DGGI issued Rs.3 Crore Tax Notice to Nazara Technologies over alleged GST Violation

Nazara Technologies Ltd. announced on 27 September that it had received a show cause notice from the DGGI (Directorate General of GST Intelligence), Mumbai. The notice is for a tax demand of Rs 2.83 crore, along with interest and penalties, according to the mobile gaming company and sports media platform.

The company was the latest in a string of online gaming companies to receive tax notices, following Dream11, Games24x7, Gameskraft, and Delta Corp.

The tax demand is made in accordance with Section 74(1) of the Central Goods and Services Tax Act of 2017 as well as Section 74(1) of the Maharashtra Goods and Services Tax Act of 2017. In addition, the notice includes interest under Section 50 of the CGST and a penalty under Section 122(2)(b) of the Act, as well as Section 20 of the Integrated Goods and Services Tax Act, 2017.

In a stock market filing, the company stated that it would respond to the show cause notice within the time limit specified.

“Nazara exported services under a letter of undertaking without paying GST in accordance with Rule 96A of the CGST Rules, 2017. Because export proceeds have yet to be received (due to a force majeure event), section 2(6)(iv) does not comply, the sale of services cannot be treated as an export of services, and thus the company is responsible for paying IGST at 18% on the value of such services,” according to the show cause notice.

According to the filing, the firm’s receipt of proceeds from the export of services has been delayed due to unforeseen circumstances beyond the firm’s control.