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Over 100 Online Gaming Companies May Face Investigation in GST Evasion Case, Says Report

September 25, 2023

In a bid to strengthen their efforts against tax evasion by online gaming companies, officials are now poised to initiate investigations into more than 100 additional online gaming firms, according to a report by Business Today.

Previously, the Supreme Court had temporarily halted the Karnataka High Court’s ruling, which had annulled the Goods and Service Tax (GST) department’s intimation notice seeking ₹21,000 crore from an online gaming platform.

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

A senior official stated, “There are over 100 domestically registered companies affiliated with online gaming associations. We will commence scrutiny of these companies to determine whether there has been any GST evasion.” The official added that only firms involving a monetary component in gaming activities would be scrutinized.

The matter stemmed from an intimation notice issued to Gameskraft by GST authorities on September 8 of the previous year, demanding ₹21,000 crore. The company contested the notice in the high court.

On September 23, 2022, a single-judge bench of the high court held the GST department’s notice, citing several contentious issues in the case.

Subsequently, the online gaming company returned to the high court, alleging that despite the stay order, authorities had unlawfully and maliciously issued a show-cause notice on the very same day as the high court’s ruling on September 23, 2022.

The notice of September 8, 2022, sought to impose a 28% GST on the company’s transactions.

In response to these developments, the company issued a statement, saying, “We have taken note of the interim order of the Supreme Court. We, along with industry associations in the skilled gaming sector, will present our arguments before the Supreme Court in the coming weeks.”

“We have full confidence in the judiciary and believe that the Supreme Court will once again uphold the established law of over five decades and support our position as well as that of the industry,” the statement concluded

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