GST Authorities Issue Notice to Gameskraft, Seek Rs 21,000 crore

The Goods and Services Tax authorities have served a show cause notice to Bengaluru-based online gaming company Gameskraft Technology Pvt Ltd, demanding Rs 21,000 crore in taxes, interest and penalty, the company said in a submission to the Karnataka High Court.

The court has stayed the notice and will hear the matter after Dussehra holidays.

Last year in December, the GST authorities had conducted a search on the premises of the company and attached its property and bank accounts, alleging a tax evasion to the tune of Rs 460 crore.

The company filed an appeal against the demand and attachment of its property and bank accounts.

The authorities have now issued a fresh show cause notice, the company said, seeking the court's intervention.

"The total GST demanded in the impugned intimation notice is close to Rs 21,000 crore (plus interest and penalty) against the total income earned by the petitioner from 2017 to 2022, which is little more than Rs. 4,000 crore," the company said in its submission, referring to the September 8 notice from the GST authorities.

The tax was calculated by applying a GST rate of 28%.

"We are confident that we will be able to respond to this notice to the full satisfaction of the authorities since they have sought to apply 28% tax applicable to games of chance and lottery, instead of the 18% applicable to online platforms of games of skill," a Gameskraft spokesperson said.

The spokesperson added that as a responsible startup with Unicorn status in the online skill gaming sector, the company has discharged its GST and income-tax liabilities as per standard industry practice.

The company has also told the court that the notice has been issued by an officer not having jurisdiction.