Online fantasy sports games are games of skill and not gambling/betting, and are protected under Article 19(1)(g) of the Constitution of India.

JUDGMENT :

I. Mahanty, J.

1. This writ petition has been filed in the nature of a Public Interest Litigation, inter-alia, alleging that respondent No. 5-Dream 11 Fantasy Private Limited provides a platform to its users for playing sports and games on a virtual platform, such as fantasy cricket, football, kabaddi, basketball and hockey. It is asserted by the petitioner that the said virtual platform, namely Dream-11, allow its users to register and play various games, to form their own teams made up of real players for cricket, football, kabaddi and NBA with maximum budget of 100 crores. It is further asserted that users initially have to pay an amount of Rs.100/-, out of which 20% is retained by respondent No. 5-Dream 11, whereas 80% of the remaining balance is transferred towards the winning amount for the game. It is alleged that the game being played on the aforesaid platform is nothing else but "betting" on the cricket team. It is further alleged that online fantasy sports games are games of chance, thereby constituting illegal act of gambling/betting and that respondent Nos. 1 to 4 are not prohibiting this illegal act.

2. Further, the petitioner prays for action to be taken against the private-respondent No. 5 under the Central Goods and Service Tax Act, 2017 (for short, 'the CGST Act') and the Rules made thereunder for evasion of GST. In this respect, it is alleged that the private-respondent No. 5 is not paying GST under proper classification, which should be @ 28% and only pays 18% GST that too on the amount received from a participant and retained by it, which effectively amounts to evading GST on balance 80% amount, which is transferred towards the winning amount for the game. The petitioner referred to Section 65-B(15) of the Finance Act, 1994 for definition of "betting or gambling", Section 2(13) of the CGST Act for definition of "consideration" and rule 31-A of the Central Goods and Service Tax Rules, 2018 (for short 'the CGST Rules'). The petitioner also referred to Circular No. 27/01/2018-GST dated 04.01.2018 issued in respect of horse racing and on such basis alleges that GST should have been payable on 100% of the amount received. According to the petitioner, out of every Rs.100/- received by the private respondent No. 5 from the participants, Rs.80/- are set aside in an escrow account for the common price pool and same is distributed amongst the winners and on such sum no GST is paid which, is being paid on the remaining amount retained as Platform Fee i.e. Rs.20/-. The petitioner also alleges that even on the said actionable claim amount of Rs.80/- kept in the escrow account and distributed amongst the winners, GST should be payable by the private respondent No. 5, that too @ 28%. In substance, the present PIL seeks action against the private respondent No. 5-Dream 11 by raising two issues, namely:-

(1) Whether online fantasy sports games offered on Dream 11 platform are "gambling/betting"?

(2) Whether respondent No. 5-Dream 11 is wrongly classifying its virtual online game under the wrong entry for GST and, therefore, violating Rule 31(A) (3) of the CGST Rules, 2018 in order to evade GST?

3. Respondent Nos. 2 & 3, namely State of Rajasthan and the Additional Chief Secretary, Home Department, Government of Rajasthan have filed a detailed counter affidavit dated 26.08.2020 opposing the PIL stating therein that the PIL petitioner has merely made untenable allegations without any facts and substance. It is further submitted that the Punjab & Haryana High Court in the case of Varun Gumber Vs. Union Territory of Chandigarh, 2017 Cri. LJ 3827, vide judgment dated 18.04.2017 and the order dated 15.09.2017 passed by the Hon'ble Supreme Court dismissing the Special Leave Petition against the aforesaid judgment have come to hold that the fantasy games of Dream 11 are games of mere skill and their business has protection under Article 19(1)(g) of the Constitution of India. The counter affidavit submitted by the respondent N