In an interim relief to MyTeam11, the Rajasthan High Court has stayed the show cause notice issued by the Directorate General of GST Intelligence ( DGGI ) last month.
The Company challenged the show cause notice served to them under Section 74(1) of the Central Goods & Services Tax, 2017 alleging that “MyTeam11 has avoided tax by undertaking activities in the form of betting and misclassified their supply as service instead of actionable claims which are goods.”
While staying the demand, the Court stated that the department shall not take any coercive measures to recover any amount from the petitioners pursuant to the impugned show cause notice till the final decision on MyTeam11’s petition. The company also has to file a reply to the show cause notice within one month.
Further, in the interim order, the bench said, “based on the initial impression, we are satisfied that some of the games offered by MyTeam11 online have already been held to be games of skill rather than that of chance or that of betting/gambling. Thus, when the matter is so settled by various courts, the issuance of the show cause notice is nothing but an abuse of the process of law.”
Online gaming companies are under Taxscan since a few years. Last year, the GST department also served similar notice worth ₹21,000 crore to GamesKraft Technologies in 2022.
Since then, DGGI has questioned 65-70 online gaming companies since October and the frequency has increased till December, according to four business line sources close to the development. All the top online gaming companies are said to have had these visits from DGGI in the last few months.
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