Supreme Court’s Gameskraft Decision likely to Trigger Show-Cause Notices to 40 Online Gaming Companies Over GST Evasion Allegations

Supreme Court's Gameskraf - Show-Cause Notices - Online Gaming Companies Over GST Evasion Allegations - taxscan

The Supreme Court’s order to stay the decision of the Karnataka High Court in the case of the online gaming company Gameskraft Technology Private Limited in the Goods and Services Tax (GST) has likely to trigger the issuance of Show Cause Notices (SCN) to other 40 online gaming companies.

Gameskraft Technology Private Limited had been facing allegations of substantial GST tax evasion, amounting to a staggering Rs 21,000 crore. The Karnataka High Court had previously ruled in favour of the company, quashing the GST notice against them. However, the Supreme Court has now intervened by issuing a stay order, effectively suspending the High Court’s decision and allowing further legal proceedings to take place.

Read More: Blowback to Gameskraft: Supreme Court stays Karnataka HC order quashing Rs. 21000 Cr Online Gaming GST Demand

This development has set a precedent and has caused a ripple effect within the online gaming industry. Approximately 40 other online gaming companies are now in the spotlight, as the GST authorities are preparing to issue SCN to them, said the government officials.

“We should see a horde of show-cause notices. The GST authorities were trying to send the notices to other online gaming companies but the Karnataka High Court order came in. But now the notices will be issued on the same principle,” a senior government official told Moneycontrol.

Further stated that “Show-cause notices will be issued to other companies also. The SC has allowed it. The DGGI is continuing its investigations against other companies also”.

This situation is likely to have far-reaching implications for the online gaming industry in the country, as it signals increased scrutiny and regulatory oversight of their tax-related activities. It also emphasizes the government’s commitment to ensuring that all companies, including those in the online gaming sector, fulfill their tax obligations and adhere to GST regulations.

Also read: Lok Sabha Passes CGST and IGST Amendment  Bill Proposing 28% GST on Online Gaming

In addition to the Gameskraft case, two other gaming companies have received show-cause notices as well. These notices pertain to alleged tax evasion amounting to Rs 3,000 crore collectively. While the amounts may not be as massive as in the Gameskraft case, they are still significant and reflect potential tax liabilities that have drawn the attention of the tax authorities.

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