Lately, the Directorate General of GST Intelligence (DGGI) has been on a roll, issuing tax evasion notices to several real-money gaming (RMG) companies. This has become more common, especially after the Hon’ble Supreme Court put a stay on Karnataka HC’s verdict on Gameskraft’s Rs 21,000 crore notice.
Aggregatively, the amount of notices served to 71 gaming firms has touched a whopping Rs 1.12 lakh crores. Companies like Dream11 (Rs 28,000 crore), Games24x7 (Rs 20,000 crore) and Delta Corp (Rs 16,000 crore) are among the biggest to receive DGGI’s notices.
Minister of State for Finance Pankaj Chaudhary responded regarding the service of these GST notices. However, he refrained from revealing details of individual companies who were asked to pay the said amounts.
“As these notices are pending adjudication, the respective GST demand is not yet determined under the provisions of CGST Act, 2017,” Chaudhary said in the Upper House of Parliament on Tuesday as quoted by Moneycontrol.
Notably, GST on online gaming was brought into enforcement from October 1. Since then, no offshore firms in the online gaming space have registered their business in India, Chaudhary revealed.
RMG firms file petitions to challenge GST notices
RMG firms have also started to challenge DGGI’s notices that they received, respectively. Some firms have filed petitions across multiple high courts to address the issue of retrospective taxation. Companies have claimed that the GST demanded by the authority is higher than their total revenue during the year.
The matters are currently being heard. However, if the decision is not in favour of RMG Cos., it could lead to hard times for many companies. In fact, if obliged to pay, companies may go bankrupt, which might lead to lay-offs or in worse situations, shutdown.
Since new GST rates were implemented starting October, companies demanded clarification on the GST notices received. Prior to that, the companies claimed that the taxes should be charged on old rates, which were charged at 18% on gross gaming revenue.
The government, however, replied that the recent tax changes weren’t unjust. According to government, implementing the change provided clarity to a law that was already in force. And thus, the tax isn’t retrospective in nature, it concluded.