Executive summary
Enquiries into offshore platforms rarely begin with a demand. They begin with a request for information — which is the point at which the outcome is still shapeable, and the point most platforms waste.
- Identify the instrument first. A Section 70 summons, an information request, a DRC-01 intimation and a Show Cause Notice carry different deadlines and different consequences.
- No Indian entity is not a defence. The enquiry follows the supply, and the department reconstructs India revenue from payment-side data.
- Silence produces an estimate. An unanswered enquiry tends to end in an order built on the department's assumptions about your Indian revenue, not your records.
- The evidence is contemporaneous or it is weak. Terms of service, fee disclosure and custody language carry far more weight than an explanation written after the enquiry lands.
What these enquiries actually look like
The sequence is more predictable than it feels when the first email arrives.
Initial contact
Often an email or letter to a general or compliance address, sometimes to a group entity rather than the platform itself. It asks for information about India-facing activity and may not use the word "tax" prominently.
Information request or summons
A request for user numbers, India-attributable revenue, fee structures, settlement flows and corporate structure. Under Section 70 this can take the form of a summons compelling production of documents.
Quantification
The department builds a figure. Where the platform has not provided its own, the figure is reconstructed from payment-side data — which is almost always higher and broader than the platform's fee income.
Intimation, then Show Cause Notice
A DRC-01A intimation may precede a formal Show Cause Notice. Once the Notice issues, the matter is time-bound and the arguments narrow sharply.
The first 48 hours
What to do immediately, in order, before any substantive reply is drafted.
- Diarise the deadline from the date on the document, not the date it reached the right person internally. Internal routing delay is not a recognised excuse.
- Classify the instrument. Establish whether it is an information request, a Section 70 summons, a DRC-01A intimation or a Show Cause Notice, and what each requires of you.
- Acknowledge receipt. A short acknowledgement, with a request for time where the window is tight, is materially better than silence while you organise internally.
- Freeze the record. Preserve the terms of service, fee schedules and user agreements as they stood in the periods under enquiry — not as they read today.
- Route it to one owner. Enquiries answered by several people in parallel produce inconsistencies that are quoted back later.
- Separate the tax threads. Do not answer a GST enquiry with withholding material, or the reverse. See our crypto tax guide on why the two run on different bases.
The evidence that decides it
Most of what determines the outcome existed long before the enquiry, which is why preparation beats argument.
| What the department asks for | What it is used to establish |
|---|---|
| India-attributable user numbers and revenue by period | Whether registration was required, and from when |
| Fee schedules, commission and spread structure | Whether the taxable value is the fee or something broader |
| Terms of service and user agreements | Whether the platform acts as facilitator or principal |
| Settlement and custody flows | Characterisation, and any withholding exposure |
| Corporate structure and group entities | Which entity made the supply, and who should be assessed |
Four costly mistakes
Each of these is common, and each narrows the options available later.
- Ignoring it because there is no Indian entity. The enquiry follows the supply. Silence converts a negotiable position into an ex-parte order built on someone else's estimate.
- Letting the department set the number. Where the platform supplies nothing, quantification proceeds from payment-side data, which captures gross flows rather than fee income.
- Treating FIU-IND registration as a tax answer. They are different regulators with different obligations; offering one as evidence of the other weakens the reply.
- Answering inconsistently across threads. Information given to one authority, or by one team, is read against everything else you say.
Checklist
If an enquiry has arrived, work through this in order.
- Diarise the deadline from the document date
- Classify the instrument — summons, information request, intimation or Show Cause Notice
- Acknowledge receipt and request time if the window is short
- Preserve period-correct terms of service, fee schedules and user agreements
- Assemble India-attributable revenue by period on your own basis
- Appoint a single owner for all correspondence
- Model exposure before conceding any figure — penalty calculator
- If no notice has arrived yet, read voluntary registration first
Common questions
What is a DGGI summons and how is it different from a GST notice?
A summons under Section 70 of the CGST Act compels attendance and the production of documents in an ongoing enquiry. It is an investigative instrument, not a demand: no tax is asserted and no liability is quantified. A Show Cause Notice is the opposite — it states a case against you and starts a time-bound adjudication. Treating a summons as a demand leads platforms to argue the merits far too early; treating it as unimportant leads them to under-prepare the material that will shape whether a demand is ever raised. The correct response to a summons is accurate, complete, carefully scoped disclosure of what is actually asked for.
Can DGGI act against an exchange with no Indian entity?
Yes. The enquiry is directed at a supply made to Indian recipients, not at an Indian establishment, so the absence of an Indian entity is not a jurisdictional answer. In practice the department reconstructs India-attributable activity from payment-side data obtained from banks and payment intermediaries rather than relying on the platform's cooperation. The absence of a local entity does affect recovery, but it does not prevent a demand being raised and confirmed, and an unanswered enquiry tends to produce an ex-parte order built on the department's own estimate of your Indian revenue rather than on your figures.