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


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 notice issued by the authorities for alleged evasion of Goods and Services Tax (GST) worth over ₹1,200 crore, excluding interest and penalty.

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

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

Petitioner Sporta Technology, which owns the brand Dream 11, claimed that the notices were on the basis that the service provided 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 only the fee for the platform but also the prize pool amount as an actionable claim.

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

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

Therefore, the petition challenges the investigation initiated by the Deputy Commissioner of the State Tax Department and the Directorate General of GST Intelligence into the alleged tax evasion.

It also challenged the notices issued by GST officials demanding documents for financial years 2017-18 and 2018-19.

Sporta claimed that the notice gave retrospective effect to the amendments in the GST Act, which gave weightage to online fantasy sports at a rate of 28%.

However, this amendment is effective from October 1, 2023 and could not be applied retrospectively, the company argued.

Relevantly, the petitioner also challenged Section 15(5) of the Central GST Act in the petition and claimed that it is arbitrary as it suffers from excessive delegation.

Section 15(5) empowers the authorities to fix the value of supplies for taxation purposes on the recommendation of the GST Council.

The petition states that this provision provides unbridled power to the officers.

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