Show cause notices to online gaming firms as per legal provisions: CBIC chairman

CBIC chairman Sanjay Kumar Agarwal on Thursday, September 28, said that the law is being applied uniformly and show cause notices for alleged Goods and Services Tax (GST) evasion by online gaming companies are as per legal provisions.

The head of the Central Board of Indirect Taxes and Customs was speaking at a FICCI event and added that the government is fully prepared to implement the 28 per cent levy from October 1 on online gaming, casinos, and horse racing along with mandatory registration of offshore e-gaming platforms.

On the quantum of taxes that are due from gaming major Dream11, Agarwal said, “can’t comment on the quantum of recovery from Dream11 as notice was sent by State GST department.”

CNBC-TV18 had earlier reported that at least six online gaming companies have received pre-show-cause notices from the Directorate General of Goods and Services Tax Intelligence (DGGI).

Fantasy gaming company Dream 11 alone has received at least 4 such tax demands so far, amounting to a total of Rs 18,000 crore, as per the report.

The show cause notice slapped on Delta Corp last week was for alleged short payment of taxes worth Rs 16,822 crore. In September last year, a similar show cause notice was served to online gaming company Gameskraft for recovery of Rs 21,000 crore GST. The company had approached the Karnataka High Court which had quashed the show cause notice.

Following this, the revenue department in July filed a Special Leave Petition in the Supreme Court on the Karnataka High Court ruling in the Gameskraft case. The next date of hearing is listed for October 10.

The Goods and Services Tax (GST) Council had in July announced that bets placed in online gaming, horse racing, and casinos will attract a 28 per cent tax at full value. Parliament last month passed amendments to the Central GST and Integrated GST laws to give effect to the Council's decision.

About a dozen states have passed the amendments in their assemblies, while a similar number of states are understood to have brought in an ordinance to pave the way for implementation of the changes from October 1.