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GST breather for gaming industry, casinos and racecourses operating in India

economy | Oct 11, 2021 2:05 PM IST

GST breather for gaming industry, casinos and racecourses operating in India


CNBC-TV18 has learnt that online gaming and casinos are likely to get goods and services tax (GST) relief. This breather will be welcome relief considering the recent GST enforcement action against these three industries.

In a major development for the online gaming industry, casinos and racecourses operating in the country, the GST Secretariat has asked GST Council to issue clarity on the GST rate and the applicability of the levy on these services, sources told CNBCTV18. This follows a directive from the Punjab Haryana High Court to the effect.

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The week before last, the Court had issued a stay order on any GST enforcement action against tax avoidance till the GST Council issued clarity on the GST rate and the applicability of the levy on these services.
The move comes on the back of the Directorate General of GST Intelligence (DGGI), the law enforcement agency under the Ministry of Finance responsible for fighting tax evasion in India, issuing several tax demand notices, conducting search and survey actions against several players online gaming industry, casinos and racecourses.
“GST Secretariat has approached the 8-member Group of ministers to fastrack their recommendations following Punjab Haryana High court order. The GST Council had nominated a GOM on the matter, headed by Gujarat Dy CM – Nitin Bhai Patel which was initially constituted in May and had a 6-month timeframe to come up with recommendations. The GOM was then reconstituted in June. Goa has a major role to play in this as the casino industry had been pitching to Goa government to get the GST council clarity on the issue,” sources added.
Similar to the Punjab Haryana High Court case, another case challenging undue GST Demand notice has been filed by the casino industry in Mumbai High Court, which is ongoing.
Punjab and Haryana High Court in an order on 29 September said that no coercive action should be taken by GST authorities to recover GST from online gaming platforms until clarity comes from GST Council. This was in response to a petition filed by an online gaming company – WITZEAL, which had faced an investigation and search enforcement action for tax avoidance by GST enforcement agency. WITZEAL had challenged the investigation proceedings initiated by GST authorities against recovery and had complained of coercive measures.
GST authorities have been sending several notices for search and survey actions for tax avoidance notices to the online gaming industry, casinos, horse racing institutions including Delta, Strike Casino, etc
“GST authorities are now bound by recent Punjab and Haryana High Court order to not to undertake further action until clarity being issued on the levy of GST by GST Council,” sources said.
An advocate of WITZEAL, Abhishek A Rastogi, Partner at Khaitan & Co, declined to comment on the matter when approached by this channel. Rastogi is also contesting a case against the GST authorities on behalf of some casinos, which have been served similar GST notices in Bombay High Court.
It remains to be seen how soon the GST council gives clarity and whether these demands are tenable or not.
Watch the accompanying video of CNBC-TV18’s Timsy Jaipuria for more details.
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