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Fantasy sports platform Dream11 has taken legal action by filing a petition in the Bombay High Court to challenge the imposition of 28% Goods and Services Tax (GST) on bets made on its platform, a move made retroactively.
This legal action comes in response to Show Cause Notices (SCN) issued by the Goods and Services Tax (GST) authorities against the e-gaming platform. The SCN sought to recover a substantial sum, amounting to ₹216.94 crore for the fiscal year 2017-18 and ₹1,005.77 crore for 2018-19.
Dream11 has contested the SCN, arguing that the GST demand is based on the assumption that the services provided by the company fall under the category of gambling, thus warranting a 28% tax rate. However, the company asserts that its services predominantly involve skill-based online fantasy sports gaming, as determined by previous judgments, including one by the Supreme Court.
“The impugned notices lack jurisdiction having been issued in teeth of the Apex Court judgments in the petitioner’s own case, wherein, it has been held that Online Fantasy Sports Gaming provided by the petitioner are predominantly games of skill, not amounting to gambling/betting,” the petition stated.
Dream11 maintains that the SCN lacks jurisdiction and should be invalidated. The company did not provide additional comments on the matter.
Several online gaming companies and those in the casino industry have received similar Show Cause Notices for non-payment of 28% GST on the full face value of bets placed on their platforms.
Recently, GST authorities issued an intimation notice to Delta Corp, a casino operator, and its subsidiaries, for a shortfall in GST payments totaling over ₹16,000 crore. These notices were issued in alignment with the GST Council’s clarification that online gaming, casinos, and horse racing supplies are subject to 28% tax, regardless of whether they involve games of skill or chance.
A comparable situation unfolded last year when Gameskraft, an online gaming company, received a similar SCN demanding ₹21,000 crore in GST. The Karnataka High Court ultimately quashed the SCN, prompting the revenue department to file a special leave petition in the Supreme Court. The next hearing for this case is scheduled for October 10.
Sources By Agencies
