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The company has argued that the show-cause notices issued by the authorities wrongly claim that tax is applicable to the actionable claim, which is not accurate as the prize pool amount and the platform do not fall under the purview of being either the supplier or the recipient
Fantasy sports platform Dream11 has approached the Bombay High Court to contest a show-cause notice issued by GST authorities alleging evasion of Rs. 1200 crores.
The petitioner, Sporta Technology, owner of the Dream11 platform, argues that the notices were based on the assumption that Dream11's business is a game of chance rather than a game of skill.
In its petition, Dream11 argued that the show-cause notices issued by the authorities contradicted established Supreme Court precedent, which had determined that games hosted on their platform were primarily games of skill. Therefore, it asserted that the show-cause notices violated Article 141 of the Constitution.
Additionally, Dream11 referred to the Niti Ayog report titled "Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India - Draft for Discussion," which recognized fantasy sports as games of skill.
The company has argued that the show-cause notices issued by the authorities wrongly claim that tax is applicable to the actionable claim, which is not accurate as the prize pool amount and the platform do not fall under the purview of being either the supplier or the recipient.
In addition to the show-cause tax notices related to tax evasion for the fiscal years 2017-2018 and 2018-2019, the company has also contested the tax department's seeking production of documents for those years, arguing that these notices are time-barred.
Furthermore, the plea asserts that the GST council had officially notified a 28% GST rate on fantasy platforms effective from October 1, 2023, without providing retrospective effect. Despite this, Dream11 was arbitrarily subjected to the rate applicable from October 1, 2023.
The plea asserts that the notices issued by the tax department are in violation of Article 19(1)(g) and Article 21 of the Indian Constitution. It states that these notices not only contravene Article 14 of the Constitution but also impede the petitioner's right to conduct trade.
Furthermore, the company has contended that Section 15(5) of the CGST and MGST Act suffers from the excessive delegation, granting officers unriddled and unrestricted authority to determine the value of taxable supply. This, according to the plea, is in violation of Articles 14, 19, and 21 of the Indian Constitution.
Case title: Sporta Technology Pvt Ltd. Vs UOI & Ors.
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