Report Suggests Over 100 Online Gaming Firms to Face GST Evasion Investigations
Report Suggests Over 100 Online Gaming Firms to Face GST Evasion Investigations

In a strategic maneuver aimed at curbing tax evasion within the online gaming sector, authorities are gearing up to initiate probes into more than 100 additional online gaming enterprises, according to recent reports.

This course of action follows the Supreme Court's intervention, overturning the Karnataka High Court's decision to nullify the Goods and Service Tax (GST) department's intimation notice, which sought a hefty sum of Rs. 21,000 crore from an online gaming platform.

A bench comprising Chief Justice D Y Chandrachud, along with Justices J B Pardiwala and Manoj Mishra, has summoned a response to a plea filed by the Directorate General of Goods and Services Tax Intelligence regarding Gameskraft, a Karnataka-based online gaming platform.

A senior official asserted, "There exist more than 100 companies registered within domestic online gaming federations. We intend to scrutinize the operations of these companies to ascertain if any GST evasion has taken place." The official further clarified that only those entities engaged in financial transactions related to gaming activities would be subjected to investigation.

The official elaborated, stating, "Out of these 100 companies, not all engage in real money online gaming. Our focus will primarily be on those that offer such games."

The genesis of this matter can be traced back to when Gameskraft received an intimation notice from GST authorities on September 8 of the previous year, demanding a colossal sum of Rs. 21,000 crore. Subsequently, the company contested the notice in the high court.

In a significant development, a single-judge bench of the high court, on September 23, 2022, stayed the GST department's notice, citing multiple contentious issues intertwined with the case.

However, Gameskraft found itself returning to the high court, alleging that despite the stay order, authorities unjustly and maliciously issued a show-cause notice on the very same day as the high court's ruling on September 23, 2022.

The September 8, 2022 notice had sought to levy a 28 percent GST on the company's financial transactions.

In response to these unfolding events, Gameskraft issued a statement, stating, "We have taken note of the interim order issued by the Supreme Court. In the forthcoming weeks, we, in collaboration with skilled gaming industry associations, will present our arguments before the Supreme Court."

The statement continued, expressing faith in the judicial process, saying, "We hold full confidence in the judiciary and believe that the Supreme Court will once again uphold established legal principles spanning over five decades, thereby vindicating both our stance and that of the industry."

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