Dream11 Withdraws Plea Against Rs 1221 Crore GST Notice in Bombay High Court

Last updated: 08 December 2023

Dream11 Withdraws Plea Against Rs 1221 Crore GST Notice, Maharashtra GST to Issue Fresh Notice

State GST Withdraws Notice

Fantasy sports giant Dream11 has decided to withdraw its plea challenging the Rs 1221 crore Goods and Services Tax (GST) show cause notice issued by the Maharashtra state GST department. The decision came following the withdrawal of the show cause notice by the state GST authority, as disclosed by the advocate representing the state before the bench headed by Justice GS Kulkarni and Justice Jitendra Jain.

 

Fresh Notice in the Pipeline

The state GST authority informed the court that a fresh show cause notice would be issued. In response to this development, Dream11 withdrew its plea, signaling a potential shift in the ongoing legal battle.

Background

The GST notice served to Dream11 pertained to tax dues for the financial years 2017-18 and 2018-19, imposing a 28% GST rate. However, the 28% rate was implemented from October 1 onwards. In response, Dream11 sought intervention from the court, seeking the quashing of the show cause notice.

Playerzpot's Similar Plea

In a parallel development, Playerzpot, another online gaming firm, faced a similar challenge with a GST notice amounting to Rs 532 crore. The Bombay High Court heard Playerzpot's plea, raising questions about the GST treatment of online gaming platforms.

Uniform Tax Treatment

The GST notices issued by authorities did not distinguish between skill-based and chance-based games, categorizing them as "actionable claims" and applying a 28% GST rate to online gaming, casinos, and horse racing.

Retrospective Nature Controversy

Online gaming companies contended that the tax was retrospective, challenging the authorities' stance that the 28% tax rate was already in place. The companies argued that recent amendments clarified the existing tax rate.

Supreme Court Intervention

Amidst the legal tussle, reports indicate that the Centre plans to request the Supreme Court to consolidate all GST-related online gaming cases under a single principle. This move aims to address the overarching concerns related to tax treatment in the online gaming sector.

Confidence in Favorable Verdict

Despite the legal complexities, online gaming companies remain optimistic, citing previous Supreme Court rulings that classified such activities as skill-based rather than chance-based. The ongoing legal saga underscores the evolving nature of tax implications in the dynamic online gaming industry.

In conclusion, the withdrawal of Dream11's plea and the issuance of a fresh notice signal a pivotal moment in the GST dispute, with implications for the broader online gaming sector. The industry awaits further developments, including potential Supreme Court intervention and the resolution of the ongoing legal challenges.



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