Gameskraft Technologies Private Limited Vs Directorate General of Goods Services Tax Intelligence Karnataka High Court
Gameskraft Technologies Private Limited Vs Directorate General of Goods Services Tax Intelligence Karnataka High Court
R
IN THE HIGH COURT OF KARNATAKA, BENGALURU
BEFORE
THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR
BETWEEN:
AND:
3. ADDITIONAL DIRECTOR
DIRECTOR GENERAL OF
GOODS AND SERVICES INTELLIGENCE
(HEADQUARTERS)
WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM
DELHI – 110 066.
BETWEEN:
AND:
4. ICICI BANK
420, 27TH MIAN ROAD, SECTOR 2
1ST SECTOR, HSR LAYOUT
BENGALURU, KARNATAKA – 560 102.
7. RBL BANK
NO.8, SBI COLONY
7TH MAIN, 3RD BLOKC
KORAMANGALA,
BANGALORE – 560 037
REP BY MANAGER.
8. IDFC BANK
GROUND FLOOR
SIRE NO. 4 & 5, 27TH MAIN
1ST SECTOR, HSR LAYOUT
BENGALURU – 560 102
REP BY MANAGER.
…RESPONDENTS
AND:
BETWEEN:
RAMESH PRABHU
AGED 43 YEARS
CHIEF FINANCIAL OFFICER
M/S. GAMESKRACT TECHNOLOGIES PRIVATE LIMITED
B-304, VICTORY HARMONY APARTMENTS
SSA ROAD, HEBBEL, BENGALURU.
…PETITIONER
(BY SRI. DR. ABHISHEK MANU SINGVI, SENIOR COUNSEL AND
SRI. UDAYA HOLLA, SENIOR COUNSEL A/W
SRI. SIDDHARTHA H.M., & SRI. SUHAAN MUKERJI,
SRI. NIKHIL PARIKSHITH
SRI. ABHISHEK MANCHANDA &
SRI. CHANDAN PRAKASH PANDEY &
SRI. L. NIDHIRAM SHARMA
SRI. VYASAKIRAN UPADHYA & SRI. MANJUNATH B,
SRI. VARUN THOMAS MATHEW ,
SRI. ONKAR SHARMA, ADVOCATES)
AND:
3. ADDITIONAL DIRECTOR
DIRECTORATE GENERAL OF GOODS AND SERVICES
INTELLIGENCE ( HEADQUARTERS)
WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM
DELHI – 110 066.
BETWEEN:
AND:
3. ADDITIONAL DIRECTOR
DIRECTORATE GENERAL OF
GOODS AND SERVICES INTELLIGENCE
(HEADQUARTERS), WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM, DELHI – 110 066.
BETWEEN:
AND:
3. ADDITIONAL DIRECTOR
DIRECTORATE GENERAL OF
GOODS AND SERVICES INTELLIGENCE
(HEADQUARTERS)
WEST BLOCK – 8, WING NO. 6
2ND FLOOR, R.K. PURAM
DELHI – 110 066.
ORDER
I. FACTUAL MATRIX
and registered under the Central Goods and Services Tax Act,
2017 (for short ‘ the CGST Act’) and the Karnataka Goods and
company, who has been duly filing GST returns and has paid
June 2022.
30.11.2021.
30.11.2021;
23.09.2022;
23.09.2022;
in these petitions.
these petitions.
following illustration:
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service.
to be rejected.
INR 200. The Impugned SCN does not dispute the fact
GST.
India.
(37) Skill Loto Solutions Pvt. Ltd., vs. Union of India &
Others – (2020) SCC Online SC 990;
dismissed.
gambling.
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platform does not record the skill level of a player and does
man can today sign up on the app and start playing the
the Petitioner that people with less skills will stake less and
people with higher skills will stake higher is farcical for the
be rejected.
deserves to be rejected.
before the High Court and the same is still pending. The
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Rajasthan High Court took note of this and left it to the GST
GST are still wide open and have not attained finality. Out
deserves to be rejected.
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(15) Head Digital Works Private Limited & Ors. Vs. State of
Kerala & Ors. – 2021 SCC Online Ker 3592;
(23) M/s. Krida Sports And Games Pvt. Ltd., vs. Director
General of Police & Ors. – Diary No(s). 7161/2019;
(26) Skill Lotto Solutions Pvt. Ltd., vs. Union of India and
others – 2020 SCC Online SC 990;
(28) The State vs. Ramprakash P. Puri and Ors. – AIR 1964
Guj 223;
(29) R.Chitralekha & Anr. Vs. State of Mysore & Ors. – 1964
AIR 1823;
(31) State of U.P. & Ors. Vs. Jeet S. Bisht & Anr. – (2007) 6
SCC 586;
(32) Deb Narayan Shyam and Ors. Vs. State of West Bengal
and Ors. – AIR 2005 SC 1167;
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– ICICI Bank.
V. SUBMISSIONS OF PETITIONERS
reasons:
chance;
that the competitions that fall under Category I & III were
gambling nature.
rejected.
The said decision does not lay down any general legal
of skill.
14, the true meaning of the said para becomes clear from
alone. Notably, the Apex Court does not hold that “Video
Company does not have any right or claim over the prize
towards the prize pool are (i) not supplies made by the
providing as follows:
II, the Apex Court held that the phrase “betting and
games of skill.
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cards and drawing cards from the open pile. The game
absurd.
industry.
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Thus, for any game to fall within the import of Entry 34,
• Thus in summary:
and gambling”.
Constitution of India.
on game of chance.
forecasting is gambling.
is illegal.
of goods or services.
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a game of chance.
for stakes.
the game does it. To both, the player and the stranger,
35 and 37).
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amount staked.
illustrations.
and Gambling.
to Gambling.
more money.
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player.
