Dream11 is a Game of Skill and not a Game of Chance, not come under Gambling, attracts 18% GST: Bombay HC [Read Judgment]

While dismissing a Writ Petition against Dream11, a fantasy sports platform, the Bombay High Court has observed that It is undoubtedly a game of skill and not a game of chance.

The petitioner Gurdeep Singh Sachar claims himself as a public-spirited advocate sought directions to initiate criminal prosecution against the respondent No.3- a Company named “Dream 11 Fantasy Pvt. Ltd.”, firstly for allegedly conducting illegal operations of gambling/betting/wagering in the guise of Online Fantasy Sports Gaming, which as per the petitioner shall attract penal provisions of Public Gambling Act, 1867, and secondly for alleged evasion of Goods & Service Tax (GST) payable by it by violating the provisions of GST Act and the Rule 31A of CGST Rules, 2018.

The division bench comprising of Justice Ranjit More and Justice Bharati Dangre observed that, “Since the actionable claim in the Online Fantasy Sport Gaming of the respondent No.3 are amongst such actionable claims as per Schedule III and Section 7(2) of the Act, which are not considered as ‘supply of goods’ or ‘supply of services’, Rule 31A has no application. Moreover, actionable claim referred to in Rule 31A is limited to only activities or transactions in the form of chance to win in “lottery” or “betting” or “gambling” or “horse racing in a race club”. Thus, Rule 31A which is restricted only to such four supplies of actionable claim has no application in this case”.

The Petitioner also submitted that, is liable GST @ 28%, however, respondent No.3 wrongfully, to evade tax, claims classification under entry 998439 on the sum received by it as platform fees.

The bench also said that, The said entry evidently covers a host of online games which are intended to be played on the Internet and involve payment by subscription, membership fee, pay-per-play or pay per view. The said entry, however, excludes online gambling services. Since the Online Fantasy Sports Gaming of respondent No.3 is not gambling services, the respondent No. 3 is not in error in paying GST under this entry for its online gaming activities, by paying applicable GST @ 18%.

“It can be seen that success in Dream 11’s fantasy sports depends upon user’s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is undoubtedly a game of skill and not a game of chance. The attempt to reopen the issues decided by the Punjab and Haryana High Court in respect of the same online gaming activities, which are backed by a judgment of the three judges bench of the Apex Court in K. R. Lakshmanan that too, after dismissal of SLP by the Apex Court is wholly misconceived”, the bench also added.