2023

Click Here To Read The Order