Bombay HC rules fantasy sports to be a game of skill, approves Dream11’s format and manner of payment of GST
A division bench of the Bombay High Court comprising of Justices Bharati H. Dangre and Ranjit More in a Public Interestꦏ Litigation (PIL) filed by one Gurdeep Singh Sachar, ruled that the daily fantasy sports games offered by Dream11 depends upon the user’s skill and judgment and is undoubtedlyဣ a game of skill.
The PIL was filed by Sachar,ꦡ a Mumbai-based resident, who claimed that are luring people to play games of chance through their hard earned money and are amount to different forms of gambling.
Sachar further contended 🤡that Dream11 was allegedly evading Goo𓃲ds & Services Tax (GST) by violating of the Central GST Rules and not paying 28% GST on the total value of deposits.
The court in its judgment dated 30th April, 2019 rejected both🐠 the contentions mad꧅e by Singh.
In its order in Gurdeep Singh Sachar v. Union of India & Others, Justice Ranjit More, speaking on behalf of the bench noted that the Punjab and Haryana High Court of Varun Gumber v. Union Territory of Chandigarh has already held, after detailed examination, t🎉hat activities conducted by Dream11 do not amount to gambling.
The court also referred to the fact that Gumber filed a against the order of the Punjab 📖and Haryana High Court which was dismissed.
The order further mentions that the Supreme Court order of Dr. KR Lakshmanan v. State of Tamil Nadu & Another, w𒁃hich held that games involving a substantial degree of skill fall outside the definition of gaming and gambling, has been relied upon by the Punjab and Haryana High Court in its 2017 order.
ওThe Bombay High Court subsequently notes that the view it has taken is not different from the reasoning of the Punjab and Haryana High Court. The court observe🐠d:
There is no merit in the submission that the result of their fantasy game/contest shall be considered as merely by chance or accident notwithstanding involvement of substantial skill. The petitioner claims that the result would depend largely on extraneous factors such as, who amongst the players actually play better in the real game on a particular day, which according to the petitioner wouꦅld be a matter of chance, howsoever skillful a participant player in the online fantasy game may be. The petitioner has lost sight of the fact that the result of the fantasy game co𒈔ntest on the platform of respondent No.3, is not at all dependent on winning or losing of any particular team in the real world game. Thus, no betting or gambling is involved in their . Their result is not dependent upon winning or losing of any particular team in real world on any given day.
On the⛎ issue of alleged GST evasion, the court noted that Rule31A of the Central GST rules applied only to ‘gambling’ or ‘betting’ services, where 28% GST is payable on the face value of the bets.
The court referred to Schedule III of the Central Goods and Services Act, 2017 which states that ‘actionable cla𒁏ims, other than lottery, gambling and bet🍨ting’ are excluded from the scope of supply.
The court reasoned that the amounts pooled by the players for entering a contest in the escrow account of the company is an actionable claim that is to be distributed to the wi🍎nning players and consequently can neither be considered as supply of goods or supply or services and is thus excluded from the definition of supply.
On the issue of rate at which the GST has to be charged, the court noted that under entry code 998439 (other online content n.e.c.), explanatory notes suggest that role-playing games, strategy games, action games, card games and children’s games etc. are covered under this category, which would also cover Dream11’𒊎s format and , for which 18% GST is applicable.
The court in its concluding remarks while dismissi♌ng Sachar’🃏s PIL observed:
It is seen that the entire case of the Petitioner is wholly untenable, misconceived and without any merit. It can be seen tꦬhat success in Dream11’s fantasy sports depends upon user’s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is undoubtedly a game of skill and not a game of chance. The attempt to reopen the issues decided by th🧜e Punjab and Haryana High Court in respect of the same online gaming activities, which are backed by a judgment of the three judges bench of the Apex Court in K. R. Lakshmanan (supra), that too, after dismissal of SLP by the Apex Court is wholly misconceived.
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