TaxTMI 
TaxTMI 
2019 (6) TMI 1008
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.... in the guise of Online Fanstasy Sports Gaming, which as per the petitioner shall attract penal provisions of Public Gambling Act, 1867, and secondly for alleged evasion of Goods & Service Tax (GST) payable by it by violating the provisions of Goods and Service Tax Act and the Rule 31A of CGST Rules, 2018. 3. The petitioner has placed on record a copy of the print-out taken from the web-site of respondent No.3 for giving the details and manner of selecting virtual teams and playing free or paid online fantasy games on internet on the web-site of the respondent No.3. It is the case of the petitioner that players can create different virtual teams for playing fantasy games. Admittedly, for understanding and getting a know-how of the game, option to play for free is also available on the website. He, however, claims that the fantasy games are such that after some time people tend to pay with their hard earned money, instead of playing for free. According to him, these fantasy games are nothing but means to lure people to spend their money for quick earning by taking a chance, and most of then end up losing their money in the process, which is thus gambling/betting/wagering, being dif....
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....2017, records the introduction Dream 11- the online gaming platform of respondent no.3 for online fantasy sports games, and gives in detail the activities carried out on their platform. After detailed consideration of the facts as well as law, the Hon'ble Punjab and Haryana High Court categorically held that success in Dream 11's Fantasy Sports basically arises out of user exercise of superior knowledge, judgment and attention thus as per their skill; and that their fantasy games are exempt from the application of the penal provisions, in view of section 18 of 1867 Act, and held that they have protection guaranteed under Article 19(1)(g) of the Constitution of India. A SLP against this judgment of Punjab and Haryana High Court was admittedly dismissed by the Hon'ble Supreme Court vide Order dated 15.09.2017. Despite this admitted position, the petitioner effectively seeks to reopen not only the issue decided therein, but also seeks to reopen a judgment of 3 Judges Bench of the Hon'ble Supreme Court in K. R. Lakshmanan v. State of Tamil Nadu [AIR 1996 SC 1153] which was relied upon by the Punjab and Haryana High Court to hold that since success in Dream 11's fantasy sports basically....
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....Whether there is any merit in the allegation of violation of Rule 31A(3) of CGST Rules, 2018 and erroneous classification ? 6. In respect of the first issue, after considering the very same activities of the respondent No.3 at considerable length, it has already been held by the Punjab and Haryana High Court that the activities performed by the respondent No.3 do not amount to 'gambling', even as per the Public Gambling Act, 1867. The respondent No.3 refers and relies on the findings contained in the said judgment. Admittedly, SLP filed there-against has been dismissed. The Punjab and Haryana High Court has categorically held that these are games of skill and not games of chance. Various judgments have been referred and relied upon in the said judgment. There is no reason to take a different view. The Punjab and Haryana High Court has relied upon a three Judges Bench decision of the Hon'ble Apex Court in K. R. Lakshmanan (Dr.) v.State of T.N.,(1996) 2 SCC 226, wherein it was held as under- "9. On the same day when this Court decided Chamarbaugwala's case, the same four-Judge Bench presided over by S.R. Das, Chief Justice, delivered judgment in another case between the same parti....
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....activities, the protection of which is guaranteed by Art. 19(1) (g)..." Finally, Venkatarama Ayyr, J. speaking for the Court held as under:- "(23) Applying these principles to the present Act, it will not be questioned that competitions in which success depends to a substantial extent on skill and competitions in which it does not so depend, form two distinct and separate categories. The difference between the two classes of competitions is as clear cut as that between commercial and wagering contracts. On the facts there might be difficulty in deciding whether a given competition falls within one category or not; but when its true character is determined, it must fall either under the one or the other. The distinction between the two classes of competitions has long been recognised in the legislative practice of both the United Kingdom and this country, and the Courts have, time and again, pointed out the characteristic features which differentiate them. And if we are now to ask ourselves the question would Parliament have enacted the law in question if it had known that it would fail as regards competitions involving skill, there can be no doubt, having regard to the history o....
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....y to be a game of mere skill on the following reasoning: "We are also not satisfied that the protection of s.14 is not available in this case. The game of Rummy is not a game entirely of chance like the `three- card' game mentioned in the Madras case to which we were referred. The `three card' game which goes under different names such as `flush', `brag' etc. is a game of pure chance. Rummy, on the other hand requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill. The chance in Rummy is of the same character as the chance in a deal at a game of bridge. In fact in all games in which cards are shuffled and dealt out, there is an element of chance, because the distribution of the cards is not according to any set pattern but is dependent upon how the cards find their place in the shuffled pack. From this alone it cannot be said that Rummy is a game of chance and there is no skill involved in it." 20. The judgments of this Court in the two Cha....
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....ngst the players actually play better in the real game on a particular day, which according to the petitioner would 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 contest 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 fantasy games. Their result is not dependent upon winning or losing of any particular team in real world on any given day. In these circumstances, there is no plausible reason to take a contrary view than that taken by the Hon'ble Punjab and Haryana High court, which judgment has already been upheld by the Hon'ble Supreme Court in the SLP filed against the respondent No.3 itself. Moreover, the said issue is also covered by a judgment of 3 Judge Bench of the Hon'ble Supreme Court, to which detailed reference is made in the order of the Hon'ble Punjab and Haryana High Court. It is thus clear that the activity of the respondent No.3 do not amount to 'gambling' or 'betting' or 'wagering' even if the definition contai....
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....the submission that the entire deposit received from the member is taxable. It is also erroneously contended that even this amount shall be included in the definition of expression 'consideration' as per Section 2(31) of the Act, which reads as under- (31) "consideration" in relation to the supply of goods or services or both includes - (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government. (b) the monetary value of any act or for bearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; The scope of definition of 'consideration' exte....