9911796707
TMI Blog2023 (5) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... hew, Sri. Onkar Sharma, Advocates) For the Respondents: (By Sri. N. Venkataraman, Additional Solicitor General A/W Sri. Jeevan J Neeralagi, Advocate Sri. Mukul Rohtgi, Senior Counsel A/W Sri. Pradeep Nayak & Smt. Anupama Hebbar Sri. Sankeerth Vittal And Sri. Karan Gupta, Advocates A/W Sri. Amit Anand Deshpande, Advocate For R-1 TO R-3, Smt. Jai M. Patil, Advocate For R-4) For Impleading Applicant ON IA 1/2022 Sri. Aravind Datar and Sri. Sajjan Poovayya, Senior Counsel A/W Miss, Raksha Agarwal Sri. Sameer Singh and Sri. Ravi Raghavan, Advocates For Impleading Applicant On IA 2/2022) ORDER The main question/issue that arises for consideration in these petitions is, whether offline/online games such as Rummy which are mainly/preponderantly/substantially based on skill and not on chance, whether played with/without stakes tantamount to 'gambling or betting' as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017. I. FACTUAL MATRIX M/s.Gameskraft Technologies Pvt. Ltd., (for short 'the GTPL') claims to be an Online Intermediary Company incorporated in June 2017, who runs technology platforms that allow users to play skill based online games against each other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 20120/2022. Accordingly, the details of the instant writ petitions are as under: (a) W.P. No. 22010/2021 has been preferred by GTPL challenging the Attachment orders dated 17.11.2021 and 30.11.2021; (b) W.P. No. 18304/2022 is preferred by GTPL against the Intimation Notice dated 08.09.2022 issued under Section 74(5) of the CGST Act; (c) W.P.No. 19570/2022 is filed by GTPL assailing the impugned Show Cause Notice (SCN) dated 23.09.2022; (d) W.P.No. 19561/2022 is preferred by the Chief Financial Officer of GTPL challenging the impugned SCN dated 23.09.2022; (e) W.P.No. 20119/2022 is preferred by the Founders of GTPL challenging the impugned SCN dated 23.09.2022; (f) W.P.No. 20120/2022 is preferred by the Chief Executive Officers of GTPL challenging the impugned SCN dated 23.09.2022; 7. At the outset, it is relevant to state that the impugned Attachment orders having been passed on 17.11.2021 and 30.11.2021, the period of one year prescribed in Section 83 of the CGST Act having expired during the pendency of the subsequent petitions challenging the impugned SCN, this Court while reserving the petitions on 17.11.2022 directed that the said Attachment orders would contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST. (ii) It is contended that the Respondents have issued the Impugned SCN whereby it has been alleged that the Petitioner is involved in 'betting/gambling' and supplies 'actionable claims' and that the petitioner is guilty of evasion of GST by misclassifying their supply as services under SAC 998439 instead of actionable claims which are goods and mis-declaring their taxable value, though the activities undertaken by the petitioner were in the form of betting/gambling which is an actionable claim and not a service. (iii) It is contended that the Impugned SCN is completely fallacious, perverse, and without jurisdiction or authority of law and the same is vitiated with malice and deserves to be quashed for the following grounds: * It is an undisputed fact that more than 96% of the game played on the platform of the Petitioner is 'Rummy' which a 'game of skill' and is Constitutionally protected as established by judgments of the Apex Court, this Court and other High Courts and the said position has remained unchanged even till today. It is also settled law that the character of rummy being a game of skill does not change when it is played online and consequently, the allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner induces the players to play more games by giving bonuses / discounts when in reality the option entirely lies with the players. A player exercising its own discretion to use the amount lying in his withdrawal wallet to play further games cannot be equated or even alleged to be an inducement on the part of the Petitioner. Further and without prejudice to the foregoing, providing discounts and incentives to market one's business and platform does not and cannot change the nature of games played on that platform. For instance, rummy will remain a game of skill irrespective of whether discounts were offered to a player for playing the game. * Insofar as issuance of invoices are concerned, the Petitioner has in fact acted in accordance with Section 31(3)(b) of the CGST Act which allows an assessee to not issue an invoice if the value of supply is less than INR 200. The Impugned SCN does not dispute the fact that more than 99.5% of the supplies made through the platform of the Petitioner had a value of less than INR 200 and therefore, there was no requirement to issue an invoice. The Impugned SCN has utterly failed to depict as to how non-issuance of invoice has led to evasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in nature. * It is well settled that "games of skill" played with monetary stakes does not partake the character of betting and it still remains within the realm of 'games of skill' only. The term 'betting and gambling' cannot be artificially bifurcated by the Respondents to carve out an exception by stating that 'games of skill' played with monetary stakes can also partake the character of betting and hence, be taxable at the rate of 28%. Trying to do so would result in obliterating well settled distinction between 'games of skill' and 'betting and gambling'. The Respondents have been unable to discharge the burden of proving that the Petitioner's games fall within the category of 'betting and gambling'. Further, no material or legal basis for such a classification of the Petitioner's business has been referred to in the Impugned SCN. * The Impugned SCN is premised on the fact that the Petitioner is involved in the supply of 'actionable claim' which is ex-facie erroneous. The Petitioner merely facilitates the playing of skill-based games between users/players on its technology platforms in return for consideration in the form of platform fees, on which the Petitioner has du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utive Club vs. State of Andhra Pradesh - (1998) 3 APLJ 138; (26) Patamata Cultural and Recreation Society vs. Commissioner of Police - 2004 SCC Online AP 963; (27) D.Krishna Kumar vs. State of A.P. - 2002 (3) APLJ 211; (28) Uniworth Textiles vs. Commissioner of Central Excise - (2013) 9 SCC 753; (29) Tamilnadu Housing Board vs. Collector of Central Excise - (1995) SUPP(1) SCC 50; (30) Continental Foundation vs. Commissioner of Central Excise - (2007) 216 ELT 177 (SC); (31) Densons Pultretaknik vs. Commissioner of Central Excise - 2003 (155) ELT 211 (SC); (32) Shreya Singhal vs. Union of India - (2015) 5 SCC 1; (33) Shayara Bano vs. Union of India - (2017) 9 SCC 1; (34) Twin Cities Cinema Cultural Centre vs. Commissioner of Police - 2002 SCC Online AP 691; (35) Subramanyan Swamy vs. Union of India - (2016) 7 SCC 221; (36) Sunrise Associates vs. Government of NCT of Delhi- (2006) 5 SCC 603; (37) Skill Loto Solutions Pvt. Ltd., vs. Union of India & Others - (2020) SCC Online SC 990; (38) State of Rajasthan vs. Rajasthan Chemist Association - (2006) 6 SCC 773; (39) Commissioner of Income Tax vs. Sun Engineering Works - (1992) 4 SCC 363; (40) Kalabharathi A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enter a particular table in the Petitioner's platform is to stake a particular amount. Once an amount is staked, the Petitioner's platform places the player in a table where fellow players have also staked an equal amount. The Petitioner admits to this position. Further, the Petitioner's platform does not record the skill level of a player and does not disclose the skill level of a particular player to all the players seated at a table. This position is also admitted by the Petitioner. Therefore, a player of rummy on the Petitioner's platform has no choice to make a conscious decision as to against whom he can compete. Any common man can today sign up on the app and start playing the game on the Petitioner's platform. Therefore, when skill is not the qualifying criteria and placing stakes by a player is the only criteria to enter a table on Petitioner's platform, the success of the game principally depends on chance and not skill and therefore, in the facts and circumstances, the game of rummy is a game of chance. The presumption of the Petitioner that people with less skills will stake less and people with higher skills will stake higher is farcical for the reason that even the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not attained finality. Out of abundant caution, it is clarified that even the aspects of betting/gambling was decided without underlying facts and the Respondents are at liberty to revisit and examine the facts as it has never been done before. * Lastly, the judgment of this Court in All India Gaming Federation supra, will have no applicability as what was decided was only the vires of the 2021 Amendment treating Games of Skill on par with Games of Chance. Taking note that they fell under different categories and ought not to have been treated as same, this Hon'ble Court struck down the Amendment. This Hon'ble Court never had the occasion to examine on a factual basis as to whether the underlying games were Games