Factual Matrix 

In the matter of Grameskraft v Directorate General of Goods and Services Tax On September 8, 2022, Gameskraft received an intimation notice from the GST authorities that included a demand for 21,000 crore. This claim was contested in front of the High Court. Despite the High Court’s stay on a prior 21,000 crore tax notice given to the corporation, a judge rejected a show-cause notice issued to online gambling platform Gameskraft by the Directorate General of Goods and Services Tax Intelligence.

Issue 

Whether or not the stakes-based game of rummy is regarded as gambling.

Contention from parties 

The appellant had argued that skill-based games that involve monetary stakes do not acquire the characteristics of gambling and nonetheless fall under the category of games of skill.

The only issue that needs to be taken into account, according to the respondents, is whether or not participants of online rummy are betting and gambling by staking money on the results of rummy games.

Conclusion

Games of skill are not and cannot be included within the scope of the phrases betting and gambling used in the CGST Act, according to the single-judge Justice SR Krishna Kumar. Rummy, whether played physically or online, is significantly and preponderantly a game of skill rather than chance, according to Justice SR Krishna Kumar, who also concluded that other online games that are primarily games of skill rather than chance are not gambling.

Games of skill are not and cannot be included within the scope of the phrases betting and gambling used in the CGST Act, according to the single-judge Justice SR Krishna Kumar. Rummy, whether played physicaIf the answer is yes, then a transaction like this would offer actionable claims in the form of betting and gambling, according to the Supreme Court’s ruling in Skill Lotto Solutions Pvt Ltd v. Union of India. The Central Goods and Services Tax Act and Rules, as argued by the respondents, did not apply to games played on the platform, according to the Court’s ruling.