Supreme Court Dismisses All Appeals Against Dream11 on GST Evasion Charges & ‘Skill Game’ Contention

Supreme Court dismisses appeal petitions against Dream11 Vs Sachar case
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  • Namita Ghosh December 14, 2019
  • 2 Minutes Read

Earlier this month, disturbing news that Bombay High Court’s favorable decision in the Gurdeep Sachar Vs. Dream11 case was being challenged in the Supreme Court sent shockwaves down the gaming industry. Both the Union of India and the State of Maharashtra had filed Special Leave Petitions (SLP) in the Supreme Court challenging the High Court’s order that had upheld that Dream11 hosted ‘games of skill’ and was correct in paying 18% GST on the fees retained from the players’ pool.

In a landmark decision, the Supreme Court dismissed both the SLPs by declining to admit the petitions or interfere with the Bombay High Court order! Also rejecting the intervention appeals by Gurdeep Singh Sachar, and social activist Avinash Mehrotra, the Supreme Court has settled all once and for all, all contentions surrounding fantasy sports being games of skill.

According to a report on Glaws, Justice Nariman, orally observed: “there is no doubt that fantasy sports is a game of skill.” In context to the GST challenge, the Apex Court upheld the Bombay High Court’s decision that Dream11 was right in paying 18% GST on the commission retained as opposed to 28% on the face value of the bets, as was the petitioner`s contention.

The judgment comes with a caveat that the Union Government is allowed to file a review petition at the Bombay High Court if it wishes to pursue the case of the alleged GST evasion by Dream11 to the tune of ₹2,173 Crores!

While the Center is likely to do the same soon, the Apex Court’s ruling comes as a massive shot in the arm not only for the fantasy sports sector but also for other real-money games of skill like rummy and poker. It also future-proofs these sectors against similar legal challenges in the future.

 

The Petitions

On Friday, a division bench of the Supreme Court comprising of Justice Rohinton Nariman and S. Ravindra Bhat heard out the SLPs filed by the Central Department of Revenue, Union of India and State of Maharashtra against the April 30 order of the Bombay High Court in the Sachar Vs. Dream11 case.

The bench also heard intervention petitions filed by lawyer Gurdeep Singh Sachar and social activist Avinash Mehrotra who had recently filed a PIL in the Delhi High Court against online poker and other betting websites.

> The Department of Revenue, Union of India, had challenged the Bombay HC order, claiming that Dream11 had evaded GST to the tune of ₹2,173 Crores. It had further alleged that the company was liable to pay 28% GST on the face value of bets. The department had also alleged that the Bombay High Court had not allowed it to present its views and had passed the order within two working days from the case being registered, without issuing any notice.

> Sachar in his intervention appeal claimed that fantasy sports were games of chance and that the 1996 KR Lakshmanan judgment that defined horse racing and betting as games of skills needed review.

> Mehrotra, in his intervention appeal, sought to assist the court in proving that fantasy sports and other similar games were equivalent to gambling without any skill element involved in them.

 

Supreme Court`s Judgment

After hearing the petitions, the Supreme Court unequivocally dismissed all the appeals.

Justice Rohinton Nariman said that there could not be any doubt that fantasy sports are a game of skill, and the individual who enters the contests needs to apply his mind and judgment. He also pointed out that if rummy was deemed a game of skill, then so should fantasy sports.

Refusing to interfere with the Bombay High Court’s order, the court has, however, said that the Central Revenue Department could approach the Bombay High Court again by filing a review petition and seek that the court hears its charges of Dream11 having evaded GST to the tune of ₹2,173 Crores.

The Union Government may yet take to court to argue against the 18% GST being paid by the fantasy gaming companies. But the Apex Court’s unequivocal assertion that fantasy sports amount to skill-games comes as a significant relief for the gaming sector.

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