of Chance or Skill. When such is the case, the contention of the Petitioner that the issue is decided against the Department in the light of this decision, deserves to be rejected. JUDGMENTS RELIED UPON BY RESPONDENTS (1) H.H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur of Gwalior & Others - Union of India & Another - (1971) 1 SCC 85; (2) R.M.D. Chamarbaugwala vs. Union of India - AIR 1957 SC 628; (3) State of Andhra Pradesh vs. K.Satyanarayana & others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mysore & Ors. - 1964 AIR 1823; (30) Santosh vs. Central Bank of India - AIR 2003 MP 218; (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; (33) State of M.P. & Anr. Vs. Narmada Bachao Andolan - (2011) 7 SCC 639; (34) Somasundaram Chettiar & Others v. Emperor - 1947 SCC Online Mad 193; (35) Krishnachandra And others vs. State of Madhya Pradesh - AIR 1965 SC 307; (36) Commissioner of Income Tax, Andhra Pradesh v. Motors & General Stores (P) Ltd., - AIR 1968 SC 200; (37) Commissioner of Income Tax, Calcutta vs. Gillanders Arbuthnot & Co., - 1973 SCC (Tax) 359; (38) Bhopal Sugar Industries Ltd., vs. Sales Tax Officer, Bhopal - (1977) 3 SCC 147; (39) Relevant Provisions of the Police Act, 1963; (40) D.V.R. Recreation Club vs. State of Karnataka - 2014 SCC Online Kar 11073; Decision in W.P.No. 207054 of 2014 dated 15.12.2014; (41) D.V.R. Recreation Club vs. State of Karnataka - Writ Appeal No. 200290 of 2015 Dated 27.06.2016; (42) D.V.R. Recreation Club vs. State of Karnataka - 2016 SCC Online Kar 8878; Decision in Review Petition No. 200029 of 2016 decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edominance' test applies to ascertain the true character of the game - this artificial distinction between online and offline is merely to create a fear psychosis and to reopen settled legal principles; * Why did earlier statutes codify exclusions for games of skill? Statutes are made by application of mind and the prevailing statement of law i.e. games of skill stand protected from any penal consequences; * The correct ratio of the case of K. Satyanarayana was the apprehension of the Court that people are playing flush in guise of rummy or doing prostitution or otherwise indulging in noxious activities - these are issues of policing not of the validity or the character of the game; * Playing with stakes or high stakes is irrelevant; * The contentions of the petitioner are fully covered by the judgments of the Apex Court in RMDC-1, RMDC-2, Satyanarayana, Sivani, Lakshmanan and this Court in All India Gaming Federation, Junglee Games(Madras), Head Digital (Kerala) and judgments of other High Courts. * The expression 'gaming' does not merit any re-examination, since it has become nomen juris in view of Lakshmanan's case, wherein it is held that Gaming is the act or practice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in which the law has been declared and accordingly, RMDC 1 & 2, K. Satyanarayana, M.J.Sivani and K.R. Lakshmanan's cases supra must be construed harmoniously and not in a disharmonious manner. * The contention of the Respondents that in RMDC-1, it was held that any game whose result is based on a 'forecast' is a gambling activity is liable to be rejected. At paragraph 17, the tripartite categorisation of competitions by the Apex Court was in the context of Clauses (i), (ii) and (iii) of the definition of "prize competition" as defined under Section 2(1)(d) of the 1948 Act. Such prize competitions were offered through the medium of Newspapers. In the said paragraph-17, it was concluded that the competitions that fall under Category I & III were in the nature of gambling. Notably, paragraph-17 lays down a general principle which is that, "a competition success wherein does not depend to a substantial degree upon the exercise of skill is now recognised to be of a gambling nature." In other words, competitions wherein success depends on a substantial degree of the exercise of skill are not of a gambling nature. Therefore, de hors the definition of prize competition the said legal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an element of 'chance' in each game and a 'game of skill', may not necessarily be such an activity where "skill" must always prevail; however, it is well settled in law, where in an activity the "exercise of skill" can control the 'chance' element involved in the particular activity, such that the better skilled would prevail more often than not, such activity qualifies as a game of skill. The game of rummy played with stakes is played between players on the basis of the assessment of their own skill. Therefore, while playing for stakes, the player makes a value judgment on his/her skill. The outcome of the game is determined predominantly by the skill of the players. Therefore, rummy played with stakes and the same cannot be viewed as a 'forecast' or a shot at the "hidden target". Thus the said contentions of the respondents based on RMDC-1's case is liable to be rejected. * The respondents contention that a club deriving an income by charging sitting fees on the players playing cards must to be taken as profit or gain which makes the club a "common gaming house": However, the nature of the game in question in the said case i.e. "three cards" holds immense significance and canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate in the competition would be guilty of running a common gaming house. In addition, paragraph-10 (as interpreted by the respondents) falls foul with paragraph-5 of RMDC-2's case, which permits running a business involving games of skill. * Respondents are also not entitled to place reliance upon the latter portion of paragraph-12 which cannot be read in isolation. Paragraph-3 makes it abundantly clear that the game being played was "rummy for stakes". The opening words of paragraph-12 make it clear that protection of Section 14 was available "in this case". The only reasonable explanation of the said sentence (which is consistent with the entire decision including the substantive portion of paragraph-12) is that words "from the game" must be construed as "from the outcome of the game". In other words, the said sentence prohibits the owner of the club from betting on a game of rummy played in the club. The said sentence does not prohibit the running of a club, wherein rummy is played with stakes between the players. If Satyanarayana's case is interpreted to mean that rummy played with stakes is an offence, it would render not only Section 14 but also the opening words of paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio laid down by the Division Bench of this Court in All India Gaming Federation's case is sufficient to reject all the claims put forth by the respondents as well their untenable attempt to distinguish the said judgment and contend that the same cannot be relied upon by the petitioner. * GST is a tax on 'supply' of goods and services. Alternatively and without prejudice to the points discussed above and irrespective of qualification as 'betting and gambling', GST liability as alleged in the impugned SCN can be affixed on the Petitioners, only if the Petitioner-GTPL can be said to have 'supplied' actionable claims. However, the Petitioner-GTPL is an online intermediary who only provides services of facilitating skill-based game plays between the players and contractual terms of service with the player(s), would show that the Petitioner-GTPL was not supplying any "actionable claim": For the gaming platform so provided, the Petitioner-GTPL charges a consideration in the form of 'Platform Fee' on which GST is duly deposited. It is also undisputed that the monies that are contributed by the players to the prize pool is merely held by the Petitioner-GTPL in Trust and the Petitioner-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol is a fund held by the Operators in trust, for a brief period of time (i.e., from the time of the contribution by the players prior to the commencement of the game till its completion), subsequent to which the prize pool amount is distributed among the winners. The amounts comprising the prize pool are not a "consideration" for any services provided by the Operators. Since these amounts contributed towards the prize pool are (i) not supplies made by the Operators; and alternatively (ii) consideration for supply of actionable claims, no goods and services tax (GST) is required to be discharged on the contribution made by the players to the prize pool. * Games of skill fall outside the purview of "betting and gambling" enumerated in Entry 34 of List II of the Seventh Schedule of the Constitution. The terms "betting" and "gambling" are not defined in the Constitution or in the CGST Act and the ordinary dictionary meanings ought to be ascribed to such terms. Further, the Finance Act, 1994 at Section 65B (15) sought to define both the terms of betting and gambling interchangeably by providing as follows: "Section 65-B. Interpretations: (15) Betting or gambling means putting on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... skills in permutations and combinations. A player with greater skills is always more likely to win against players with inferior skills, purely based on the skill that the players possess. * The dispute only pertains to whether rummy when played for stakes amounts to gambling / betting which question has been held in the negative against the