GST Evasion Notice soon for 40 Gaming Companies including Gameskraft

Around 40 online gaming companies, including Gameskraft Technology Private Limited (GTPL), are being investigated for alleged tax evasion. It is claimed that these businesses avoided paying a 28 percent Goods and Services Tax (GST) between 2017 and June 30, 2022.

The Supreme Court of India issued a stay on September 6, 2023, allowing the Directorate-General of Goods and Services Tax Intelligence (DGGI) to serve show-cause notices on these gaming companies. The stay came after the Karnataka High Court previously quashed a GST notice against GTPL for alleged tax evasion of Rs.21,000 crore in May 2023.

The tax evasion claim against GTPL is described as the largest in the history of indirect taxation in India.

The DGGI is in charge of investigating these companies for alleged tax evasion; the investigation was temporarily halted following the Karnataka High Court’s decision, but it is now set to resume in light of the Supreme Court’s decision.

Because GTPL’s and other gaming companies’ activities are considered identical, the GST authorities initially decided to withhold show-cause notices against other companies following the Karnataka High Court’s order.

Following receipt of a notice in September 2022, Gameskraft Technology filed an appeal with the Karnataka High Court, which quashed the notice in May 2023; however, the Directorate of Revenue Intelligence of GST appealed this decision in the Supreme Court.

Following the Karnataka High Court’s decision, the Central Board of Indirect Taxes and Customs (CBIC) suspended at least 35 show-cause notices issued to online gaming companies. Following the Supreme Court’s decision, the DGGI will continue its investigations into other gaming companies.

In summary, the legal battle centres on allegations of significant tax evasion by Indian online gaming companies. The Supreme Court’s stay of the Karnataka High Court’s decision has cleared the way for the GST authorities to conduct additional investigations and issue show-cause notices to these companies.