Issuance of GST Show Cause Notice to MyTeam11 is an Abuse of Process of Law: Rajasthan High Court

The Rajasthan High Court has held that the issuance of the show cause notice dated December 9, 2022, is an “abuse of the process of law”, considering that few of the games offered by the petitioner company, Myteam11 Fantasy Sports Private Ltd. through its online portal are “games of skill rather than that of chance or that of betting/gambling”.

The petitioner company, which provides online gaming services through its web portal, was served with a show cause notice dated December 9, 2022, under Section 74(1) of the Central Goods & Services Tax, 2017, on the ground that the petitioner company avoided payment of tax by misclassifying its supply as service instead of actionable claims and by undertaking activities which are in the form of betting. Through the notice, the petitioner was called upon to make payment of GST and interest accrued thereon, along with the applicable penalty for the misclassification.

Aggrieved, the petitioner company filed a writ petition before the Rajasthan High Court challenging the said show cause notice. Accepting the contentions of the petitioner company, the court restrained the respondents from taking any coercive action in pursuance of the said show cause notice until the respondents take a final decision in this regard. However, the petitioner company has been directed to file a due reply to the show cause notice within one month from the order date.