TMI Blog2019 (6) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... which includes actionable claims, other than lottery, betting and gambling. Admittedly, there is no dispute that the amounts pooled in the escrow account is an actionable claim , as the same is to be distributed amongst the winning participating members as per the outcome of a game. But, as held hereinabove since the activities of the respondent No.3 do not amount to lottery, betting and gambling, the said actionable claim would fall under Entry 6 of the Schedule III under Section 7(2) of CGST Act. Therefore, this activity or transaction pertaining to such actionable claim can neither be considered as supply of goods nor supply of services, and is thus clearly exempted from levy of any GST. The scope of definition of consideration extends only in relation to the supply of goods or services or both . Since, the said activity or transaction relating to the actionable claim qua the amounts of participants pooled in escrow arrangement, for which only acknowledgement is given, is neither supply of goods nor supply of services, the same is clearly out of the purview of the expression consideration - Since the actionable claim in the Online Fantasy Sport Gaming of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Service Tax Act and the Rule 31A of CGST Rules, 2018. 3. The petitioner has placed on record a copy of the print-out taken from the web-site of respondent No.3 for giving the details and manner of selecting virtual teams and playing free or paid online fantasy games on internet on the web-site of the respondent No.3. It is the case of the petitioner that players can create different virtual teams for playing fantasy games. Admittedly, for understanding and getting a know-how of the game, option to play for free is also available on the website. He, however, claims that the fantasy games are such that after some time people tend to pay with their hard earned money, instead of playing for free. According to him, these fantasy games are nothing but means to lure people to spend their money for quick earning by taking a chance, and most of then end up losing their money in the process, which is thus gambling/betting/wagering, being different forms of gambling . According to his belief, a fantasy game of this nature is merely a game of chance or luck, which is totally dependent upon the luck of a player on a particular day. He further claims that upon entering in various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as law, the Hon ble Punjab and Haryana High Court categorically held that success in Dream 11 s Fantasy Sports basically arises out of user exercise of superior knowledge, judgment and attention thus as per their skill; and that their fantasy games are exempt from the application of the penal provisions, in view of section 18 of 1867 Act, and held that they have protection guaranteed under Article 19(1)(g) of the Constitution of India. A SLP against this judgment of Punjab and Haryana High Court was admittedly dismissed by the Hon ble Supreme Court vide Order dated 15.09.2017. Despite this admitted position, the petitioner effectively seeks to reopen not only the issue decided therein, but also seeks to reopen a judgment of 3 Judges Bench of the Hon ble Supreme Court in K. R. Lakshmanan v. State of Tamil Nadu [AIR 1996 SC 1153] which was relied upon by the Punjab and Haryana High Court to hold that since success in Dream 11 s fantasy sports basically arises out of user s exercise of superior knowledge, judgment and attention, it is a game of skill and not a game of chance. The 3 judges bench of the Hon ble Apex Court held that the horse racing is not gambling, and is a game of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities of the respondent No.3 at considerable length, it has already been held by the Punjab and Haryana High Court that the activities performed by the respondent No.3 do not amount to gambling , even as per the Public Gambling Act, 1867. The respondent No.3 refers and relies on the findings contained in the said judgment. Admittedly, SLP filed there-against has been dismissed. The Punjab and Haryana High Court has categorically held that these are games of skill and not games of chance. Various judgments have been referred and relied upon in the said judgment. There is no reason to take a different view. The Punjab and Haryana High Court has relied upon a three Judges Bench decision of the Hon ble Apex Court in K. R. Lakshmanan (Dr.) v.State of T.N.,(1996) 2 SCC 226, wherein it was held as under- 9. On the same day when this Court decided Chamarbaugwala s case, the same four-Judge Bench presided over by S.R. Das, Chief Justice, delivered judgment in another case between the same parties titled R.M.D. Chamarbaugwala Anr. vs. Union of India Anr. The validity of some of the provisions of the Prize Competitions Act (42 of 1955) was challenged before this Court b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er:- (23) Applying these principles to the present Act, it will not be questioned that competitions in which success depends to a substantial extent on skill and competitions in which it does not so depend, form two distinct