The Supreme Court of India has put a temporary halt on the proceedings related to a massive ₹5,712 crore GST Show Cause Notice (SCN) issued to First Games Technology Pvt. Ltd., a subsidiary of One97 Communications Ltd (Paytm).
The interim relief was granted on May 23, with Paytm officially disclosing the development in a regulatory filing on May 24, 2025.
Key Highlights:
- Company Involved: First Games Technology Pvt. Ltd. (subsidiary of Paytm)
- Notice Amount: ₹5,712 crore
- Period Covered by GST Notice: January 2018 – March 2023
- Issued by: Directorate General of GST Intelligence (DGGI)
- Supreme Court Verdict: Proceedings stayed until final disposal of the case
Supreme Court’s Interim Order
The apex court, while responding to a petition filed by First Games, stated:
“Further proceedings of all the impugned show cause notices shall remain stayed till the final disposal of the main matter along with all the matters which are tagged.”
This pause allows Paytm’s gaming arm to defend its case without immediate financial liability or enforcement action.
What’s at the Core of the Dispute?
The issue stems from GST levied at 28% on the entire entry amount, whereas online gaming firms, including First Games, argue that GST should only apply at 18% on platform fees or operator margins—not the entire pool.
This case is part of a broader, industry-wide investigation involving several gaming companies.
Industry-Wide Impact
The dispute over GST classification is not isolated to Paytm’s First Games. The online gaming sector in India has been under close scrutiny, with similar notices issued to other players.
The outcome of this case could set a precedent for how gaming revenues are taxed in India, affecting taxation norms and compliance strategies across the industry.
Financial Snapshot – Paytm Q4 FY25
- Operating Revenue: ₹1,911 crore (down 16% YoY from ₹2,267 crore in Q4 FY24)
- Net Loss: Narrowed to ₹23 crore (a 96% reduction from ₹536 crore in Q4 FY24)
Despite the GST cloud, Paytm’s cost discipline is showing progress on the bottom line.
