Rummy not gambling whether played with stakes or without stakes: Karnataka High Court

The Karnataka High Court recently held that the game of Rummy, whether played with stakes or without stakes is not gambling. .Justice SR Krishna Kumar held that Rummy, whether played online or physically, is substantially and preponderantly a game of skill and not of chance. "Rummy whether played with stakes or without stakes is not gambling; There is no difference between offline/physical Rummy and Online/Electronic/Digital Rummy and both are substantially and preponderantly games of skill and not of chance," the court held. .The observation was made in a judgment which quashed a show-cause notice issued to online gaming platform Gameskraft by the Directorate General of Goods and Services Tax Intelligence despite the High Court’s stay on a previous ₹21,000 crore tax notice issued to the company..The single-judge also held that other online games which are substantially games of skill and not of chance, are also not gambling..Gameskraft was issued an intimation notice from the GST authorities on September 8 2022 raising a demand of ₹21,000 crore, which was challenged before the High Court.The platform had argued that games of skill played with monetary stakes do not take the character of betting and still remain within the realm of games of skill..The respondents, on the other hand, said that the only question that arises for consideration is whether the players of online rummy are betting and gambling by placing stakes on the outcome of games of rummy.If the answer is in the affirmative, then according to the Supreme Court in Skill Lotto Solutions Pvt Ltd v. Union of India such a transaction would be a supply of actionable claims in the form of betting and gambling..The Court, however, held that games played on the platform were not taxable as betting and gambling as contended by the respondents under the Central Goods and Services Tax Act and Rules. In the 325-page judgment, Justice Kumar also said that the terms betting and gambling appearing in the CGST Act do not and cannot include games of skill within their ambit..Gameskraft and its founders were represented by Senior Advocates Udaya Holla and Abhishek Manu Singhvi assisted by Suhaan Mukherji, Siddhartha HM, Abhishek Manchanda, and Nikhil Parikshith from PLR Chambers.Sudipta Bhattacharjee, Onkar, Harsh Makhija, Arjyadeep Roy and Rishabh Prasad from Khaitan & Co also represented Gameskraft.Senior Advocate Mukul Rohatgi appeared for the All India Gaming Federation assisted by Pradeep Nayak, Anupama Hebbar, Sankeerth Vittal, Karan Gupta and Siddharth Aiyanna from Keystone Partners as well as a team from Khaitan & Co.Senior Advocates Arvind Datar and Sajjan Poovayya assisted by Advocates L Badrinarayanan, Ravi Raghavan, Ashish Philip and Karan Sachdev appeared for the E-Gaming Federation..[Read Judgment]