In a significant legal development, the Gujarat High Court presided over by Justice Biren Vaishnav and Justice Mauna M. Bhat, stayed the Goods and Services Tax (GST) Show Cause Notice (SCN) in the case where the court is set to determine whether fantasy gaming should be categorised as an actionable claim related to skill-based activities or as betting and gambling.
The court has issued a notice returnable on January 17, 2024. NXGN Sports Interactive, the petitioner, contested the show-cause notice from the GST department. Mr. Joshi, the petitioner’s counsel, argued that their platform does not fall under the category of actionable claims. This legal challenge raises a pivotal question regarding whether their gaming platform should be considered as an actionable claim linked to betting and gambling. The petitioner submitted the activity of the online claim that the petitioners undertake would be an actionable claim other than lottery, betting and gambling.
They relied on a decision of the Division Bench of the Punjab and Haryana High Court in the case of Varun Gumber vs. Union Territory of Chandigarh and Others wherein the Punjab and Haryana High Court considered a claim of similar kind. Citing Section 2(52) of the GST Act in conjunction with Section 7, particularly Schedule (III), which outlines activities or transactions that are not considered supplies of goods or services, the petitioner argued that the activity in question should not be deemed an actionable claim falling within the purview of the show-cause notice.
The bench hearing both sides stated that “we are of the view that the question whether online gaming as so done by the petitioner would tantamount to betting/gambling requires to be considered in extenso.” Further added that “Hence, notice returnable on 17.01.2024. Pending the petition there shall be ad-interim relief inasmuch as the respondents are restrained from taking any further steps on the adjudication of the show cause notice. It shall however be open to the petitioner to file a response to the show cause notice.”