Exchange22 gets GST relief as Allahabad HC stays ₹253 crore show cause notice
Gaming companies argue that the 28% GST rate should be imposed only from October 1, 2023, when the revised taxation structure was officially implemented.
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M/S Hulm Entertainment Private Limited parent company of Exchange22 had filed a writ petition against the government seeking a stay on the Rs 253 crore demand order. The case revolves around the ongoing debate regarding the applicability of Goods and Services Tax (GST) on online gaming firms.
According to the order copy, the online gaming platform Exchange22 has argued that similar matters are currently under consideration before the Hon'ble Supreme Court citing Director General of Goods and Services Tax Intelligence Vs. Gameskraft Technologies Private Limited and Others. In light of this, the court has ordered a stay on proceedings related to the show-cause notice dated November 13, 2024, issued under Section 74 of the Central Goods and Services Tax (C.G.S.T.) Act, 2017. The matter has been scheduled for further hearing on May 8, 2025.
Exchange22 is being represented by legal counsels Abhishek Ghosh, Prashant Mishra, Tarun Agrawal, Kumar Visalaksh, Pranav Bansal, and Jay Sayta and instructed by authorized representative Bodhishatta Karfa. On the other side, the government is being represented by Naveen Chandra Gupta (Additional Solicitor General of India), C.S.C., Parv Agarwal, and Manoj Kumar Kushwaha (State Counsel).
The case is part of a larger dispute regarding GST liabilities on online gaming firms. The Indian government has issued over 71 show-cause notices to online gaming companies for allegedly evading GST worth ₹1.12 lakh crore during the financial year 2022-23 and the first seven months of 2023-24, as reported to the Rajya Sabha last year.
A key contention in the dispute is the applicable GST rate. Gaming companies argue that the 28% GST rate should be imposed only from October 1, 2023, when the revised taxation structure was officially implemented. However, the government maintains that this revision merely clarified an existing law rather than introducing a new tax, meaning that the demand for GST payments is not retrospective.
While the Supreme Court is hearing the broader issue regarding GST demands on online gaming companies, the government has also challenged a Karnataka High Court ruling that had quashed a ₹21,000 crore GST demand on Gameskraft. The outcome of these cases will have significant implications for the online gaming industry, determining whether companies will have to pay backdated GST amounts for the period between July 2017 and March 2023.
The industry awaits further legal clarity as the matter progresses through the courts, with the Supreme Court's ruling expected to set a precedent for future GST assessments on gaming platforms.
