Dream11 Challenges GST Show Cause Notices in Bombay High Court

Dream11 Challenges GST Show Cause Notices in Bombay High Court

Dream11, a fantasy sports platform, has taken legal action by filing a petition in the Bombay High Court. This petition challenges the imposition of a 28 per cent GST (Goods and Services Tax) on bets placed on its platform, which is being applied retrospectively. This move comes in response to Show Cause Notices (SCN) issued to the e-gaming platform by GST authorities, and the petition was officially submitted on September 22.

According to the filed petition, the tax liability in question amounts to ₹216.94 crore for the fiscal year 2017-18 and ₹1,005.77 crore for the fiscal year 2018-19.

Dream11 has contested the Show Cause Notices (SCN) that aim to collect GST. These notices were issued under the assumption that the services offered by the company constituted gambling, and therefore, subjected to a 28 per cent tax.

In the petition, it was argued that the contested notices lack jurisdiction, as they were issued in contradiction to the judgments of the Supreme Court in the petitioner’s own case. These judgments have firmly established that the Online Fantasy Sports Gaming provided by the petitioner primarily involve skill-based games, rather than constituting gambling or betting activities. It further requests the Court to quash these notices.

Several online gaming companies and businesses operating in the casino industry have also received similar Show Cause Notices regarding their failure to pay a 28 per cent GST on the entire face value of bets made on their respective platforms.

Last week, the GST authorities issued an intimation notice to the casino operator Delta Corp and its subsidiary companies, indicating a shortfall in GST payment amounting to over ₹16,000 crore.

These notices have been issued in response to a clarification provided by the GST Council which stated that online gaming, casinos, and horse racing supplies are subject to a 28 per cent tax rate, regardless of whether the activities involved are considered games of skill or chance.

In September 2022, a similar Show Cause Notice (SCN) was issued to the online gaming company Gameskraft for the recovery of ₹21,000 crore GST. The company had taken the matter to the Karnataka High Court, which subsequently ruled in favour of Gameskraft by quashing the SCN.

The Supreme Court is scheduled to hear on October 10 the revenue department’s special leave petition filed in response to the Karnataka High Court ruling.