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2019 (6) TMI 1008 - HC - GSTPIL against the company organizing online Fantasy games - ‘gambling’ or ‘betting’ - actionable claim - game of chance or game of skill - supply of services or not - alleged conducting illegal operations of gambling/betting/wagering in the guise of Online Fantasy Sports Gaming - violation of Rule 31A of CGST Rules, 2018 - HELD THAT:- 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 - 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 contained in Finance Act, 1994 is taken into consideration. The allegation of the petitioner regarding GST evasion or erroneous classification - the activities mentioned in Schedule III under the CGST Act are not taxable as the same are neither ‘supply’ of goods nor ‘supply’ of services. The entry in schedule III relevant for the instant case is Entry 6 which includes actionable claims, other than lottery, betting and gambling. 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. The scope of definition of ‘consideration’ extends only in relation to “the supply of goods or services or both”. Since, the said activity or transaction relating to the actionable claim qua the amounts of participants pooled in escrow arrangement, for which only acknowledgement is given, is neither supply of goods nor supply of services, the same is clearly out of the purview of the expression ‘consideration’ - 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. The authorities have therefore not taken any coercive steps against the respondent No.3. No case for issuing any directions is made out. It is seen that the entire case of the Petitioner is wholly untenable, misconceived and without any merit. It can be seen that success in Dream 11’s fantasy sports depends upon user’s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is undoubtedly a game of skill and not a game of chance. Petition dismissed.
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