respondents not only in the aforesaid judgments but also by the Andhra Pradesh High Court in the case of Executive Club v. State of Andhra Pradesh -1998 (3) APL) 138 and D. Krishna Kumar v. State of Andhra Pradesh-2002 SCC OnLine AP 810. * It is the Respondents submission that playing a game of skill for stakes also amounts to betting and gambling. The respondents seeks to completely annul the difference between games of chance and games of skill as its stands today on the basis of settled law by the Higher Courts of the Country. The Respondents are also doing so by selectively picking and choosing certain portions of the decisions of the Supreme Court, not forming part of the ratio and divorced from the context of the decisions. It is settled law that sentences in a judgment cannot be picked out of context of the question under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing to note that while on the one hand, the Central and the State Governments are pushing to make the country a gaming hub, on the other hand, the Revenue is seeking to effectively kill the industry. * It was submitted that the Impugned SCN is arbitrary and ignores settled law, reiterated time and again by the Hon'ble Supreme Court. "Betting and gambling" under the CGST Act is to be ascribed the same meaning as that under the Constitution of India. Betting and Gambling" under Entry 34 List II has attained constitutional significance. "Betting and Gambling" only relates to games of chance and its scope cannot be extended to include games preponderantly and substantially of skill. "Betting and Gambling" has also been read conjunctively to mean betting in gambling. Thus, for any game to fall within the import of Entry 34, there has to be betting in gambling. * The definition of "gaming" in various statutes should be read to mean the act or practice of gambling on a game of chance. Further, gambling and gaming have developed secondary meanings in judicial parlance (nomen juris). Gambling is equated with gaming, where chance is the predominant factor. The Division Bench of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s complete violence to the legislative intent that has consistently been in vogue for over 150 years. * The argument that games of skill played with stakes amounts to gambling obliterates the distinction between games of skill and games of chance. The Respondents argument that the distinction remains for the purpose of conducting competitions is entirely a figment of their imagination and finds no mention in any jurisprudence on the subject. They cannot be seen to supply such hidden interpretations. As noticed by the Hon'ble Division Bench of this Court in All India Gaming Federation's case, a game that involves substantial amount of skill is not gambling. The Hon'ble Division Bench has further conclusively held that a game of skill does not cease to be one even when played with stakes. There is no concept of an independent category of betting on games of skill. All betting sought to be caught in the ambit of "betting and gambling" is betting on game of chance. * The argument of the Respondents that placing of bets on games of skill amounts to forecasting of results on a future event and consequently, amounts to gambling by placing reliance on RMDC-1 is entirely misplaced. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in Lakshmanan's case is also entirely in favour of the Petitioner herein. The Hon'ble Supreme Court clearly notes that the term gaming can only be interpreted in the light of the law laid down in the RMDC 1 and 2, i.e., competition which substantially depends on skill is not gambling. The Hon'ble Supreme Court has held that "Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor." Thus, accordingly, the Hon'ble Supreme Court concludes "Even if there is wagering or betting with the Club it is on a game of mere skill and as such it would not be 'gaming' under the two Acts." Hence, the ratio that emerges is that wager or betting on a game of skill does not amount to gambling. * The contention of the Respondents that an exception on wagering or betting on horse racing is carved out in specific circumstances and therefore wagering or betting otherwise is not permitted is specifically answered in the 'negative' in paragraph-35 of Lakshmanan's case, where the Hon'ble Supreme Court has held that these sections in question are applicable to bucket-shops in the city streets or bazaars, purely for g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifficult to treat these as a game of skill. Thus, the only test to ascertain the nature of the game is the preponderance test and not on the basis of the skill level of the player involved. * The judgment of this Court in All India Gaming Federation is neither per incuriam nor sub-silentio as contended by the Respondents. Only because a specific paragraph in a precedent has not been excerpted by a Court, does not mean that a precedent has not been considered in its entirety. By that logic, if the entirety of a precedent judgment is not excerpted in a subsequent judgment, the subsequent judgment will become automatically sub silentio and per-incuriam, which is a completely absurd proposition. Thus it cannot be said that the decision of the Hon'ble Division Bench of this Court in All India Gaming Federation is either per incuriam (as it refers to and considers all the judgments of the Hon'ble Supreme Court) or sub-silentio (as it specifically holds that playing games of skill for stakes does not amount to gambling in paragraph - X). * Online gaming platforms do not supply 'goods' (i.e., actionable claims) on their platforms and they only render services on which GST is paid. Onli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... away prizes based on the forecasting i.e., predicting in anticipation an unknown and uncertain future outcome is nothing but betting and gambling. The Petitioner before this Hon'ble Court had admitted both in the Affidavits and during arguments that the game of rummy is played for stakes. * A simple illustration would explain the position. The players of online rummy on the Petitioner's platform are forecasting i.e., predicting in anticipation the unknown and uncertain future event of the player winning the game of rummy, and are placing stakes on that unknown and uncertain future event. Assuming a scenario where in table of four players, each of them have staked INR 1,000. Each player stakes INR 1,000 with a hope to win INR 3,600, on the event that the player wins, which event is a future unknown and uncertain event for each player on the table. The stakes are placed before even reaching the table. In fact, unless the stakes are placed, a player cannot reach the table. Therefore, each player of rummy on the Petitioner's platform forecasts i.e., predicts in anticipation the unknown and uncertain future event of the player winning the game of rummy, and places stakes on it. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the outcome of games of rummy. If the answer to this question is in the 'affirmative' and Respondents most humbly submit, it is so, then according to the Hon'ble Supreme Court in Skill Lotto Solutions Pvt Ltd v. Union of India - 2020 SCC Online SC 990, such a transaction would be a supply of actionable claims in the form of betting and gambling. Consequently, the scheme of CGST r/w Rule 31A will govern the transaction to be taxed at 28% on 100% of the bet value. * Games can be categorized into three categories: - A game of pure skill - An example under this category would be the game of Chess and Cricket. - A game of pure chance - An example under this category would be 'three cards' and 'mankatha' where there is no requirement for any skill. - A game of mixed skill and chance. - An example under this category would be the game of rummy. * In a game of mixed skill and chance, the test of predominance is applied to categorize the game. If in a game of mixed skill and chance, the element of chance predominates over the element of skill, the game would be categorized as a Game of Chance. If in a game of mixed chance and skill, the element of skill predominates over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bling. * The example placed before this Hon'ble Court during oral arguments is reiterated herein. Dhoni can play the game of cricket, a pure game of skill and the act of playing the game of cricket per se is not illegal and is in fact protected under Article 19(1)(g). The outcome of the game depends purely on the skill sets of Dhoni. According to the Petitioner, in such a scenario, if Dhoni stakes on the outcome of the game, it would not amount to Gambling. * Now assuming for a moment that Dhoni places stakes of INR 100 on the outcome of the game of cricket, the outcome still remains to be uncertain and Dhoni with precision cannot predict the outcome as it is impossible. Therefore, placing stakes even on the outcome of a game of skill would continue to be gambling as stakes are placed on an uncertain event with a hope to gain more money. * The Petitioner contends that in a game of skill, only side betting is gambling and if the player of the game of skill places stakes, it would not amount to gambling. This submissions is fallacious and deserves to be rejected for the sole reason that whether it is the player of a game of cricket, who is betting or a spectator of a game of cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner's platform which is an uncertain unknown event. The second transaction unequivocally qualifies as an act of betting and gambling. * During oral arguments, it was contended by the Petitioner that the Respondents are bifurcating a single transaction and the same must not be permitted. According to the Petitioner, the act of playing the game of skill and placing stakes on it is a single transaction. This argument deserves to be rejected for the sole reason that the game of rummy can be played independent of the stakes and without placing stakes on the outcome. When the element of staking on the outcome of the games of rummy is introduced, it is nothing but an independent transaction which is in the nature of betting and gambling on the outcome of a game which is an uncertain event. * It was also contended alternatively, the judgment of this Court in All India Gaming Federation's case in addition to not laying down any ratio to support the claim of the petitioners was also sub-silentio and per-incuriam and no reliance can be placed upon the said judgment by the petitioners. * It was therefore contended that there was no merit in the petition and that the same are l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sory in nature - Notice issued with premeditation or prejudgment - Vires of an enactment is challenged - Violation of principles of natural justice - Notice is barred by limitation - Authority is incompetent to issue Notice as per statutes governing it. - Allegation that Notice is malafide - Infringement of Fundamental Rights (2) In the instant case, the material on record makes it clear that it is the specific contention of the petitioners that the respondents did not have jurisdiction or authority of law to issue the impugned SCN in the light of the law laid down by the Apex Court, this Court and other High Courts have held that a games involving skill and games of betting/gambling are significantly different and that the former category of cases cannot be brought to tax similar to the latter category and any attempt to unsettle a settled position would clearly mean that the tax authority has no jurisdiction; in other words, in view of the specific contention of the petitioners that the impugned SCN was without jurisdiction or authority of law, I am of the considered opinion that the present petition is maintainable and this contention urged by the respondents cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the general public, i.e., res extra commercium, (outside commerce). There cannot be business in crime. Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium being inherently harmful. A citizen has, therefore, no fundamental right to do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited. Article 47 of the Constitution considers intoxicating drinks and drugs as injurious to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health. It, therefore, ordains the State to bring about prohibition of the consumption of intoxicating drinks which obviously include liquor, except for medicinal purposes. Article 47 is one of the directive principles which is fundamental in the governance of the country. The State has, therefore, the power to completely prohibit the manufacture, sale, possession, distribution and consumption of potable liquor as a beverage, both bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on it. What makes lottery a pernicious is its gambling nature? Can it be said that in the State organized lotteries this element of gambling is excluded? The stringent measures and the conditions imposed under the State lotteries are only to inculcate faith to the participant of such lottery, that it is being conducted fairly with no possibility of fraud, misappropriation or deceit and assure and hopeful recipients of high prizes that all is fair and safe." 4. In the case of Union of India Vs Martin Lottery Agencies Ltd - (2008)12 SCC 209, it was held as under: "The doctrine of res extra Commercium was invoked in the United States of America where keeping in view the nature of right conferred on its citizens and the concept of imposition of reasonable restrictions thereon being absent, it was held that gambling should be frowned upon being opposed to constitutional jurisprudence. While borrowing the said principle in the Indian context, however, it must be borne in mind that Constitution of India envisages reasonable restrictions in respect of almost all the fundamental rights of the citizens. No citizen has an absolute fundamental right. Whereas the same principle may apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions (save for some provisions relating to savings, etc) and the discussion on provisions of CGST Act, 2017 would equally be applicable to the SGST provisions also. 3. Similarly, Section 5 of the IGST Act, 2017 deals with the levy and collection of taxes where the supply is in the course of inter-State supply of goods or services or both. The said provision also provides that integrated tax on goods imported into India will be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 on the value as determined thereunder at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962. 4. The provisions relating to levy could be summarized as below : Levy is on Supply of goods and/or services or both, other than on the supply of alcoholic liquor for human consumption Rate To be notified - but shall not exceed 20% each of CGST and SGST Value Value determined in terms of Section 15 of CGST Dual tax of CGST+SGST would apply On intra-State supply of goods &/or Services Integrated Tax (IGST) would apply On inter-State supply of goods &/or Services at maximum rate of 40%. How to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r valuable consideration. Explanation - For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration. (d) omitted. (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1): (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) to include all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation - For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another; (b) to include importation of services for a consideration whether or not in the course or furtherance of business. (c) the activities specified in Schedule I, made or agreed to be made without a consideration. 2. It is relevant to note that Section 7 of CGST Act, 2017 has been amended by CGST (Amendment) Act, 2018 with retrospective effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould satisfy the factors stipulated in Section 7(1)(a) except to the variation specifically stipulated in the respective clauses. (iii) Section 7(1)(b) treats import of service as supply irrespective of whether it is in course or furtherance of business or not. But for that exception, in order to qualify as supply under section 7(1)(b), the rest of the factors stipulated in section 7(1)(a) should be satisfied. (iv) Section 7(1)(c) dispenses with the requirement of presence of consideration in respect of activities stipulated in Schedule I. But for that exception, for the activities stipulated under Schedule I to qualify as supply under Section 7(1)(c), it should be established that it is made or agreed to be made during the course or furtherance of business. (v) Finally, the purpose of Section 7(1)(d) is to only classify an activity as supply of goods and supply of services. The other factors to qualify as supply stipulated in section 7(1)(a); for Eg: there should be consideration, it should be in course or furtherance of business should be satisfied even by the activities falling under section 7(1)(d). This view is now reiterated by the insertion of sub-section (1A) to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which the provisions of section 294A of the Penal Code apply. Advanced Law Lexicon by P Ramanatha Aiyar's Wagering Contract- "A wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependant on the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the parties having any other interest in that contract than the sum or stake he will win or lose, there is no other consideration for making of such contract by either of the parties. If either of the parties may win but cannot lose or may lose but cannot win, it is not a wagering contract" [Carlill vs Carbolic Smoke Ball co. [1892 (2) QB 484] An agreement for payment of prize money on a lottery ticket comes within the ambit of the expression 'wagering contract' as contemplated under Section 30 of the Act. [Subhash Kumar Manwani vs State of MP, AIR 2000 MP 109, 110] Black's Law Dictionary Wager - A contract by which two or more parties agree that a certain sum of money or other thing shall be paid or delivered to one of them or that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing every act, game, and contrivance by which one intentionally exposes money or other thing of value to the risk or hazard of loss by chance." Definition of 'business' under GST to include betting, gambling, lottery; The principle of "res extra commercium" applies to betting, gambling, wagering for the purpose of other laws. However, with respect to GST law, the definition of business is much wider to include 'wager' or 'any other similar activity'. Therefore, for the purpose of GST, business also includes, betting, gambling, lottery, etc. Given the wide scope of the definition of business under CGST Act, 