According to sources, the Directorate General of Goods and Services Tax Intelligence (DGGI) in the Mumbai Zone has taken action against two prominent online gaming companies. Firstly, they have issued a notice to the well-known online gaming company Dream11, alleging that the company owes a significant sum of Rs 28,000 crore. Secondly, against Play Games 24X7, asserting a claim of Rs 21,000 crore reported by CNBC-TV18.
This development follows a precedent set by the Maharashtra State GST Audit authorities, who previously issued a notice to Dream11. Dream11 is a prominent online fantasy sports gaming platform in India and has now become entangled in a multifaceted tax dispute involving both state and central tax authorities.
In response to the show cause notice issued by the Maharashtra state GST audit authorities, the gaming company initiated legal proceedings by filing a writ petition before the Bombay High Court. This step was taken following the commencement of an audit by state authorities in December 2020, which culminated in the issuance of final audit reports on January 10, 2022, and subsequently on January 6, 2023.
Also Read: 28% GST on Online Gaming from October 1st: Focus Shifts to Supreme Court’s Decision on Gameskraft
The core issue at the heart of the controversy surrounding Dream11 revolves around allegations related to the incorrect classification of their online fantasy sports gaming activities. This legal dispute underscores the company’s determination to address the tax-related concerns raised by the state authorities through judicial means and seek legal clarity on the matter. It also signifies the ongoing legal complexity and potential financial implications for Dream11 in resolving this matter through the legal system.
The Supreme Court has recently stayed the order of the Single Judge of the High Court of Karnataka that quashed the Rs. 21,000 Crore Rupee GST Demand served on Gameskraft. It was a major blowback to the gaming companies. Subsequent to the implementation of the 28% GST, the focus has now shifted to the Supreme Court’s decision in the Gameskraft.
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