LI Network
Published on: 29 September 2023 at 10:20 IST
Dream11, a prominent fantasy sports platform, has taken legal action by filing a petition in the Bombay High Court to contest show cause notices issued by tax authorities. These notices claim that Dream11 evaded Goods and Services Tax (GST) totaling more than ₹1,200 crores (approximately $163 million), excluding interest and penalties.
The notices are linked to the financial years 2017-18 and 2018-19, accusing Dream11 of evading 28% GST on the amounts collected for offering gambling-related services to users. Dream11, which is presently a sponsor of the Indian national cricket team, asserts that these notices are based on the erroneous assumption that their services constitute gambling.
Sporta Technology, the entity behind Dream11, has clarified that GST on actionable claims should not be applicable to them since they neither act as a supplier nor a recipient of such claims. They emphasize that they merely provide a platform for users to engage in fantasy sports.
Additionally, Sporta Technology contends that the notices lack jurisdiction, as they contradict the established position of the Supreme Court, which recognizes online fantasy sports as primarily skill-based rather than gambling or betting.
The plea, filed through TLC Legal LLP, challenges the ongoing investigation initiated by the Deputy Commissioner of the State Tax department and the Directorate General of GST Intelligence regarding the alleged tax evasion.
It also contests the notices issued by the GST authorities, which sought documentation for the financial years 2017-18 and 2018-19.
Sporta Technology argues that the notices retroactively apply amendments to the GST Act that assess online fantasy sports at a 28% rate. However, the company asserts that these amendments are effective only from October 1, 2023, and cannot be retroactively enforced.
Notably, the petitioner in this plea also criticizes Section 15(5) of the Central GST Act, alleging it to be arbitrary and excessively delegating power.
This section allows officers to determine the value of supplies for taxation purposes based on recommendations from the GST council, potentially granting them unchecked authority, according to the plea.