INR 36,000.
and gambling.
by the petitioners.
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dismissed.
Alternate Remedy
purpose as well;
person;
where, (a) the writ petition has been filed for the
issue the impugned SCN in the light of the law laid down by
the Apex Court, this Court and other High Courts have held
cannot be accepted.
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Constitution.
Breweries Ltd - [2004] 13 ILD 481 (SC), the Apex Court held
as beyond commerce.
GST regime introduced w.e.f., 1st July 2017, the levy of GST
as below :
Excludes Includes
money and securities actionable claim, growing crops,
grass and things attached to or
forming part of the land which are
agreed to be severed before supply
or under a contract of supply
(a) goods,
(c) securities
Concept of Supply
term ‘supply’ in the context of GST law w.e.f., 1st July 2017. In
under :
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(d) omitted.
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note that under the provisions of UK VAT Act, 1994, the term
meaning to be given.
following 3 sub-groups:
business.
(1A).
persons, etc.
CGST Act, 2017 with retrospective effect from 1st July 2017,
read as under:
clauses.
Definition of ‘Business’:
“business” includes––
(a) any trade, commerce, manufacture, profession,
vocation, adventure, wager or any other similar
activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or
incidental or ancillary to sub-clause (a);
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Wagering Contract-
as those specified.
akin to wager.
as follows:
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mean that lottery, betting and gambling are the same as other
lower tax rates for the latter, if any and that is precisely what
reads as under:
and the issue therefore that would arise herein is, whether a
actionable claim on one side or whether they would fit into the
RMDC-1
(c) The levy of the tax under the said sections was
void as offending against Article 276(2) of the
Constitution.
“betting and gambling”. The case was not one where it was
held that the competition was a game of skill and that staking
forecasting the outcome of the game for the prize and are
skills.
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of the player and such skill controls the outcome of the game
the Apex Court was in the context of Clauses (i), (ii) and (iii) of
2(1) (d) of the 1948 Act. Such prize competitions were offered
nature.
Court in RMDC-1 has held that sub- clause (b) of the definition
gambling.
the better skill would prevail more often than not, such activity
RMDC-2
that the said part of the Act cannot be severed from it, hence
Article 301 of the Constitution are the only activities that can
Section 5 and Rules 11 and 12 of the Act not only to the acts
involving skill but also to the acts which did not depend on any
skill.
significant way.
were being played for stakes. Even so, the Apex Court held
separate treatment.
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SATYANARAYANA’S CASE
in fact being played for stakes. Even so, the Court held that
the said case was a “Members Club” and what was held to be
a profit or gain i.e., 5 points per game and the said scenario
not hit by any of the other provisions of the Act and therefore,
rummy played in the club. The said sentence does not prohibit
paragraph - 12 as otiose.
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Court went into the question of profits only because this was
the Apex Court was considering the fact that several persons
mixed game of skill and chance and that these activities could
the true meaning of the said para becomes clear from the
system and not between two real players and the true
this factual context alone. Notably, the Apex Court does not
in the judgment does the Apex Court hold that playing a game
supra.
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1. What is ‘gambling’?
***
***
(emphasis added)
(i) on a horse-race, or
(ii)-(vi)***
(b)-(d)***
(i) on a horse-race, or
(ii)-(vi)***
(b)-(d)***”
(emphasis added)
cliché: breed the best to the best and hope for the
best. Performance of progeny is the most reliable
guide to what is best for breeding purposes, of
course but in the case of horses untried at stud,
their own racing ability, pedigree, and physical
conformation are the only available yardsticks.
Emphasis is on racing ability, especially in
evaluating potential stallions.”
ability of the horse and the rider, nature of the race, its current
form etc. Out of the amount collected 75% goes to the winner
betting which involves a skill neither from the horse nor from
the rider but from the better who has to keep a keen check
that horse riding is one such sport which involves special skills
such, it would not be ‘gaming’ under the two Acts.” Hence, the
to betting and gambling. In that case, under the Police Act and
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place – (i) on the date on which such race is to be run; and (ii)
the Gaming Act even as amended by the 1974 Act are not
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skill, it shall be a game of mere skill. The Apex Court held that
preponderance of skill.
follows:
but for the exemption under Section 49 of the Police Act and
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accepted.
skill’. It was held that since the game does not come within the
cannot be curtailed.
outcome.
game of skill if, ordinarily, the exercise of skill can control the
game of skill.
Court(DB)
1
(1968) 1 QB 509
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2
AIR 1957 SC 628
3
AIR 1957 SC 874
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(ii) ……..
4
AIR 1968 SC 825
5
(1996) 2 SCC 226
6
(1950) SCR 759
7
(1969) 1 SCC 853
8
(2017) 9 SCC 1
- 275 -
(i)……….
9
(1908) 6 CLR 469, 611-12
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XX. AS TO WHETHER
CHAMARBAUGWALA JURISPRUDENCE HAS
LOST RELEVANCE DUE TO ADVANCEMENT OF
SCIENCE & TECHNOLOGY:
XXII. AS TO MANIFEST
ARBITRARINESS AND VOIDING OF PLENARY
LEGISLATIONS:
does not mean that a precedent has not been considered in its
gambling).
Principle of Nomen-Juris
issue before the Apex Court was whether the provisions of the
Madras General Sales Tax Act are ultra vires, insofar as they
their legal sense, that sense can only be what it has in the
in Satyanarayana supra.
same manner.
subsequent legislations.
on Statute law:
Schedule III of the CGST Act does not and cannot include
games of skill within its ambit and must be so held as per the
them in detail.
impermissible in law.
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X. CONCLUSIONS
skill.
taxable.
not of skill;
chance;
not gambling;
chance;
ORDER
allowed;
disposed off;
Sd/-
JUDGE
Srl.