Dream 11 moves Bombay High Court challenging GST notices for alleged tax evasion of over ₹1,200 crore

Dream 11, which is the current sponsor of the Indian national cricket team, has challenged the tax demand on the ground that online fantasy sports are predominantly games of skill and not gambling or betting.
Dream 11 logo with Bombay HIgh court
Dream 11 logo with Bombay HIgh court

Fantasy sports platform Dream 11 approached the Bombay High Court on Tuesday challenging the show cause notices issued by the authorities for alleged evasion of Goods and Services Tax (GST) amounting to over ₹1,200 crores exclusive of interest and penalty.

The notices were for the period of financial years 2017-18 and 2018-19 and alleged GST evasion of 28% GST on the amount levied for providing gambling services to users.

Dream 11 is the current sponsor of the Indian national cricket team.

The petitioner Sporta Technology which is the owner of the brand Dream 11, claimed that the notices were based on the premise that the service supplied by Dream 11 amounts to gambling.

Due to this, the authorities were levying and recovering differential GST on the contest entry amount which included not just the fee for the platform but also the prize pool amount as an actionable claim.

Sporta clarified that GST on actionable claims could not be levied on it as it was neither a supplier nor a recipient of the claim but merely provided a platform.

The company also claimed that the notices were issued without jurisdiction because they were contrary to the settled position of the Supreme Court that online fantasy sports are predominantly games of skill and not gambling or betting.

The plea filed through TLC Legal LLP, therefore, challenged the investigation initiated by the Deputy Commissioner of State Tax department and Directorate General of GST Intelligence into the alleged evasion.

It also challenged the notices issued by the GST authorities calling for documents for the FY 2017-18 and 2018-19.

Sporta claimed that the notices gave retrospective effect to the amendments to the GST Act which valued online fantasy sports at the rate of 28%.

However, this amendment is effective from October 1, 2023 and could not have been applied retrospectively, the company contended.

Pertinently, the petitioner in the plea also raised challenge to Section 15(5) of the Central GST Act claiming it was arbitrary as it suffered from excessive delegation.

Section 15(5) gives power to the officers to fix the value of supplies for taxation purposes on the recommendation of the GST council.

This provision, the plea stated, grants unbridled power to the officers.

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