The Punjab and Haryana High Court has refused to remit GST proceedings against an online gaming company to the adjudicating authority, holding that the company must challenge the order-in-original through the statutory appellate mechanism. 

The bench of Acting Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor ruled that the magnitude of the demand and the financial burden of making a 10% pre-deposit did not justify bypassing the remedy of appeal.

The bench directed that if the appeal is filed within the permitted period, it must be entertained without raising any objection concerning limitation.

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The appellant/assessee approached the High Court challenging the constitutional validity of Rule 31A(3) of the Central Goods and Services Tax Rules, 2017, along with departmental circulars issued pursuant to the rule.

The company also challenged the show-cause notice and the order-in-original passed against it by relying upon the disputed valuation provisions.

Although several grounds had been raised questioning the validity of the statutory rule, the High Court found it unnecessary to examine them independently. The Court noted that the controversy had already been adjudicated by the Supreme Court in Directorate General of Goods and Services Tax Intelligence (HQS) v. Gameskraft Technologies Private Limited, decided on May 27, 2026.

The Supreme Court had upheld the validity of the relevant rules and prescribed the manner in which pending show-cause notices, assessment orders and appeals were to be dealt with.

The High Court referred to paragraph 86.1 of the Supreme Court’s Gameskraft judgment.

Under the directions issued by the Supreme Court, taxpayers who had received show-cause notices were allowed eight weeks from receipt of the judgment to submit their replies. The competent authorities were required to consider those replies and pass orders in accordance with law and the findings recorded by the Supreme Court within 12 weeks thereafter.

In cases where assessment orders had already been passed, the Supreme Court allowed 12 weeks for filing appeals from the date of receipt of its judgment. The appellate authorities were directed to decide such appeals in accordance with law and in light of the findings in Gameskraft as expeditiously as possible.

Consequently, the Punjab and Haryana High Court concluded that the petitioner’s challenge to the validity of Rule 31A(3) could not be independently reconsidered after the Supreme Court had already upheld the provision.

Appearing for the gaming company, senior counsel Tarun Gulati argued that the order-in-original was inconsistent with the principles subsequently laid down by the Supreme Court in the Gameskraft judgment.

It was submitted that if the adjudicating authority reconsidered the case in accordance with the Supreme Court’s observations, the GST demand could be reduced to virtually one-fifth of the amount presently claimed, even without considering the company’s other objections.

On this basis, the petitioner requested the High Court to remit the matter to the adjudicating authority for a fresh examination in light of the Supreme Court’s ruling.

The department opposed the request for remand. Senior Standing Counsel Rishabh Kapoor submitted that paragraph 86.1 of the Gameskraft judgment specifically provided the remedy available to taxpayers against orders that had already been passed.

According to the Revenue, the appropriate course for the petitioner was to file a statutory appeal against the order-in-original rather than seek reconsideration by the original adjudicating authority through a writ petition.

The High Court accepted this objection.

The petitioner further contended that the order-in-original had imposed a financial liability running into hundreds of crores of rupees.

It argued that even the mandatory pre-deposit of 10% required for pursuing the appeal would result in an excessive financial burden. The company claimed that it did not have sufficient funds to make such a substantial pre-deposit and, therefore, should not be relegated to the appellate remedy.

The High Court, however, did not accept financial hardship as a sufficient reason for directing the adjudicating authority to reopen the matter.

The Bench found substance in the Revenue’s objection and held that the proper remedy available to the petitioner was to challenge the order-in-original by filing an appeal.

The Court expressly declined to direct the original adjudicating authority to revisit the demand.

It observed that issuing such a direction would not be justified when the Supreme Court had already laid down a specific course for cases in which adjudication orders had been passed. The petitioner was therefore permitted to pursue the appellate remedy in terms of the Gameskraft judgment.

The Court stated, “We would not be justified in issuing any direction either to the adjudicating authority to revisit the matter, nor to issue any further direction, except for permitting the petitioner to pursue its remedy of appeal.”

The writ petition was accordingly dismissed.

While declining substantive relief, the High Court protected the petitioner against a possible limitation objection.

It directed that if the company files its appeal within four weeks from the date of the High Court’s order, the appellate authority must entertain it without objecting to the delay or limitation.

The merits of the GST demand, including the company’s contention that the liability should be significantly reduced after applying the principles laid down in Gameskraft, were left open for determination by the appellate authority.

All pending applications in the writ proceedings were also disposed of.

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