cr pil st.22.19.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL PUBLIC INTEREST LITIGATION STAMP NO.22 OF 2019 Gurdeep Singh Sachar ) 7, Gandhi House 149, ) L J Road, Mahim, ) Mumbai 400016 ) …..Petitioner Versus 1. Union of India, ) Through Ministry of Finance ) Department of Revenue ) North Block, New Delhi – 11000. ) 2. State of Maharashtra ) Through Addl. Public Prosecutor ) PWD Building, High Court, Bombay, ) Dr. Kane Road, Mumbai, PIN – 400 032. ) 3. Dream 11 Fantasy Pvt.Ltd. ) 1901-A, Naman Midtown, ) SB Marg, Elphinstone (W), ) Mumbai, Maharashtra – 400013 ) 4. Office of the Commissioner of State Tax, ) 8Th Floor, GST Bhavan, Mazgaon, ) Mumbai, PIN – 400 010. ) 5. DCP EOW, Mumbai ) Office of the Commissioner of Police, ) Nd 2 Floor, Annexe Building, ) D.N.Road, Mumbai, PIN – 400 001. ) …..Respondents Shubhada S Kadam 1/21 ::: Uploaded on - 17/06/2019 ::: Downloaded on - 18/06/2019 19:12:25 ::: cr pil st.22.19.doc Dr. Sujay Kantawala I/b. Mr. Sarosh Damania, advocate for the petitioner. Mr. Vikram Nankani, senior advocate with Mr.Lavesh Nankani, Mr. Ramnath Prabhu and Mr. Prithviraj I/b. Mr. Nikhil Rungta, advocate for the respondent No.3. Ms. Sangeeta D. Shinde, APP for the State. CORAM : RANJIT MORE & SMT. BHARATI H. DANGRE, JJ. DATE : 30th APRIL, 2019. JUDGMENT : (Per : Ranjit More, J.) 1. Rule. Rule is made returnable forthwith and, by consent, the matter is heard finally. 2. Heard Dr. Kantawala, learned counsel for the petitioner and Mr.Nankani, learned senior counsel for the respondent No.3. 3. The petitioner claims himself as a public spirited advocate practising in this High Court, and seeks directions to initiate criminal prosecution against the respondent No.3- a Company named “Dream 11 Fantasy Pvt. Ltd.”, firstly for allegedly conducting illegal operations of gambling/betting/wagering in the guise of Online Fanstasy Sports Gaming, which as per the petitioner shall attract penal provisions of Public Shubhada S Kadam 2/21 ::: Uploaded on - 17/06/2019 ::: Downloaded on - 18/06/2019 19:12:25 ::: cr pil st.22.19.doc 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 different forms of “gambling”. According to his belief, a fantasy game of this nature is merely a game of chance or luck, which is totally dependent upon the luck of a player on a particular day. He further claims that upon entering in various contests and putting alleging bet money in them, the player receives a tax invoice in which tax is being charged only on the amount received and retained Shubhada S Kadam 3/21 ::: Uploaded on - 17/06/2019 ::: Downloaded on - 18/06/2019 19:12:25 ::: cr pil st.22.19.doc by respondent No.3 towards platform fee say 20%, and not on the entire money which is put a stake by the player. For the balance 80% amount only “acknowledgement” is given. Admittedly, this “acknowledgement” amount collected from each player is pooled in as Escrow Account and their contribution ultimately gets distributed amongst the players themselves as price money immediately upon conclusion of game, as a result of which, some players get more than their contribution, and some lose money. According to the petitioner, since these activities are nothing but 'gambling' or 'betting' even if this acknowledgement amount is separately kept in an Escrow account and not retained by the respondent No.3, GST would be payable even on this amount. However, since GST is not being paid on this “acknowledgement” amount by the respondent No.3 and since the activities such as those being conducted by the respondent No.3, are nothing but 'betting' or 'gambling', the same according to the petitioner shall be governed by Rule 31A(3) of CGST Rules, 2018. According to him, like horse racing the said Rule shall apply even ins such fantasy games amounting to gambling and/or betting and/or wagering, and thus GST shall be payable on 100% amount collected by the respondent No.3, which shall be under proper classification so as to pay Tax @ 28% instead of @18%. The petitioner in effect submits that the activities of the respondent No.3 is nothing but 'gambling'/'betting', and for promoting gambling/betting and for evading Shubhada S Kadam 4/21 ::: Uploaded on - 17/06/2019 ::: Downloaded on - 18/06/2019 19:12:25 ::: cr pil st.22.19.doc payment of CGST/IGST, suitable action shall be taken for criminal prosecution of the said respondent No.3. 4. At the outset, it is submitted on behalf of the respondent No.3 that the main issue raised by the petitioner is substantially decided in a judgment dated 18th April, 2017 passed by the Hon'ble Punjab and Haryana High Court, in another such petition filed against the respondent No.3, which is also referred in the petition. Admittedly, the said judgment dated 18th April, 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 Shubhada S Kadam 5/21 ::: Uploaded on - 17/06/2019 ::: Downloaded on - 18/06/2019 19:12:25 ::: cr pil st.22.19.doc 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 arises out of user's exercise of superior knowledge, judgment and attention, it is a game of skill and not a game of chance. The 3 judges bench of the Hon'ble Apex Court held that the “horse racing” is not gambling, and is a game of skill, nor of mere chance. The Petitioner erroneously claims that these judgment are per incurium. It is the case of the respondent No. 3 that such frivolous and misconceived petitions are being filed by targeting them before different forums in the guise of PILs, and even the present petition is abuse of process of law, and each of the Petitioner's claim for seeking criminal prosecution of the respondent No.3 is on such frivolous grounds, which lack in bona fide and merits. In the written submissions tendered on behalf of the respondent No.3, it is also contended that the Online Fantasy Sports Gaming conducted by it is predominantly game of skill, where users/participants create virtual teams comprising as many players as in real life teams, e.g., in cricket, he creates team of 11 real players out of the 30 probables, for upcoming matches. There has to be a mix of players from both the competing teams between whom the real life matches being played. The users/ participants compete against such virtual teams created by other users / participants. The winners are decided based on points scored, using statistical data generated by the Shubhada S Kadam 6/21 ::: Uploaded on - 17/06/2019 ::: Downloaded on - 18/06/2019 19:12:25 ::: cr pil st.22.19.doc real-life performance of the players on the ground. Further, the deadline to create a team is latest by the official match start time. No changes can be made after the deadline. The participants do not bet on the outcome of the match and merely play a role akin to that of selectors in selecing the team. The points are scored by the participants for the entire duration of the whole match and not any part of the match. Their Online Fantasy Sports Gaming are “games of skill” and not any “games of chance” and therefore outside the purview of Rule 31A(3). It was submitted that present PIL is gross abuse of the process of the Court and ought to be dismissed in the light of the judgment of the Hon'ble Supreme Court in State of Uttaranchal v.