The GST Intelligence unit has issued a show cause notice to Bengaluru-based online gaming startup Gameskraft Technology (GTPL), in what seems to be the biggest such notice in the history of indirect taxation, according to an exclusive report by CNN News18.
The notice pertains to the company not paying Goods and Services Tax (GST) to the tune of Rs 21,000 crore, the report added.
Gameskraft Technology has also been accused of promoting online betting through card, casual and fantasy games such as Rummy Culture, Gamezy, Rummy Time etc. Further, it was also found that Gameskraft was not issuing any invoices to its customers.
As per the report, GST officials have slapped 28 percent tax on betting amount of nearly Rs 77,000 crore. "GTPL was engaged in the betting by allowing its players/gamers to place bets in the form of money stakes on outcome of card games played online," the tax authorities noted.
During investigation, the gaming platform submitted fake/back dates invoices, which was caught by forensic examination, the report stated, adding that the company was also inducing its customers to betting as there was no way of return once the money was added in the wallet.
The show cause notice issued is for the period between 2017 and 30 June, 2022.
In a later development, Gameskraft issued a statement with regard to the show cause notice.
"As a responsible startup with Unicorn status in the online skill gaming sector, we have discharged our GST and Income Tax liabilities as per standard industry practice, which is now over a decade old. 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," the company' spokesperson said.
"Games of skill are a constitutionally protected activity per the Supreme Court and various High Courts across the country. Rummy is one such game declared to be a skill game like horse racing, bridge and fantasy games. Therefore, the notice is a departure from the well established law of the land," the spokesperson added.
Moneycontrol had last year reported that Gameskraft Technologies had bought five apartments in the city for around Rs 32 crore, citing documents accessed by Zapkey.com.
The agreement of sale was registered on August 26, 2021. The five apartments, together worth Rs 31.49 crore, are of size 6,950 sq ft (super built-up area) each and are located in the Savyasachi Sarayu project on First Main Road, Jayamahal Extension, Bengaluru.
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