Nazara Technologies gets a tax demand of Rs 2.83 crore from DGGI Mumbai

Nazara Technologies said on September 27 that it has received a show cause notice from the Director General of GST Intelligence, Mumbai for a tax demand of Rs 2.83 crore, along with interest and penalty.

With this, the diversified gaming and sports media company became the latest company to receive such a notice after Dream11, Games24x7, Gameskraft and Delta Corp in recent weeks.

However, this tax demand is unrelated to the current issue of retrospective taxation that is haunting India's real-money gaming sector, Moneycontrol has learnt. We have reached out to Nazara Technologies for more details and will update once we hear back.

In a stock market filing, the company said it would be filing its response to the said show cause notice within the prescribed timelines.

"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.

The company said, in the filing, there has been a delay in receiving the proceeds from the export of services due to unforeseen events beyond the company's control.

"However, there is no indication to suggest that the company will not eventually receive the entire export proceeds," it said.