Vision11 and Twelfth Man Fantasy Secure Stay on GST Retrospective Tax Cases in Gujarat

On November 3, 2023, a bench of the Gujarat High Court comprising Justices Biren Vaishnaw and Mauna Bhatt, issued an order to stay a show cause notice served to the fantasy operator, Vision11, under section 74(1) of the CGST Act. The tax department has asked for over Rs. 1700 crores, alleging the services, which are offered by the gaming company, resemble betting and gambling in nature.

Relying on the past cases such as Varun Gumber vs. UOI, Vision11 has challenged the notice, arguing that it only provides a platform for skill-based games and does not engage in betting or gambling. Vision11 maintained that it holds all winnings and credits in a trust and has no claim over them.

The show cause notice has alleged that Vision11 operates an online betting platform and has proposed charging GST on the ‘face value’ of total bets. The matter was consolidated with another similar case involving Twelfth Man Fantasy. Twelfth Man Fantasy, the petitioner, also challenged the constitutionality of Rule 31A of CGST Rules on various grounds, claiming that the rule is arbitrary and extends beyond the statutory requirements. Both companies believe that, although the law was amended with effect from October 1, 2023, it cannot be applicable for the period prior to its effect.

The Directorate General of Goods and Services Tax Intelligence (DGGI) has issued show cause notices to 40 online gaming companies for retrospective tax dues from 2017-2022, totaling over Rs. 1.5 lakh crores, plus interest and penalty. These notices are based on the belief that these platforms offer gambling and betting services, and hence every bet or entry fee should be subject to 28% tax.

The Gujarat High Court has temporarily granted a stay on further proceedings, with the case is now set for a hearing in January 2024. Similar cases have been filed in other High Courts, including the Bombay High Court (Goa Bench) and Sikkim. In addition, a special leave petition on a similar casse involving Gameskraft, a skill gaming operator, is also pending before the Supreme Court.

Keep reading Online Poker News (OPN) and follow us on FacebookInstagram and Twitter.