and separate categories. The difference between the two classes of competitions is as clear cut as that between commercial and wagering contracts. On the facts there might be difficulty in deciding whether a given competition falls within one category or not; but when its true character is determined, it must fall either under the one or the other. The distinction between the two classes of competitions has long been recognised in the legislative practice of both the United Kingdom and this country, and the Courts have, time and again, pointed out the characteristic features which differentiate them. And if we are now to ask ourselves the question would Parliament have enacted the law in question if it had known that it would fail as regards competitions involving skill, there can be no doubt, having regard to the history of the legislation, as to what our answer would be. The conclusion is therefore inescapable that the impugned provisions, assuming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied that the protection of s.14 is not available in this case. The game of Rummy is not a game entirely of chance like the `three- card game mentioned in the Madras case to which we were referred. The `three card game which goes under different names such as `flush , `brag etc. is a game of pure chance. Rummy, on the other hand requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill. The chance in Rummy is of the same character as the chance in a deal at a game of bridge. In fact in all games in which cards are shuffled and dealt out, there is an element of chance, because the distribution of the cards is not according to any set pattern but is dependent upon how the cards find their place in the shuffled pack. From this alone it cannot be said that Rummy is a game of chance and there is no skill involved in it. 20. The judgments of this Court in the two Chamarbaugwala cases and in the Satyanarayana case clearly lay-down that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial skill. The petitioner claims that the result would depend largely on extraneous factors such as, who amongst the players actually play better in the real game on a particular day, which according to the petitioner would be a matter of chance, howsoever skillful a participant player in the online fantasy game may be. The petitioner has lost sight of the fact that the result of the fantasy game contest on the platform of respondent No.3, is not at all dependent on winning or losing of any particular team in the real world game. Thus, no betting or gambling is involved in their fantasy games. Their result is not dependent upon winning or losing of any particular team in real world on any given day. In these circumstances, there is no plausible reason to take a contrary view than that taken by the Hon ble Punjab and Haryana High court, which judgment has already been upheld by the Hon ble Supreme Court in the SLP filed against the respondent No.3 itself. Moreover, the said issue is also covered by a judgment of 3 Judge Bench of the Hon ble Supreme Court, to which detailed reference is made in the order of the Hon ble Punjab and Haryana High Court. It is thus clear that the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule III under Section 7(2) of CGST Act. Therefore, this activity or transaction pertaining to such actionable claim can neither be considered as supply of goods nor supply of services, and is thus clearly exempted from levy of any GST. 14. Thus, there is no merit in the submission that the entire deposit received from the member is taxable. It is also erroneously contended that even this amount shall be included in the definition of expression consideration as per Section 2(31) of the Act, which reads as under- (31) consideration in relation to the supply of goods or services or both includes - (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government. (b) the monetary value of any act or for bearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of Services 998439 Other on-line content n.e.c. This service code includes games that are intended to be played on the Internet such as role-playing games (RPGs), strategy games, action games, card games, children s games: software that is intended to be executed on-line, except game software, mature theme, sexually explicit content published or broadcast over the Internet including graphics, live feeds, interactive performances and virtual activities; content provided on web search portals, I.e, extensive database of Internet addresses and content in an easily searchable format; statistics or other information, including streamed news; other non-line content not included above such as greeting cards, jokes, cartoons, graphics, maps. Note: Payment may be by subscription, membership fee, pay-perplay or pay- per-view. This service code does not include : - software downloads cf. 998434 - on-line gambling services, cf. 999692 - adult content in on-line newspapers, periodicals, books, directories, cf 998431 [emphasis supplied] The said entry, as clarified in these Explanatory Notes, evident ..... X X X X Extracts X X X X X X X X Extracts X X X X
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