Deltatech Gaming, an online real money gaming company, has moved the Calcutta High Court to challenge a staggering Rs. 6,384 crore show-cause notice issued by tax authorities.
The notice, which has raised eyebrows in the gaming industry, is scheduled for a hearing on November 29th.
The move comes in the wake of the GST Council’s decision to increase the tax slab for online gaming with wagering from 18% to 28% earlier this year. Contrary to initial concerns, the Indian government clarified that this tax hike is not retrospective.
Deltatech Gaming, the parent company of Adda 52, a prominent player in the online poker space, received the notice last month and promptly questioned its legal validity. In an official statement, the company asserted that the tax demand is arbitrary and contrary to the law. The company plans to exhaust all available legal remedies to challenge the tax demand and related proceedings.
The notice is grounded in the gross bet value of games played at the casinos between 2017 and 2022. Deltatech argues that the demand for GST on gross bet value, rather than gross gaming revenue, has been an industry-wide concern. The company highlights that representations have been made to the government regarding this issue.
Advocate Shwetank Ginodia represents the petitioner in the legal battle, seeking to invoke the writ of mandamus.
This legal standoff is not unique, as the gaming industry grapples with hefty tax demands. Gameskraft, a major player in real money skill gaming, faced a Rs. 21,000 crore show-cause notice last year, which was later struck down by the Karnataka High Court. However, GST authorities have challenged this decision in the Supreme Court, where the case is set for a hearing on December 15th.
Dream Sports, another key player in real money gaming, is also contesting a substantial show-cause notice of around Rs. 25,000 crore before the Bombay High Court.
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