DGGI probes alleged GST violations by Mahadev Online Book, suspects dues of Rs 30,000 crore

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The Directorate General of GST Intelligence (DGGI) has launched an investigation into Mahadev Online Book and its promoters for potential violations of GST rules and non-payment of taxes. The banned app, currently under scrutiny by the Enforcement Directorate and police in multiple cities, including Mumbai and Hyderabad, faces allegations related to money laundering, illegal betting, and match-fixing.

Officials familiar with the investigation estimate the GST dues to be around Rs 30,000 crore, reported the Economic Times. This figure includes interest and penalties accumulating since the app’s inception in 2018-19. Last year, between September and November, DGGI issued show-cause notices to real money gaming (RMG) applications, seeking a total demand of over ₹1.12 lakh crore. Many of these companies opposed the demands in high courts and the Supreme Court.

Unlike legitimate RMG firms with valid GST registration, Mahadev Book and its subsidiaries, such as Fairplay, Anna Reddy, and Lotus 35, allegedly operated their applications illegally without proper registration. When an application faced scrutiny, the operators reportedly closed it and redirected customers to another, according to sources close to the investigation.

“In 2022, when the Mahadev application came under scrutiny by the ED, the promoters started floating other applications. These applications, operating illegally without GST registration, have caused massive revenue losses to the exchequer,” said an official involved in the probe.

Even though Mahadev claims to be registered in the Netherlands and operates from Dubai, it is still liable for GST dues post-amendment and subsequent ban, the official added. Last year, amendments to the IGST Act directed online money gaming suppliers to pay integrated tax on supply within India and register under a simplified process. The imposition of 28% GST on RMG apps after October 1, 2022, led to a surge in advertisements by offshore betting applications, claiming their platforms do not attract GST. Social media influencers endorsing these claims have come under the scrutiny of DGGI and the Enforcement Directorate.

Various agencies, including state police, ED, and DGGI, are investigating approximately 100 offshore gaming applications. The ED’s investigation revealed that Mahadev Book operated a franchise-type model, outsourcing the panel in a profit-sharing ratio of 70-30%, and the owners were generating ₹450 crore monthly through the application’s operations. The panel operators were responsible for financial transactions, transferring Mahadev’s share via hawala channels.

As the authorities crack down on offshore gaming applications, the revelations suggest a pattern of operators evading taxes through a constant cycle of launching and shutting down applications. The enforcement agencies, including DGGI and the Enforcement Directorate, are intensifying their efforts against such practices, emphasizing the need for stringent measures to curb illegal gaming activities and ensure compliance with tax regulations in the digital landscape.