Nazara Gets Interim Relief In INR 845 Cr GST Notice Case

SUMMARY

Nazara said that the HC has issued directions that “no effect shall be given to any order passed by the tax authority (DGGI, Kolkata) in relation to the show cause notice”

In July, Nazara’s two subsidiaries – Openplay Technologies and Halaplay Technologies – received tax notices to the tune of INR 1,119.93 Cr

Last year, the listed online gaming major received a GST show cause notice from the Mumbai office of DGGI amounting to INR 2.84 Cr

In a major reprieve, listed gaming major Nazara Technologies’ subsidiary Openplay Technologies has received an interim relief from the Calcutta High Court (HC) in connection with the INR 845.7 Cr tax notice issued by West Bengal goods and services tax (GST) authorities.

In an exchange filing, the online gaming giant said that the HC has issued directions that “no effect shall be given to any order passed by the tax authority (Director General of GST Intelligence, Kolkata) in relation to the show cause notice”.

The relief comes two months after Nazara’s two subsidiaries – Openplay and Halaplay Technologies Pvt Ltd, received tax notices to the tune of INR 1,119.93 Cr from DGGI, Kolkata.

The show cause notice against Openplay pertains to the period between 2017-18 and 2022-23, and was issued under Section 74(1) of the CGST Act, 2017 and State SGST Act, 2017.

“These claims are in relation to calculation of GST based on the sums pooled by players as opposed to gross gaming revenues,” Nazara said at the time. It also said then that both Openplay and Halaplay cumulatively contribute less than 2% of the company’s revenue and less than 1% of its total profit.

The tax notices came a year after the GST Council decided to impose a 28% GST on online real-money gaming on the full face value of the bets. The aftermath saw several online platforms, including Gameskraft, Delta Corp, among others, receiving GST notices to the tune of INR 1.12 Lakh Cr. Many of these companies have challenged these levies in courts.

Notably, this is not the first time that Nazara has received a show cause notice to pay tax GST levy. Last year, the listed online gaming major received a GST show cause notice from the Mumbai office of the Directorate of GST Intelligence (DGGI) amounting to INR 2.84 Cr.

The latest development comes at a time when Nazara is in the middle of a funding and acquisition spree. Last month, it signed a definitive agreement to acquire a 47.7% stake in Pokerbaazi parent Moonshine Technology for INR 831.5 Cr through a secondary transaction.

In September itself, Nazara said it was acquiring a 15.86% stake in gaming community platform GetStan Technologies for INR 18.4 Cr. More recently, the company also said that its board approved a proposal to raise INR 900 Cr via a preferential equity issue.

Shares of the company closed 2.9% lower at INR 954.20 on the BSE on Friday (October 4).