Mumbai, May 29 : Shares of gaming companies came under heavy selling pressure on Friday after the Supreme Court upheld the government's retrospective imposition of 28 per cent Goods and Services Tax (GST) on online gaming platforms.

Delta Corp -- that operates licensed casinos and luxury hotels -- shares declined as much as 17.76 per cent to hit an intraday low of Rs 66.60 on the BSE from the previous close.

Meanwhile, Nazara Technologies -- a diversified gaming and sports media platform -- shares traded 5.07 per cent lower at Rs 274.80, hitting an intraday low on the exchange.

The verdict is expected to have significant financial implications for online gaming companies, which have been engaged in a prolonged legal battle over the tax treatment of online gaming activities.

The Supreme Court ruled that online gaming platforms cannot be treated merely as intermediaries and held that such activities create actionable claims under GST law. The apex court further observed that legislative amendments validating the tax levy were clarificatory in nature and therefore applicable retrospectively.

Following the ruling, shares of gaming-related companies witnessed sharp declines as investors assessed the potential impact of higher tax liabilities and regulatory uncertainty on the sector.

The dispute dates back to September 2023, when the Supreme Court stayed a Karnataka High Court order that had quashed a Directorate General of GST Intelligence (DGGI) notice seeking nearly Rs 21,000 crore in GST from Gameskraft.

The tax notice alleged that the company promoted online betting activities through platforms including Rummy Culture, Gamezy and Rummy Time.

Gaming companies had argued that online gaming operators merely function as intermediaries facilitating contests and do not supply actionable claims to players, making retrospective GST demands unsustainable.

However, tax authorities maintained that online gaming platforms effectively operate within betting and gambling frameworks, making player stakes taxable under the highest GST slab.

According to court submissions, cumulative tax demands raised through show-cause notices against online gaming companies amount to nearly Rs 91,684.81 crore. Including casinos, the total tax demand rises to around Rs 1.08 lakh crore.

The government had amended GST laws in August 2023 and made it mandatory for overseas online gaming companies to register in India from October 1, 2023.

/IANS