The online gaming industry is under fire again amid reports of multiple goods and services tax (GST) evasion notices and pre-show-cause notices being served by the Directorate General of Goods and Services Tax Intelligence (DGGI) to at least six online gaming companies on September 26.Sources told CNBC-TV18 that the biggest tax notice in the industry has been served to fantasy gaming company Dream 11.
Its parent firm Sporta Technologies Private Limited has filed a writ petition in the Bombay High Court challenging the show-cause notice issued against it for the alleged failure to pay 28 percent GST on the face value of the bets its collected.Sources have also said that many more such notices are on the way and intimation notices have already been sent to at least six online gaming companies, including digital skill gaming company Games 24X7.An intimation of tax determined as payable through the DRC-01A form has been issued by authorities to these online gaming companies. Industry sources suggest that the industry-wide tax liability could be more than Rs 1 lakh crore.

They added that most of the notices will be doled out by the end of September. In cases where intimation notices have been sent, the DGGI has asked companies to clarify and explain their stand before the final notices are sent.

It must be noted that this comes after the Supreme Court earlier this month stayed a Karnataka High Court ruling whereby it set aside a show cause notice issued by DGGI directing Gameskraftto pay additional GST worth Rs 21,000 crore. Experts suggest that the stay allows the Ministry of Finance to send similar notices to other companies.

The government will apply GST law to other gaming companies in the same way as was done in the case of Gameskraft and that all gaming companies must comply with the law, sources said.

Dream 11 has refused to comment on the matter.