2017, for the limited purpose of GST, a view is possible that protection under Article 19(1)(g) of the Constitution of India is available to wagering, betting, gambling, lottery, etc. But that in itself, therefore, would not mean that lottery, betting and gambling are the same as other games of skill, which distinction can still be made to justify lower tax rates for the latter, if any and that is precisely what would be decided in this petition. Actionable claim under Schedule III of CGST Act The said Schedule III referred in Section 7(2) of the Act reads as under: "SCHED ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d arise herein is, whether a game of skill, either wholly or predominantly, can be classified as lottery, betting and gambling if these elements are involved in such a game of skill. Law expositing "game of skill" vs "game of chance" It must be noted that there is no denying the fact that game of skill and game of chance indeed have been differentiated by the highest Courts of this country and that is more so in the context of whether protection under Article 19(1)(g) can be taken. The decisions have clearly held that such protection is not available for lottery, betting and gambling which does not amount to a business. However, we have already seen how the definition of business would include wagering and other similar activities and that lottery, betting and gambling which are actionable claims is defined as goods under the legislation. However, since Schedule III clearly mentions and excepts lottery, betting and gambling from the generic term of actionable claims to ensure that it could be taxed, necessarily the interpretation of games of skill is fundamental to understand whether they fit into the realm of actionable claim on one side or whether they would fit into the real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a valid agreement which would be enforced by the court by relegating the parties to arbitration. Legalistic and plain meaning interpretation would be contrary to the contextual background including the definition clause and would result in unpalatable consequences. A reasonable and just interpretation of "existence" requires understanding the context, the purpose and the relevant legal norms applicable for a binding and enforceable arbitration agreement. An agreement evidenced in writing has no meaning unless the parties can be compelled to adhere and abide by the terms. A party cannot sue and claim rights based on an unenforceable document. Thus, there are good reasons to hold that an arbitration agreement exists only when it is valid and legal. A void and unenforceable understanding is no agreement to do anything. Existence of an arbitration agreement means an arbitration agreement that meets and satisfies the statutory requirements of both the Arbitration Act and the Contract Act and when it is enforceable in law. 147. xxx xxx xxx 147.1. In Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209, this Court had examined the question of stamp du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on & Ors.3 and Jayant Verma & Ors. vs. Union of India & Ors.4. The first judgment in State of Gujarat (supra) applies, what is called, "the inversion test" to identify what is ratio decidendi in a judgment. To test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed, i.e. to remove from the text of the judgment as if it did not exist. If the conclusion of the case would still have been the same even without examining the proposition, then it cannot be regarded as the ratio decidendi of the case. In Jayant Verma (supra), this Court has referred to an earlier decision of this Court in Dalbir Singh & Ors. vs. State of Punjab 5 to state that it is not the findings of material facts, direct and inferential, but the statements of the principles of law applicable to the legal problems disclosed by the facts, which is the vital element in the decision and operates as a precedent. Even the conclusion does not operate as a precedent, albeit operates as res judicata. Thus, it is not everything said by a Judge when giving judgment that constitutes a precedent. The only thing in a Judge's decision binding as a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay. It is said, on the strength of the audited books of account, that after distribution of prizes to the extent of about 33% of the receipts and after payment of taxes in Mysore amounting to about 15% and meeting the other expenses aggregating to about 47%, the net profit of the second petitioner works out to about 5% only. 6. On November 20, 1952 the State of Bombay passed the Bombay Lotteries and Prize Competitions Control and Tax (Amendment) Act (Bom 30 of 1952). This Act amended the provisions of the 1948 Act in several particulars. Thus, the words "but does not include a prize competition contained in a newspaper printed and published outside the Province of Bombay", which occurred in the definition of Prize Competition in Section 2(1)(d) of the 1948 Act, were deleted and the effect of this deletion was that the scope and the application of the 1948 Act so amended became enlarged and extended so as to cover prize competitions contained in newspapers printed and published outside the State of Bombay. After clause (d) of Section 2(1) the Amending Act inserted a new clause (dd) which defined the words "Promoter". A new section was substituted for the old Section 12 and anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operated extra-territorially inasmuch as it affected the trade or business of conducting prize competitions outside the State and was, therefore, beyond the competence of the State Legislature and invalid. (g) The impugned Act offended against Article 301 of the Constitution inasmuch as it imposed restrictions on trade, commerce and intercourse between the States and was not saved by Article 304(b) of the Constitution. (h) The restrictions imposed by the impugned Act on the trade or business of the petitioners were not reasonable restrictions in the interests of the general public and, therefore, contravened the fundamental right of the petitioners, who were citizens of India, to carry on their trade or business under Article 19(1)(g) of the Constitution. (i) That Sections 10, 12 and 12-A of the said Act offended against Article 14 of the Constitution inasmuch as they empowered discrimination between prize competitions contained in newspapers or publications printed and published within the State and those printed and published outside the State. 10. The State of Bombay, which is now the appellant before us, on the other hand, maintained that (a) The prize competitions co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its servants and agents, do forbear from enforcing or taking any steps in enforcement, implementation, furtherance or pursuance of any of the provisions of the impugned Act and the 1952 Rules made thereunder and particularly from enforcing any of the penal provisions against the petitioners, their Directors, officers, servants or agents and that the State of Bombay, its servants and agents, do allow the petitioners to carry on their trade and business of running the Prize Competition mentioned in the petition and do forbear from demanding, collecting or recovering from the petitioners any tax as provided in the impugned Act or the said Rules in respect of the said Prize Competition and that the State of Bombay do pay to the petitioners their costs of the said applications. 11. Being aggrieved by the decision of the trial Judge, the State of Bombay preferred an appeal on June 8, 1954. The court of appeal dismissed the appeal and confirmed the order of the trial Judge, though on somewhat different grounds. It differed from the learned trial Judge on the view that he had taken that there was no legislative competence in the Legislature to enact the legislation. It held that the top ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed law satisfies both these tests, then finally the court has to ascertain if there is anything in any other part of the Constitution which places any fetter on the legislative powers of such Legislature. The impugned law has to pass all these three tests. 