No GST on Rummy Earning - its a Game of Skill and not Wagering Contracts

· The Court ruled that the games like rummy, whether played online or physically, with or without stakes, are considered as games of skill, and wagering contracts are recognized as part of the business under Section 2(17) of the CGST Act, 2017.

GST Case Law Compendium – June 2023 Edition

Important Judgment, Ruling of May 2023

<HC Judgement>

1. Show Cause Notice (SCN) of Rs.21,000 crores issued by the Revenue department to Gameskraft Technologies (P.) Ltd is quashed being illegal, arbitrary, and without jurisdiction.

The Honorable High Court of Karnataka has quashed the biggest-ever SCN issued by the revenue department is illegal, arbitrary, and without jurisdiction in the case of M/s Games kraft Technologies (P.) Ltd. V. Directorate General of Goods Services Tax Intelligence (WRIT PETITION No. 19570 OF 2022 C/W WRIT PETITION Nos. 22010 OF 2021, 18304 OF 2022, 19561 OF 2022, 20119 OF 2022 AND 20120 OF 2022) dated May 11, 2023. The Court ruled that the games like rummy, whether played online or physically, with or without stakes, are considered as games of skill, and wagering contracts are recognized as part of the business under Section 2(17) of the CGST Act, 2017. However, this does not mean that lottery, betting, and gambling are synonymous with games of skill. Games of skill are not considered taxable under Entry 6 of Schedule III, which applies to games of chance such as lottery, betting, and gambling. Taxation of games of skill falls outside the scope of the term “supply” according to Section 7(2) of the CGST Act, 2017 read with Schedule III.

This has been a major blow to the revenue department and once again the Honorable Karnataka High Court has delivered a welcome judgment against the illegal, arbitrary, and without jurisdiction attempt to bye-pass the law laid down by the parliament of the country.

This has been the most celebrated case in recent times, and both sides took interesting defenses and arguments and high profile senior counsels presented this case in the lights of Dr. Abhishek Manu Singhvi advocate for the petitioner and Sh. Mukul Rohtgi for the respondent.