Reports: GST authorities to issue show-cause notices to 40 online gaming firms for tax evasion

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After the Supreme Court stayed the Karnataka High Court’s judgement in the Gameskraft case, which involved the quashing of Rs 21,000 crore GST evasion show-cause notice, other online gaming companies are now under a similar threat.

According to two senior government officials who talked to Moneycontrol, the Goods and Services Tax (GST) authorities are set to hand out notices to 40 online gaming companies, similar in nature to what Gameskraft was served.

The Gameskraft notice was the biggest one ever handed out to any firm. While the other 40 may not get a claim that high, it still poses a problem for the industry as it believes it is offering games of skill on the platforms.

“We should see a horde of show-cause notices. The GST authorities were trying to send the notices to other online gaming companies but the Karnataka High Court order came in. But now the notices will be issued on the same principle,” one of the officials said.

Ever since the Karnataka High Court quashed the notice served to Gameskraft, the Central Board of Indirect Taxes & Customs (CBIC) decided to put all the other notices on hold. As per reports, at least 35 show-cause notices are yet to be served to online gaming firms.

As of now, only three companies have received show-cause notices, first being Gameskraft while the other two have been served notices amounting to Rs 3,000 crore. One of the senior government officials reiterated that the notices will surely be issued to other online gaming firms. In the meantime, the investigation is still underway against other companies.

Group General Counsel at Gameskraft, Joyjyoti Misra, however, believes that they will again prevail as the nature of games provided by Gameskraft is completely legal and operated as per the rules issued by the government.