16. The petitioners contend that the object of the impugned Act is to control and to tax lotteries and prize competitions. It is not the purpose of the Act to prohibit either the lotteries or the prize competitions. They urge that the impugned Act deals alike with prize competitions which may partake of the nature of gambling and also prize competitions which call for knowledge and skill for winning success and in support of this contention reliance is placed on the definition of "prize competition" in Section 2(1)(d) of the impugned Act. We are pressed to hold that the impugned Act in its entirety or at any rate insofar as it covers legitimate and innocent prize competition is a law with respect to trade and commerce under Entry 26 and not with respect to betting and gambling under Entry 34. They also urge that in any event the taxing provisions, namely, Sections 12 and 12-A are taxes on the trade of running prize competitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which the solution is determined by lot" applied equally to each of the five kinds of prize competitions included in that category and set out one after another in a continuous sentence. It should also be noted that the qualifying clause consisted of two parts separated from each other by the disjunctive word "or". Both parts of the qualifying clause indicated that each of the five kinds of prize competitions which they qualified were of a gambling nature. Thus a prize competition for which a solution was prepared before hand was clearly a gambling prize competition, for the competitors were only invited to guess what the solution prepared beforehand by the promoters might be, or in other words, as Lord Hewart, C.J., observed in Coles v. Odhams Press, Ltd. [LR (1936) 1 KB 416], "the competitors are invited to pay certain number of pence to have the opportunity of taking blind shots at a hidden target". Prize competitions to which the second part of the qualifying clause applied, that is to say, the prize competitions for which the solution was determined by lot, was necessarily a gambling adventure. On the language used in the definition section of the 1939 Act as well as in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zes are offered for forecasts of the results either of a future event or of a past event the result of which is not yet ascertained or not yet generally known; and (iii) any other competition success in which does not depend to a substantial degree upon the exercise of skill;" It will be noticed that the concluding sentence "but does not include a prize competition contained in a newspaper printed and published outside the Province of Bombay" has been deleted. This deletion has very far reaching effect, for it has done away with the exclusion of prize competitions contained in a newspaper printed and published outside the State of Bombay from the scope of the definition. In the next place, it should be noted that the definition of prize competition still comprises three categories as before. The second and the third categories are couched in exactly the same language as were their counterparts in the earlier definitions. It is only in the first category that certain changes are noticeable. The five kinds of prize competitions that were included in the first category of the old definitions are still there but instead of their being set out one after another in a continuous sente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em may well be of an innocent type. This argument hangs on the frail peg of unskilful draftsmanship. It has been seen that in the old definitions all the five kinds of prize competitions included in the first category were of a gambling nature. We find no cogent reason-and none has been suggested-why the Legislature which treated lotteries and prize competitions on the same footing should suddenly enlarge the first category so as to include innocent prize competitions. To hold that the first category of prize competitions include innocent prize competitions will go against the obvious tenor of the impugned Act. The 1939 Act dealt with prize competitions only and the first category in the definition given there comprised only gambling competitions. The 1948 Act clubbed together lotteries and prize competitions and the first category of the prize competitions included in the definition as originally enacted was purely gambling as both parts of the qualifying clause clearly indicated. Section 3 of the Act declared all lotteries and all prize competitions unlawful. There could be no reason for declaring innocent prize competitions unlawful. The regulatory provisions for licensing and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompetitions as an invitation to a game of skill. The ordinary common people who usually join in these competitions can hardly be credited with such abundance of statistical skill as will enable them, by the application of their skill, to attain success. For most, if not all, of them the forecast is nothing better than a shot at a hidden target. Apart from the unlikelihood that the Legislature in enacting a statute tarring both lotteries and prize competitions with the same brush as indicated by Section 3 would squeeze in innocent prize competitions in between two categories of purely gambling varieties of them, all the considerations and difficulties we have adverted to in connection with the construction of the first category and the qualifying clause therein will apply mutatis mutandis to the interpretation of this second clause. 21. Reliance is placed on Section 26 of the English Betting and Lotteries Act, 1934 (24 & 25 Geo. 5 c. 58) in aid of the construction of the second category of prize competitions included in the definition given in the impugned Act. The relevant portion of Section 26 of the aforesaid Act runs thus: "26. (1) It shall be unlawful to conduct in or throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State, the definition should be read as limited only to gambling prize competitions so as to make it a law with respect to betting and gambling under Entry 34. It is not necessary for us in this case to consider whether the principle laid down by Sir Maurice Gwyer, C.J., in the Hindu Women's Right to Property Act case [(1941) FCR 12] can be called in aid to cut down the scope of a section by omitting one of two things when the section on a proper construction includes two things, for we are unable, with great respect, to agree with The court of appeal that on a proper construction the definition covers both gambling and innocent competitions. In our view, the section, on a true construction, covers only gambling prize competitions and the Act is a law with respect to betting and gambling under Entry 34. As, for the foregoing reasons, we have already arrived at the conclusion just stated, it is unnecessary for us to refer to the language used in the third category and to invoke the rule of construction which goes by the name of noscitur a sociis relied on by learned counsel for the appellant. 22. The next point urged is that although the Act may come under Entry 34, the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands is nothing but a convenient method of collecting the tax. In other words, the taxing authority finds it convenient in the course of administration to collect the duty in respect of the gambling activities represented by each of the entries when the same reaches the hands of the promoters. The tax on gambling is a well recognised group of indirect taxes as stated by Findlay Shirras in his Science of Public Finance Vol. II p. 680. It is a kind of tax which, in the language of J.S. Mill quoted by Lord Hobhouse in Bank of Toronto v. Lambe [LR (1887) 12 AC 575] is demanded from the promoter in the expectation and intention that he shall indemnify himself at the expense of the gamblers who sent entrance fees to him. That, we think, is the general tendency of the tax according to the common understanding of men. It is not difficult for the promoters to pass on the tax to the gamblers, for they may charge the proportionate percentage on the amount of each entry as the seller of goods charges the sales tax or he may increase the entrance fee from 4 annas to 5 annas 6 pies to cover the tax. If in particular circumstances it is economically undesirable or practically impossible to pass o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Federal Court of India and hold that the Legislature must have been contemplating to make a law with respect to betting and gambling under Entry 62, for there is no constitutional limit to the quantum of tax which can be imposed by a law made under that Entry. For reasons stated above, we are satisfied that Section 12-A is supportable as a valid piece of legislation under Entry 62. In RMDC-1, it was held by the Apex Court that any game/competition that relies substantially upon exercise of skill cannot be classified as 'gambling'; it was also held that gambling or conducting the business of gambling is extra-commercium and hence not included within the meaning of 'trade, commerce or intercourse' and consequently, not protected by the fundamental right to trade and profession under Article 19(1)(g) or the freedom of trade, commerce and intercourse under Article 301. 2. The contention of the respondents that in RMDC-1, it was held that category (ii) i.e., "any competition in which prizes are offered for forecasts of the results either of a future event or of a past event the result of which is not yet ascertained or not yet generally known" may not be dependent on chance, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the persons so doing should not have any interest in the outcome, which is completely contrary to the concept of game of skill, where the person playing the rummy is clearly interested in winning, which is also a circumstance to rule out the possibility of it being called a wagering contract. The contention that it matters not whether the player or some third person is staking money is not apposite considering the fact that the person who stakes does so based on the confidence that he has on his skills and not his luck. 7. As rightly contended by the petitioners and intervenors, the contention of the respondents that in RMDC-1, it was held that any game whose result is based on a 'forecast' is a gambling activity is liable to be rejected. At paragraph 17, the tripartite categorisation of competitions by the Apex Court was in the context of Clauses (i), (ii) and (iii) of the definition of "prize competition" as defined under Section 2(1) (d) of the 1948 Act. Such prize competitions were offered through the medium of Newspapers. In the said paragraph-17, it was concluded that the competitions that fall under Category I & III were in the nature of gambling. Notably, paragraph-17 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be made by ordinary persons (given that it may involve several imponderables). Such a forecast may possibly be made by conducting rigorous forensic or statistical study by persons who have the scientific or the technical or the super specialised knowledge to do so; it is when such games are offered to the general public, the forecast becomes a "shot at the hidden target". 