Case Law Details
Gurdeep Singh Sachar Vs Union of India (Bombay High Court)
In the instant case, admittedly, there is no dispute that the amounts pooled in the escrow account is an ‘actionable claim’, as the same is to be distributed amongst the winning participating members as per the outcome of a game. But, as held hereinabove since the activities of the respondent No.3 do not amount to lottery, betting and gambling, the said actionable claim would fall under Entry 6 of the Schedule III under Section 7(2) of CGST Act. Therefore, this activity or transaction pertaining to such actionable claim can neither be considered as supply of goods nor supply of services, and is thus clearly exempted from levy of any GST.
Since the CGST Act itself do not allow the imposition of Tax on such ‘actionable claim’ in relation to the Online Fantasy Sports Gaming of the respondent No.3, it being other than lottery, betting and gambling, the said Rule 31A(3) of CGST Rules 2018 cannot be read in such a manner so as to override the parent CGST Act.
Since the actionable claim in the Online Fantasy Sport Gaming of the respondent No.3 are amongst such actionable claims as per Schedule III and Section 7(2) of the Act, which are not considered as ‘supply of goods’ or ‘supply of services’, Rule 31A has no application. Moreover, actionable claim referred to in Rule 31A is limited to only activities or transactions in the form of chance to win in “lottery” or “betting” or “gambling” or “horse racing in a race club”. Thus, Rule 31A which is restricted only to such four supplies of actionable claim, has no application in this case.
“Explanatory Notes” to the said classification under entry 998439 evidently covers host of online games which are intended to be played on the Internet and involve payment by subscription, membership fee, pay-per-play or pay- per view. The said entry however excludes on-line gambling services. Since the Online Fantasy Sports Gaming of respondent No.3 are not gambling services, the respondent No. 3 is not in error in paying GST under this entry for its on-line gaming activities, by paying applicable GST @ 18%.
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