In a first of its kind action, Haryana’s excise and taxation department has issued a notice of Rs 1,500 crore to Gurugram-based Probo Media Technologies Private Limited that owns and operates reward-based opinion and idea sharing app, reported Times of India.
The notice has accused the company of misclassifying its services. The GST is applicable 100% on the face value of bet and the tax rate on chance of winning in betting, gambling, or horse racing in race club is 28% of gross amount. For games of skill, GST is applicable at 18% on platform fees only.
Probo which is new game format based on opinions was remitting GST at 18%. The department has classified the applicable tax rate at 28% thus raising a tax demand of Rs. 1,500 crore. The Haryana GST intelligence wing alleged that the firm was misclassifying its services in order to evade tax.
Further, it was reported that the firm was non-operational at the principal place of business declared by it on the GST portal. This notice is similar to the one received by rummy and poker operator Gameskraft last year. Rummy, poker were held as games of skill and therefore the applicable tax rate is 18%, however, the format of Probo is not judicially determined as game of skill.
Our sources indicate that there is a possibility of the revenue department attaching the property and bank accounts of Probo. The management is reportedly contemplating to approach Haryana High Court by way of writ to quash the GST notice. It is note worthy that the showcause notice against Gameskraft for a tax demand of Rs 21,000 crore was quashed recently.
Founded in 2019, Probo’s seed round investors include Kunal Shah of Cred, Kunal Bahl of Snapdeal, Rohit Bansal of Snapdeal, Bhavik Koladiya and Vaibhav Domkundwar. Institutional investors include Sequoia Capital, Elevation, etc.
Mumbai police had last year have filed an FIR against prediction app Probo under various sections of the Indian Penal Code, the Maharashtra Prevention of Gambling Act, 1887, and the Information Technology Act, 2000.