© Provided by News18 Rummy Played with Or without Stakes Is Not Gambling: Karnataka HC
The Karnataka High Court recently ruled that rummy whether played with stakes or without stakes is not gambling. The bench of Justice SR Krishna Kumar said that a game of chance when played with stakes is gambling whereas a game of skill whether played with stakes or without stakes is not gambling and rummy is substantially and preponderantly a game of skill and not of chance.
There is no difference between offline/physical rummy and Online/Electronic/Digital rummy and both whether played with stakes or without stakes are not gambling, added the court.
The court was dealing with a bunch of writ petitions filed by online gaming platform Gameskraft, its founders as well as its Chief Financial Officer and Chief Executive Officer.
The company essentially challenged the show-cause notice issued to it in September 2022 by the Directorate General of Goods and Services Tax Intelligence despite the high court’s stay on a previous Rs 21,000 crore tax notice issued to the company.
The GST authorities had held that the company, though being involved in betting/gambling, was guilty of evasion of GST by misclassifying their supply as services. The authorities had said that activities undertaken by the petitioner were in the form of betting/gambling which is an actionable claim, not a service.
On the other hand, the company had argued that more than 96% of the games played on its platform were rummy, which is not gambling.
In the 325-page judgement, Justice Kumar observed that there is a distinct difference between games of skill and games of chance; games such as rummy, etc, as discussed in several decisions including the decision of this the high court in All India Gaming Federation’s case (2022), whether played online or physical, with or without stakes would be games of skill and test of predominance would apply.
“Though Section 2(17) of the CGST Act recognises even wagering contracts as included in the term business, but that in itself would not mean that lottery, betting and gambling are the same as games of skill,” held the court.
The HC further held that the meaning of the terms “lottery, betting and gambling” as contemplated in Entry 6 of Schedule III of the CGST Act should be construed nomen juris which do not include a game of skill irrespective of what meanings are ascribed to these words in dictionaries.
In view of this, the court held that Entry 6 in Schedule III to the CGST Act taking actionable claims out of the purview of supply of goods or services would clearly apply to games of skill and only games of chance such as lottery, betting, and gambling would be taxable.
“Taxation of games of skill is outside the scope of the term ‘supply’ in view of Section 7(2) of the CGST Act, 2017 read with Schedule III of the Act,” the court further underscored.
Consequently, the court quashed the impugned show-cause notice while holding it illegal, arbitrary, and without jurisdiction or authority of law.