Mumbai: The online fantasy sports platform Dream11 on Wednesday withdrew its petition from the Bombay High Court challenging the show cause notice issued by the Goods and Services Tax (GST) for alleged tax evasion to the tune of ₹1,200 crore, excluding interest and penalty.
In September, Dream11, through its parent company, Sporta Technologies had approached the HC against the show cause notice served by GST.
Dream11 submits plea to HC
According to the plea, the notices were for the financial years 2017-18 and 2018-19 and alleged GST evasion of 28% GST on the amount levied for providing gambling services to users. The notices were issued after the recent change in GST rates for real money games increased the levy to 28% on the total bet placed at entry level of each gaming session on such platforms.
Additional government pleader Jyoti Chavan informed a division bench of Justices Girish Kulkarni and Jitendra Jain that the Deputy Commissioner of the State Tax department had withdrawn the show cause notice.
Instead, Chavan said, that the Directorate General, GST, (DGGST) will be issuing a fresh show cause notice.
Following the statement, the fantasy sport platform withdrew its plea.
Another petition was filed by another gaming company, Playerzpot Media Pvt Ltd, challenging notices issued to it by the state tax department and DGGST. The notices demanded payment of ₹532 crore of GST with interest and penalty.
Players challenge amendment notice
Challenging the notice, Playerz argued that the notices gave retrospective effect to the amendments to the GST Act which valued online fantasy sports at the rate of 28%. It claimed that the amendment was effective from October 1, 2023 and could not have been applied retrospectively.
The plea also challenged the Section 15(5) of the Central GST Act claiming it was arbitrary since it granted excessive delegation. Section 15(5) gives power to the officers to fix the value of supplies for taxation purposes on the recommendation of the GST council.
The HC kept the matter for hearing after six weeks.