Allahabad HC Stays ₹253 Crore GST Show Cause Notice issued to Exchange22

Prepend to the content

A division bench of the Allahabad High Court comprising Chief Justice Arun Bhansali and Justice Kshitij Shailendra by order dated 7th March, 2025 stayed the ₹253 crore GST show cause notice issued to Hulm Entertainment Private Limited, the company which operates online gaming platform Exchange22. 

According to Storyboard18, Hulm Entertainment Private Limited, the parent company of Exchange22, had filed a writ petition challenging the GST showcause notice of Rs. 253 crores issued by DGGI claiming tax at the rate of 28% on the face value of bet/entry fees instead of platform fees.

Counsels representing Hulm Entertainment argued that similar cases are pending before the Supreme Court in the batch of petitions titled Director General of Goods and Services Tax Intelligence Vs. Gameskraft Technologies Private Limited and Others and the apex court has granted interim relief by staying showcause notices issued to online gaming companies. Taking this into account, the court issued notice to the GST authorities, asking them to file their response and stayed the proceedings pertaining to the GST showcause notice issued to Hulm Entertainment until further orders. The court has fixed 8th May, 2025 as the next date of hearing in the matter.

Case Proceedings 

Hulm Entertainment was represented in the matter by Advocates Tarun Agrawal, Kumar Visalaksh, Jay Sayta, Pranav Bansal, Prashant Mishra and Abhishek Ghosh under the instructions and guidance of Hulm Entertainment authorised representative Bodhishatta Karfa. The central government’s legal team included Additional Solicitor General of India, Naveen Chandra Gupta and central government standing counsel Parv Agarwal. The Uttar Pradesh government was represented by its counsel Manoj Kumar Kushwaha.

Gaming companies maintain that the 28% GST rate on initial deposit should only apply from 1st October, 2023, when the revised GST framework for online gaming was officially introduced. However, the government contends that 28% tax on face value of bets or contest entry fees is applicable on online real money gaming companies since 2017, leading to showcause notices of over Rs. 2.5 lakh crores issued to over 70 gaming companies for the period 2017-2023.

A division bench of the Supreme Court comprising Justices JB Pardiwala and R. Mahadevan is expected to conclusively decide these issues the Gameskraft batch of cases that are scheduled for final hearing on 18th March, 2025. The outcome of the apex court in the Gameskraft matter will determine the fate of the online real money gaming and casino industries.  

The post Allahabad HC Stays ₹253 Crore GST Show Cause Notice issued to Exchange22 appeared first on G2G News.