The Karnataka High Court has recently held that the game of Rummy is not considered gambling, whether played with or without stakes.
Justice SR Krishna Kumar held that Rummy is significantly & dominantly a game of skill and not of chance whether played online or physically.
The court held that “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.”
Therefore, the observation were made in a judgment that quashed a show-cause notice issued to online gaming platform Gameskraft by the Directorate General of Goods & 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 significantly 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 argued that games of skill played with monetary stakes don’t take the character of betting and still remain within the cluster of games of skill.
On the other hand, the respondents stated that the only question that arises for consideration is whether online rummy players are betting and gambling by placing stakes on the outcome of games of rummy.
However, the Court, held that games played on the platform were not taxable as betting and gambling as asserted by the respondents under the Central Goods & Services Tax Act and Rules.
In the 325-page judgment, Justice Kumar stated that betting and gambling 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, & Nikhil Parikshith from PLR Chambers.
