Dream 11 withdraws plea against GST notices for alleged tax evasion of Rs. 1,200 crore

Dream 11, a fantasy sports site, has abandoned its petition before the Bombay High Court, which had challenged Show Cause Notices (SCN) issued by the authorities for alleged GST evasion worth over Rs. 1,200 crore, exclusive of interest and penalty.

Dream 11 has been charged of failing to pay the 28% GST levied on gambling services provided to consumers during the financial years 2017-18 and 2018-19, according to the notices.

The notices were challenged by the company in the High Court.

Jyoti Chavan, an additional government pleader, informed the Court on Wednesday that the Deputy Commissioner of the State Tax Department had withdrawn its show cause notice.

Chavan continued on to clarify that the Directorate General of GST Intelligence (DGGI) would send a new show cause notice instead. As a result, Dream 11 withdrew its petition.

Another gaming company, Playerzpot Media, has already filed a similar plea. This company received notices demanding an amount of Rs. 532 crore as GST, including interest and penalty.

Playerz stated in a petition filed through Khaitan and Co. that the notices had a retroactive impact on amendments to the GST Act that imposed a 28% tax on online fantasy sports services.

However, the company maintained that because this amendment took effect on October 1, 2023, it could not have been implemented retrospectively.

It also challenged Section 15(5) of the Central Goods and Services Tax Act, stating that it was arbitrary due to overdelegation. Section 15(5) empowers officers to fix the value of supplies for taxation purposes based on the GST Council’s recommendation.

In this matter, a panel of Justices GS Kulkarni and Jitendra Jain issued a notice to Attorney General R Venkataramani in light of the constitutional validity of Section 15(5) of the CGST Act being challenged.

Advocate Jitendra Mishra, representing the Directorate General of GST Intelligence (DGGI), promised the Court that the department would remain in its hands and not issue any orders on the demand notices if the petitioners participated in the proceedings.

After six weeks, the court recorded this statement and scheduled a hearing.