Nazara Technologies is the fifth online gaming company to receive such a notice in recent times
Nazara Technologies Ltd. has informed on 27 September that it has received a show cause notice from the Director General of GST Intelligence, Mumbai. The mobile gaming company and sports media platform said that the notice is for a tax demand of Rs 2.83 crore, along with interest and penalty.
The company became the latest in a series of online gaming companies receiving tax notices after Dream11, Games24x7, Gameskraft, and Delta Corp.
The tax demand is made under the section 74(1) of the Central Goods and Services Tax Act, 2017, as well as the Maharashtra Goods and Services Tax Act 2017.
The notice further includes interest under section 50 of CGST and a penalty under Section 122(2)(b) of the Act, in conjunction with Section 20 of the Integrated Goods and Services Tax Act, 2017.
The company said it would be filing its response to the show cause notice within the prescribed time limit, in a stock market filing.
"Nazara exported services under a letter of undertaking without payment of GST as per rule 96A of CGST Rules, 2017. As export proceeds have still not been received (on account of a force majeure event) section 2(6)(iv) does not comply, the sale of services can’t be treated as the export of services and hence company is responsible for paying IGST at 18% on the value of such services" the show cause notice states, as per the filing.
According to the firm's filing, there has been a delay in receiving proceeds from the export of services due to unforeseen circumstances beyond the firm's control.