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Gameskraft is expected to get an official notice from CBIC

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Credit: Scrut Automation

Three senior government officials predicted that the Central Board of Indirect Taxes and Customs (CBIC) would issue a demand notice with a penalty soon in light of the Supreme Court’s decision to stay the Karnataka High Court’s decision to overturn a goods and services tax (GST) notice against Bengaluru-based online gaming company Gameskraft Technology for alleged tax evasion worth Rs 21,000 crore.

The Karnataka High Court ruling from May 2023 had been stayed by the SC on September 6.

“The CBIC will now make the decision. The calling will be taken by the assessor. The tax demand will be sent by the assessing officer. What may cause a delay? The ruling from the Karnataka High Court was the only factor keeping it from happening. A top government official informed Moneycontrol that the demand letter will be sent out right away with a penalty.

The Union Finance Ministry did not respond to a request for comments until the report was published.

What’s the situation?

The largest such allegation in the history of indirect taxes, Gameskraft Technology Private Ltd (GTPL) was sent with a show-cause notice in September 2022 by the GST intelligence unit, stating that the business had failed to pay Rs 21,000 crore in GST. The warning covered the time frame of June 30, 2017, to June 30, 2022.

Rummy Culture, Gamezy, and Rummy Time are just a few of the casual and fantasy card games that Gameskraft was accused of pushing in order to increase online gambling. Additionally, it was claimed that Gameskraft failed to send clients bills.

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A show-cause notice challenge has been made by the online gambling business to the Karnataka HC. The show-cause letter was overturned by the HC in May 2023, and the court then noted that the department was selectively using its justifications. Thus, the GST department’s revenue intelligence section challenged this ruling to the SC.

“Gameskraft will be decided upon, pending what the SC has stated. The HC was contested by CBIC. There is currently a stay. Let’s see what happens when the final hearing rolls around in three weeks. Gameskraft is required to reply. According to the legislation, the assessing officer would issue a demand notice, a senior government official told Moneycontrol.

The GST Act states that the penalty is 50% if the payment for the tax demand is paid within 30 days after the decision; otherwise, the penalty is 100%.

 Final Hearing will be in Three weeks

In three weeks, the case will likely be heard in its entirety by a bench chaired by Chief Justice of India (CJI) DY Chandrachud.

The CJI has ordered Gameskraft to submit its answer and given the GST department’s revenue intelligence section permission to submit a retort. The SC would not want any other HC to adopt this order, the CJI has further said.

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Gameskraft’s Group General Counsel Joyjyoti Misra previously stated that the corporation and the groups representing the skill gaming sector would present their arguments to the SC in the upcoming weeks.

Rummy Culture, an online rummy game launched in 2017, and Gamezy, a multi-game platform that includes rummy, fantasy sports, and online ludo, among other games, are among the real-money gaming platforms in Gameskraft’s portfolio.