Dream Sports, the parent company of real money gaming major Dream11, has challenged potentially massive tax evasion show cause notices issued to it by GST authorities before the Bombay High Court, MoneyControl reported. The notices possibly allege that the company didn’t pay 28% GST on the full face value of bets placed in its games, as recently mandated by the GST Council in its controversial tax hike for the real money gaming sector.
The tax evasion claims could be Rs. 25,000 crore, or as high as Rs. 40,000 crore, both of which are significantly higher than the Rs. 21,000 crore notice levied against another gaming company Gameskraft last year.
Last Friday, another gaming company Delta Corp received a similar retrospective tax evasion notice to the tune of Rs. 16,822 crore for the period of July 2017 to March 2022. Delta Corp announced in an exchange filing that it may challenge the tax evasion notice:
“The amount claimed in the DG Notice is inter alia based on the gross bet value of all games played at the casinos during 2017-2022,” the filing said. “Demand for GST on gross bet value, rather than gross gaming revenue, has been an industry issue and various representations have already been made to the Government at an industry level in relation to this issue…The company has been legally advised that the tax demand is arbitrary and contrary to law, and the company will pursue all legal remedies available to it to challenge such tax demand and related proceedings.”