The Supreme Court of India on Friday temporarily halted the GST show-cause notices issued to multiple online gaming companies. This decision provides temporary relief to the online gaming sector, which has been facing increased scrutiny from tax authorities.

The bench, led by Justice JB Pardiwala, issued the stay ahead of the final hearing scheduled for March 18. The notices had been issued due to alleged tax evasion, causing significant concern among investors and stakeholders. This ruling is expected to reduce some immediate financial and regulatory pressures faced by the industry.

The Directorate General of GST Intelligence (DGGI) had sent 71 notices accusing gaming companies of evading GST amounting to Rs 1.12 lakh crore for 2022-23 and the first part of 2023-24, excluding penalties and interest. Given that the notices were issued under Section 74 of the GST Act, which allows a penalty of up to 100% of the tax demand, the total liability could surpass Rs 2.3 lakh crore.

In July 2023, the GST Council decided to levy a 28% GST on online gaming's full-face value, which came into effect in October. This decision led to shutdowns and layoffs in the gaming industry. Over 100 entrepreneurs, CEOs, and industry bodies have since written to the government to reconsider the decision.

Companies like Gameskraft, Dream11, Probo, and MPL were among those who received such notices and challenged the tax in the Supreme Court, which transferred 27 petitions from various high courts.

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