Dream Sports files writ petition in Bombay High Court challenging GST notice

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Dream Sports, the parent company of online fantasy gaming platform Dream 11, has reportedly approached the Bombay High Court, filing a writ petition against the tax notice served by the GST authorities for alleged tax evasion.

As per Inc42 and Moneycontrol, the tax amount demanded is estimated to be around Rs 40,000 crore which is nearly double the amount of what Gameskraft was directed to pay. Some other, however, estimate it to be around Rs 25,000 crore.

This appears to be one of the notices that the Central Board of Indirect Taxes and Customs (CBIC) was planning to send out to several online real money gaming firms. As per the notices, companies are directed to pay GST dues for the period August 2017 to June 2022.

As previously reported, the CBIC is planning to send similar notices to around 40 online gaming companies. However, the amount demanded in the notice sent to Dream Sports is allegedly more than what Gameskraft received which is considered as the record for indirect taxation.

The GST department is currently proceeding with the Gameskraft tax notice in the Supreme Court which issued a stay order on Karnataka High Court’s judgement quashing the tax notice earlier this year.

With the amount of money being asked to be paid in the tax notices, any unfavorable ruling is sure to demolish the entire online real money gaming industry as the new tax regime of 28% GST on full face value adds to the overall burden for online gaming companies as well.

The decision to implement 28% GST rate on full face value was taken with near unanimity at the 50th GST Council meeting headed by Finance Minister Nirmala Sitharaman.

However, as per Revenue Secretary Sanjay Malhotra 28% GST is not something new as he  revealed that real money games were always taxed at 28% on full face value despite platforms paying 18% tax on gross gaming revenue. The amendment is simply a clarification of the fact, he explained.