Dream11 moves to Bombay HC against 4000 Cr GST Evasion Demand

Dream11 parent company Dream Sports (Sporta Technologies Private Limited) has filed a writ petition in the Bombay High Court challenging the tax authorities’ show cause notice for alleged GST evasion and failure to pay GST @28% on the face value of bets.

According to sources, Dream Sports has been served with a show cause notice with tax claims significantly higher than Gameskraft‘s Rs 21,000 crore, which is currently the largest such claim in indirect taxation history.

In accordance to people familiar with the situation, the claims against the Mumbai-based firm would be nearly double the amount, amounting to around Rs.40,000 crore. Others, on the other hand, put the figure at Rs.25,000 crore. Dream Sports declined to comment on the news.

In FY22, Dream11 reported a net profit of Rs 142 crore on operating revenue of Rs 3,841 crore.

The Central Board of Indirect Taxes and Customs is expected to send showcause notices to over 40 skill-gaming companies for alleged tax evasion after the Supreme Court stayed a Karnataka High Court judgement quashing a GST notice against Gameskraft for alleged tax evasion to the tune of Rs 21,000 crore.

The Supreme Court will hear the case again in the coming weeks. Skill gaming executives and legal experts have previously stated that an unfavourable ruling from the Supreme Court could be the final nail in the coffin for the industry, which is already reeling from the GST Council’s recently announced 28 percent GST regime.

The GST Council decided in July 2023 to impose the top GST slab of 28 percent on the full face value, regardless of whether it is a skill or chance game. On August 2, it provided some relief by recommending that GST be levied on deposits rather than bets, in order to avoid double taxation.

Skill gaming platforms are currently subject to an 18% GST on platform fees, also known as Gross Gaming Revenue (GGR).

However, Revenue Secretary Sanjay Malhotra stated that GST rates on real-money gaming were always 28 percent on full face value and that this amendment was only for clarification.

The council, led by Finance Minister Nirmala Sitharaman, has directed that the new tax rates be implemented by all states by October 1, 2023. It also agreed to revisit this decision six months after it was put into effect.

Sitharaman introduced bills to amend the Central and Integrated GST laws on August 11, the last day of the Monsoon Session, and they were passed in both the Lok Sabha and the Rajya Sabha. On August 19, President Droupadi Murmu also gave her approval to the amendments.

As a result, states like Haryana, Goa, and Arunachal Pradesh have made similar changes to their respective state GST laws.