Gaming founders appeal to GST Council for personal liability relief after Supreme Court ruling

Mumbai: About a dozen founders of real money gaming (RMG) companies have jointly appealed to the GST Council, requesting the constitutional body to spare them from personal liabilities.

Properties, bank accounts and personal assets of directors of private limited companies can be attached under the goods and service tax (GST) law if the board members are unable to prove that tax default was not due to gross neglect, malfeasance, or breach of duty.

Also read: SC upholds govt retrospective 28% GST levy on online gaming companies


The founders have also pleaded for amnesty from the tax burden on RMGs and casinos following the Supreme Court ruling. Even though the formula fixed by the apex court is estimated to have reduced total tax dues to ₹50,000 crore or less from over ₹2 lakh crore originally claimed by the tax department, the amount could be far too heavy for a crippled industry with near-defunct firms.

Chaired by the finance minister, with representatives from states, the GST Council, which is supposed to meet every quarter, can recommend exemptions besides changes in GST law and rates. Besides invoking section 11A of the CGST Act to waive tax, the Council has powers to suggest relief under other grounds.

'ACTED IN GOOD FAITH'

According to Sudipta Bhattacharjee, partner at the law firm Khaitan & Co, "The Supreme Court's May 2026 ruling has settled the taxability of online real-money gaming at 28% on the value of deposits, but left a sector-wide retrospective burden that far exceeds the cumulative revenues of most RMG and casino operators.

Founders and directors acted in good faith on the basis of 60+ years of skill-vs-chance jurisprudence and widespread industry practice that GST applied only on platform fees. Imposing personal liability now, when there was no intention to evade taxes, connivance, or neglect would be disproportionate and could trigger a flurry of insolvencies. The GST Council should invoke Section 11A of the CGST Act to regularise the pre-October 2023 tax position adopted by the industry and waive penalty/interest as well as personal liabilities, balancing revenue interests with the reality that most firms have either shut down or pivoted and lack capacity to pay."

A calibrated settlement mechanism without coercive actions based on alleged personal liabilities will be crucial to prevent a chilling effect on entrepreneurship while preserving the rule of law, said Bhattacharjee who represented several online gaming and casino companies before the Supreme Court.

One of the oldest chambers of commerce has also moved the Council. However, it's unclear whether these pleas would figure in the agenda of the next Council meeting which, according to media reports, may be held later this month. Technology and gaming lawyer Jay Sayta, who also represented gaming companies, felt that since the issues involved were purely interpretational and the entire industry followed the interpretation based on judicial rulings prevalent at the relevant point of time, it will be a fit case for the Council to exercise its discretionary powers under Section 11A.

Meanwhile, some gaming companies are preparing to file review petitions before the Court.

Also read: Online gaming companies seek a clear regulatory playfield

"Not that the industry has much hope in this standard procedure where same judges are formally requested to re-examine their order. Nonetheless, at least two companies are planning to file," said an industry official. Apart from RMG firms, which have stopped operations, directors of functional casinos in Goa and Sikkim are also exposed to personal liability risk.

The GST law was changed in 2023 and applied retrospectively to make online gaming, casinos, and horse racing taxable at 28% on the full face value of bets, regardless of whether it's game of skill or chance. The Court modified the framework to apply the tax only on the initial deposit.