The Directorate General of GST Intelligence (DGGI) has reportedly issued around 12 pre-show cause notices to online real money gaming (RMG) firms, accusing them of evading approximately Rs 55,000 crore in Goods and Services Tax (GST).
The GST department has issued a notice exceeding Rs 25,000 crore directed towards fantasy sports platform Dream11. No official from Dream 11 was available for comment on the matter till the filing of this report.
In addition to Dream11, pre-show cause notices have been sent to Play Games 24x7 and its affiliated entities, along with Head Digital Works, as indicated in the report. Authorities have also issued notifications of determined tax liabilities through the DRC-01 A form.
According to sources, Deeam11 headed by Harsh Jain has approached the Bombay High Court in response to the pre-show cause notice sent to it. Furthermore, it anticipates that additional notices of a similar nature will be issued in the coming weeks.
Industry experts suggest that the total GST demand from RMG companies, as raised by DGGI, could potentially reach Rs 1 lakh crore.
These notices were dispatched following a decision taken by the GST Council to impose 28 per cent GST on online gaming platforms, calculated based on the entire face value of bets made at the entry level.
It has been been reported that Play Games24x7 and its associated companies, which include RummyCircle and My11Circle, have received a notice for GST dues amounting to Rs 20,000 crore. Additionally, Head Digital Works has been issued a pre-show cause notice for an amount exceeding Rs 5,000 crore.
No one from RummyCircle or My11Circle were available comments on the matter.
Before this, the highest demand, totaling Rs 21,000 crore, had been directed towards Gameskraft Technology, a company based out of Bengaluru.
On September 6, the Supreme Court had temporarily halted the Karnataka High Court's decision that had nullified a GST notice issued to Gameskraft Technology, covering the period from 2017 to June 30, 2022.
Dream11 challenges Rs 25,000 crore GST notice in Bombay HC
Sporta Technologies Pvt Ltd, which operates the online gaming portal Dream11, has filed a petition in the Bombay High Court challenging a pre-show cause notice issued to it by the Directorate General of GST Intelligence (DGGI) alleging evasion of Goods and Services Tax (GST) amounting to the tune of a staggering Rs 25,000 crore.
The plea, filed on Monday, is expected to come up for hearing shortly, as the GST pre-show cause notice -- billed as the highest ever indirect tax claim from any entity -- stumped legal and corporate circles across the country.
Dream11, led by Harsh Jain, is a leading fantasy gaming sector player both in terms of valuation and user base, as per the Moneycontrol.com.
The company’s recent valuation crossed $8 billion and it claims to have a user-base of several crores of individuals. Last year, Dream11 posted a net profit of Rs 142 crore from an operating revenue of over Rs 3,840 crore, according to Moneycontrol.com
Besides Dream11, the DGGI is understood to have slapped several such pre-show cause notices targeting leading online real money gaming companies for purported GST dues amounting to over Rs 55,000 crore, and the total GST demand may be almost double to around Rs 100,000 crore.
Among the entities which have been slapped pre-show cause notices (served before the show-cause notice) are Gameskraft, PlayGames24x7, My11Circle, RummyCircle, etc. for huge but varying amounts of GST claims.
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