Nazara Tech Arm gets Interim Relief in Rs.845 Crore GST Notice Case by Calcutta High Court

In a significant relief, listed gaming firm Nazara Technologies’ subsidiary Openplay Technologies has got interim relief from the Calcutta High Court (HC) in relation to the Rs.845.7 Crore tax notice issued by West Bengal goods and services tax (GST) authorities.

In an exchange filing, the online gaming company stated that the HC has issued directives that “no effect shall be given to any order passed by the tax authority (Director General of GST Intelligence, Kolkata) in relation to the show cause notice”.

The relief comes two months after Nazara’s two subsidiaries, Openplay and Halaplay Technologies Pvt Ltd, got tax notices totalling Rs.1,119.93 Crore from DGGI, Kolkata.

The show cause notice against Openplay covers the period from 2017-18 to 2022-23 and was issued under Section 74(1) of the CGST Act, 2017 and the State SGST Act, 2017.

“These claims are in relation to the calculation of GST based on the sums pooled by players as opposed to gross gaming revenues,” Nazara disclosed at the time. It further stated that Openplay and Halaplay together account for less than 2% of the company’s sales and less than 1% of its entire earnings.

The tax notices came a year after the GST Council opted to levy a 28% GST on online real-money gaming based on the total face value of the bets. In the aftermath, numerous online platforms, including Gameskraft and Delta Corp, received GST notices totalling INR 1.12 lakh crore. Many of these corporations have filed legal challenges to these taxes.

Notably, this is not the first time Nazara has received a show cause notice to pay the GST fee. Last year, the listed online gaming firm received a GST show cause notice from the Directorate of GST Intelligence (DGGI) in Mumbai for INR 2.84 crore.

The latest development comes while Nazara is in the midst of a financing and acquisition drive. Last month, it struck a definitive agreement to buy a 47.7% interest in Pokerbaazi parent Moonshine Technology for INR 831.5 crore in a secondary transaction.

In September, Nazara announced that it was buying a 15.86% share in the gaming community platform GetStan Technologies for INR 18.4 crore. More recently, the company announced that its board has authorized a proposal to fund INR 900 crore through a preferred stock offering.