Dream 11 Approaches Bombay High Court Over GST Demand Of Rs 1,222 Crore

Online fantasy sports platform Dream 11 has moved the Bombay High Court against a GST demand of Rs 1,222.7 crore for FY18 and FY19.

The tax demand seeks to recover GST on the premise that services supplied by the platform are in the nature of gambling, which attracts a GST of 28% on the full face value of the deposited amount.

Dream 11 has contended that the games offered on their platform have been held by the Supreme Court to be games of skill and not gambling.

The department, however, has stated that the top court ruling is under review and the tax demand has been issued to protect the government's revenue stream.

It has also been alleged that Dream 11 has misclassified its services for the purpose of taxation. The department has said that Dream 11's services must be correctly classified under 'online gambling services' and a GST rate of 28% must be applicable instead of the 18% being paid by the platform.

To participate on Dream 11's platform, a user has to pay a contest entry fee. Out of this amount, around 15% is paid towards the platform fee, and the balance amount is paid towards the prize pool of the contest.

Dream 11 has maintained that tax should be levied only on the platform fee, as the amount deposited towards the prize pool does not represent the consideration received by Dream 11 for services supplied by it.

However, the tax department has said that Dream 11 is required to discharge GST liability on the entire contest entry amount paid by the users and not merely on the platform fees.

It has further been stated that since the participant in the game is engaging in betting or wagering, the prize pool component of the contest entry amount also requires taxation as per the provisions of the GST Act.