10. The argument of the Respondents that placing of bets on games of skill amounts to forecasting of results on a future event, and consequently amounts to gambling, by placing reliance on RMDC-1 is entirely misplaced. The Apex Court in RMDC-1 has held that sub- clause (b) of the definition of 'prize competitions in Section 2 (1) (d) of the Bombay Lotteries and Prize Competition Control and Tax Act, 1948, should be read to mean as applying only to games that are gambling in nature and cannot take within its sweep innocent prize competitions. Thus, forecasting for the purposes of sub - clause (b) of Section 2 (1) (d) can only mean forecasting by a third party on an event, the outcome of which is not dependant on the skill of the player involved, such as the result of the rolling of a dice. This is an exclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romote or conduct any prize competition or competitions in which the total value of the prize or prizes (whether in cash or otherwise) to be offered in any month exceeds one thousand rupees; and in every prize competition, the number of entries shall not exceed two thousand. 5. Subject to the provisions of Section 4, no person shall promote any prize competition or competitions in which the total value of the prize or prizes (whether in cash or otherwise) to be offered in any month does not exceed one thousand rupees unless he has obtained in this behalf a licence granted in accordance with the provisions of this Act and the rules made thereunder." Then follow provisions as to licensing, maintaining of accounts and penalties for violation thereof. Section 20 confers power on the State Governments to frame rules for carrying out the purpose of the Act. In exercise of the powers conferred by this section, the Central Government has framed rules for Part C States, and they have been, in general, adopted by all the States. Two of these rules, namely, Rules 11 and 12 are impugned by the petitioners as unconstitutional, and they are as follows: "11. Entry fee.-(1) Where an entry fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners before us cannot seek the protection of Article 19(1)(g), and that the question whether the restrictions enacted in Sections 4 and 5 and Rules 11 and 12 are reasonable and in the interests of the public within Article 19(6) does not therefore arise for consideration. 5. As regards competitions which involve substantial skill however, different considerations arise. They are business activities, the protection of which is guaranteed by Article 19(1)(g), and the question would have to be determined with reference to those competitions whether Sections 4 and 5 and Rules 11 and 12 are reasonable restrictions enacted in public interest. But Mr Seervai has fairly conceded before us that on the materials on record in these proceedings, he could not maintain that the restrictions contained in those provisions are saved by Article 19(6) as being reasonable and in the public interest. The ground being thus cleared, the only questions that survive for our decision are (1) whether, on the definition of "prize competition" in Section 2(d), the Act applies to competitions which involve substantial skill and are not in the nature of gambling; and (2) if it does, whether the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the language of Section 2(d) in the light of the indications furnished by them. 9. Having regard to the circumstances under which the resolutions came to be passed, there cannot be any reasonable doubt that the law which the State legislatures moved Parliament to enact under Article 252(1) was one to control and regulate prize competitions of a gambling character. Competitions in which success depended substantially on skill could not have been in the minds of the legislatures which passed those resolutions. Those competitions had not been the subject of any controversy in court. They had done no harm to the public and had presented no problems to the States, and at no time had there been any legislation directed to regulating them. And if the State legislatures felt that there was any need to regulate even those competitions, they could have themselves effectively done so without resort to the special jurisdiction under Article 252(1). It should further be observed that the language of the resolutions is that it is desirable to control competitions. If it was intended that Parliament should legislate also on competitions involving skill, the word "control" would seem to be not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lasses 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. Nor does the restriction of the impugned provisions to competitions of a gambling character affect either the texture or the colour of the Act; nor do the provisions require to be touched and re-written before they could be applied to them. They will squarely apply to them on their own terms and in their true spirit, and form a code complete in themselves with reference to the subject. The conclusion is therefore inescapable that the impugned provisions, assuming that they apply by virtue of the definition in Section 2(d) to all kinds of competitions, are severable in their application to competitions in which success does not depend to any substantial extent on skill. 24. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elongs in one of the categories or not, but once the true nature of the competition is determined, it will fall into one of the categories. 6. The challenged provisions were presumed to apply to all types of competitions by virtue of the definition in Section 2 (d), and that they were severable in their application to competitions, in which accomplishment is not dependent on skill to any significant amount. 7. As it was in dispute whether Section 4 and Section 5 and also Rules 11 and 12 of the Act is void in its application to those competitions in which success did not depend on any skill, it was to be decided by the Apex Court with reference to application of doctrine of severability that a statute which is void in part will be treated as void in overall or whether the valid part is capable of enforcement. 8. The Apex Court decided the interpretation of Section 2(d) by referring to the circumstances that led to the making of this legislation. Moreover, the Apex court applied the severability principle as to the application of Section 4 and 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. 9. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sufficient to indicate that the same completely support the case of the petitioners and intervenors and consequently, the various contentions urged by the respondents in this regard cannot be accepted. SATYANARAYANA'S CASE The State of Andhra Pradesh appeals by special leave against the judgment of the High Court of Andhra Pradesh in which, accepting a reference by the Sessions Judge, the conviction of the respondents under Sections 4 and 5 of the Hyderabad Gambling Act (2 of 1305-F) ordered by the 5th City Magistrate at Secunderabad has been set aside. 2. The short question in this case is whether the premises of a club known as the "Crescent Recreation Club" situated in Secunderabad were being used as a common gambling house and whether the several respondents who were present at the time of the raid by the police could be said to be gambling therein. The facts of the case are as follows: 3. On May 4, 1963, the police headed by Circle Inspector Krishnaswami raided the premises of the club. They found Respondents 1-5 playing a card game known as "rummy" for stakes. At the time of the raid, there were some counters on the table as also money and of course the playing-car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soever. Explanation.- The word 'house' includes a tent and all enclosed space". The contention in regard to this definition is that the evidence clearly disclosed that the club was being used as a common gambling house and therefore the penal provisions of the Act were clearly attracted. We are concerned additionally with several sections from the Gambling Act which need to be seen. Section 4, which follows in outline the corresponding section in the Public Gambling Act, provides for penalty for an owner, occupier or person using common gambling house and includes within the reach of the section persons who have the care or the management of or in any manner assist in conducting, the business of, any such house, enclosure or open space. The members of the club which is a ("Members'Club") would prima facie be liable but as they are not before us, we need not consider the question whether they should also have been arraigned in the case or not. The Secretary and the Treasurer, who were respectively Accused 7 and 6 were so arraigned as it was thought they came within the reach of Section 4 because they were in the care and management of the club itself. 