SC dismisses GST evasion appeals filed against Dream11

Posted On 16 Dec, 2019 0

The year 2019 has been quite a challenge for the gaming industry, with multiple issues springing up and questioning the existence of fantasy sports and poker. Earlier this month, a Public Interest Litigation (PIL) filed by Advocate Gurdeep Singh Sachar claiming that Dream11 is comprised of a game of chance and gambling and that the company was indulging in GST evasion.

A division bench of the Supreme Court comprising Rohinton Nariman and S. Ravindra Bhat dismissed the Special Leave Petitions filed by the Sachar, Department of Revenue, Union of India and State of Maharashtra against a Bombay HC order dated 30th April 2019, upheld the High Court’s order that Dream11 hosted game of skills and paying 18% Goods and Services Tax (GST) on the fees fetched from the player’s pool was appropriate.

The Union of India, Department of Revenue, challenged the order of the High Court that stated that Dream11 evaded GST to the tune of INR 2,173 Crores and is responsible to pay 28% GST on the face value of bets. It further alleged that the Bombay HC did not allow to present its view and passed out the order within a period of 2 working days from when the matter was being registered without any notice.

Recently, Avinash Mehrotra, a social activist filed a PIL against online poker and betting sites in Delhi High Court claiming that fantasy sports and other similar games constitute gambling because there is no involvement of skill. Besides, Sachar also claimed that the 1996 KR Lakshmanan judgment which held horse racing to be a game of skill must be reviewed.

However, Justice Nariman orally observed that there is no doubt that fantasy sports are a game of skill. Further stating that any person who enters the competition needs to apply their mind on choosing over the team or the cricketer one over the other. He further underlined that if rummy is a game of skills, then so is fantasy sport. The final ruling from the Supreme Court is apparently the ultimate word as far as fantasy sports legality in India and skill involved is a concern.

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