30 Mar 2020 Jonas Lemberg

SC Issues Notice, Stays Bombay HC Order in Dream11 Betting & GST Evasion Case

Dream 11 Rohatgi

A three-judge bench of the Supreme Court, comprising of Chief Justice SA Bobde and Justices BR Gavai and Surya Kant issued notice to Dream11, Union of India and social activist Gurdeep Singh Sachar in an appeal filed by the state of Maharashtra as per a report in ETPrime today.

While hearing the Special Leave Petition (SLP) filed by the Maharashtra government on 6th March, 2020, the 3-judge bench of the apex court noted that the High Court decision ruling Dream11 to be a game of skill and dismissing claims of GST evasion against it was given without hearing the central or state government or issuing notice to any of the parties to the matter.

Justice Gavai, on behalf of the bench, expressed displeasure at the haste and manner in which the judgment of the Bombay High Court was given, within a span of less than three working days, without hearing any of the other parties.

The bench also dismissed the argument of Senior Counsel and former Attorney General of India, Mukul Rohatgi, who stated that a lawyer had appeared on behalf of the state government on 30th April, 2019 in the Bombay High Court.

The 3-judge bench of the apex court will likely hear the matter in April 2020 and delve into the merits of twin issues of whether Dream11 is a game of skill or amounts to gambling/betting and whether the fantasy sports website has been paying GST in a correct manner or indulging in evasion by not paying tax at the rate of 28% on entry fees.

It may be noted that Mumbai-based lawyer and social activist Gurdeep Singh Sachar had filed a Public Interest Litigation in April, 2019 asking for a ban on Dream11 and probe against it for GST evasion.

On 30th April, 2019, a division bench of the court comprising of Justices Ranjit More and Bharati Dangre ruled that Dream11 and fantasy sports games involved use of skill and judgment and was consequently outside the ambit of anti-gambling legislation. It also stated that Dream11 correctly paid GST on the platform fee retained by it as against the entry fee of every contest that was claimed by the petitioner.

A Supreme Court division bench headed by Justice Rohinton Nariman had earlier dismissed all appeals and a clarification application against the Bombay High Court order filed by Advocate Varun Gumber, Sachar as well as the Union of India, while allowing the central government to file a limited review petition in the Bombay High Court on the issue of allegations of GST evasion against Dream11.

The 3-judge bench of the Supreme Court has however, while hearing the Maharashtra government’s plea, implicitly set aside the orders of the Justice Nariman-led division bench and is likely to give a decisive verdict on the legality of daily fantasy sports and online gaming in the country.

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