The petitioner ran a technology platform called Rummy that allowed players to compete against one another in skill-based online games. According to the SCN that the department issued to the petitioner, the petitioner was accused of engaging in “betting/gambling,” providing “actionable claims,” and evading GST by categorising supplies under SAC 998439 as services.
It argued that “games of skill” performed with monetary stakes do not partake the character of betting in a writ suit filed to contest the impugned SCN. The key issue raised in the petition was whether offline/online games like rummy would qualify as “gambling or betting” under the definition found in Entry 6 of Schedule III of the Goods and Services Act of 2017.
Games of chance and games of skill have distinct differences, according to the Honourable High Court. The Court stated that a game of skill, whether it is played for money or without, is not gambling. Games like rummy, etc., whether they are played online or in person, for money or without, would be considered games of skill, and the preponderance test would be used. According to Section 7(2) of the CGST Act, 2017, read with Schedule III of the Act, taxing games of skill is outside the purview of the phrase “supply.”
As a result, it was decided that online/digital/digital rummy games and other online/digital games played on the petitioner’s platform would not be subject to taxation as “gambling” or “betting,” and the court also threw out the impugned SCN as being unlawful, capricious, and devoid of legal standing.