5. The learned Magist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement 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. Of course, if there is evidence of gambling in some other way or that the owner of the house or the club is making a profit or gain from the game of rummy or any other game played for stakes, the offence may be brought home. In this case, these elements are missing and therefore we think that the High Court was right in accepting the reference it did. 13. The appeal fails and is dismissed. Both sides are ad-idem as regards the ratio laid down by the Apex Court in Satyanarayana's case that Rummy preponderantly was a game of skill and that from this alone, it cannot be said that Rummy is a game of chance and there is no skill involved in it. 2. This decision was heavily relied upon by the Respondents to submit that playing a game of skill (rummy) for stakes also amounts to betting and gambling. Reliance was placed upon paragraph - 12, which reads as under:- "12. The game of Rummy is not a game entirely of chance li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gambling and such an inference cannot be accepted. 5. It is true that in Satyanarayana's case, Rummy was in fact being played for stakes. Even so, the Court held that rummy is a game of skill and outside the purview of betting and gambling. Further, it was held that recovery of small costs such as sitting fees, etc. is not profit in the context of the definition of "common gaming house". Further, the reference to "gambling in some other way" is regarding side betting, where third parties or the club itself may be staking on the outcome of a game being played by players. 6. It is also relevant to note that the Club in question in the said case was a "Members Club" and what was held to be possibly illegal was charging a "heavy charge" on the members for playing in card room for the purposes of making a profit or gain i.e., 5 points per game and the said scenario cannot be extended to the Petitioner Company's platform. 7. As rightly contended by the petitioners to suggest that paragraph-10 of the said judgment prohibits making of any profit or gain derived from organising a game of skill would run counter to the definition of a "Common gambling-house" since to fall within the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently holds in paragraph -12 that even otherwise, Rummy is a game of skill and that therefore the Hyderabad Gaming Act is question is not attracted. This is the ratio that emerges from Satyanarayana's case and not what is sought to be contended by the respondents. 10. The last portion of paragraph - 12 in Satyanarayana's case relied on by the Respondents says that the offence of being a "common gambling house" is attracted when the club itself is concerned with the outcome of the game (or if there is side betting), as recognised by the Kerala High Court in Head Digital's case. It is no one's case that the Petitioner herein is interested on the outcome of a game played by players on its platform. Irrespective of who wins, the Petitioners, in terms of its contract with the players, collects a percentage of the amounts staked as its platform fees / commission for providing its services as an intermediary. Thus, the Respondents cannot be permitted to supply words to these observations and say that placing of stakes on a game of skill amounts to gambling. In any event, from a reading of the whole judgment, it is evident that this last line is not the ratio of the judgment at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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. ... 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." 13. The primary questions that emerge are whether video game is a game and whether it is a game of skill or chance and liable to be regulated under the relevant Act, notification or regulations or orders issued there under. The word 'gaming' defined under the Acts is an inclusive definition to bring within its ambit diverse games as held earlier. 14. Some of the video games are operated with twoway or four-way joysticks, push buttons, a volume control with a steering wheel and accelerator, guntrigger control or potentiometer etc......Video gaming, therefore, is associated with stakes or money or money's worth on the result of a game, be it a game of pure chance or of mixed skill and chance. 15. For a commoner or a novice, it is difficult to play video game with skill. Ordinary common people who join the game can hardly be credited with skill for success in the game. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making adjustments in such a way that a player can never succeed in winning the points required for a success at the time. The player appears to have absolutely no idea as to how the cards got reversed or rearranged. There can, therefore, be no doubt, that this game is purely a game of chance wholly unrelated to the skill of the player. In respect of this particular game, the minimum amount fixed for a play is Rs. 20." 17. The report further disclosed that one player by name Ramesh lost rupees one lakh in video games who was also examined by the committee. The machines are not freely accessible or easily visible to a casual visitor. At some places, they were installed behind partition and the players are conducted into such places with a view to ensuring that such games are not visible from outside. There is no scope for using one's skill to arrive at a desired result in the games like Royal Casino, Super Continental, Five Line, High Low, Black Jack, Poker Double Up, Skill Ball, Pac Man and Golden Derby. They were classified as games of chance. By allowing such games, the innocent children and the common public would lose hard-earned money. Machines electronically operated ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tamil Nadu Government in GOMs No. 166-0 dated 18.1.1993, etc. 2. The paragraphs extracted supra clearly shows that the Apex Court was considering the fact that several persons lose their livelihood in video gaming which on facts could be mixed game of skill and chance and that these activities could be subjected to licensing. This decision does not aid the Respondents' submission that playing a game predominantly of skill for stakes amounts to gambling. 3. It is significant to note that this very contention of the respondents was also urged in All India Gaming Federation's case and was repelled by the Hon'ble Division Bench of this Court by holding as under: "The vehement contention of Learned Advocate General that gaming includes both a 'game of chance' and a 'game of skill', and sometimes also a combination of both, is not supported by his reliance on M.J SIVANI v. STATE OF KARNATAKA. We are not convinced that M.J. SIVANI recognises a functional difference between actual games and virtual games. This case was decided on the basis of a wider interpretation of the definition of 'gaming' in the context of a legislation which was enacted to regulate the running of video pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de player games which are played between the user and computer system and not between two real players and the true meaning of the last line of paragraph - 14 is to be construed in this factual context alone. Notably, the Apex Court does not hold that "Video Gaming" is akin to Gambling. In fact, at paragraphs 13 and 18, the Apex Court acknowledges that offering video games is protected under Article 19 (1) (g) and 21 of the Constitution and in other words, implicitly holds that such activities are not res extra commercium. In fact, nowhere in the judgment does the Apex Court hold that playing a game "predominantly of skill" played with money or money's worth or for stakes amount to 'gaming' or that such an activity amounts to 'gambling'. Thus M.J.Sivani's case cannot be construed to mean that playing a game which is preponderantly of skill played with either money or stakes amounts to gambling and must be seen to have been tempered by the clear enunciation of the law qua 'gaming' and 'gambling' in the later Three Judge Bench judgment in the case of K.R.Lakshmanan supra. K.R. LAKSHMANAN'S CASE The Madras Race Club (the Club) is an Association registered as a company with limited l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ca defines gambling as "the betting or staking of something of value, with consciousness of risk and hope of gain on the outcome of a game, a contest, or an uncertain event the result of which may be determined by chance or accident or have an unexpected result by reason of the better's miscalculations". According to Black's Law Dictionary (6th Edn.) "Gambling involves, not only chance, but a hope of gaining something beyond the amount played. Gambling consists of consideration, an element of chance and a reward". Gambling in a nutshell is payment of a price for a chance to win a prize. Games may be of chance or of skill or of skill and chance combined. A game of chance is determined entirely or in part by lot or mere luck. The throw of the dice, the turning of the wheel, the shuffling of the cards, are all modes of chance. In these games the result is wholly uncertain and doubtful. No human mind knows or can know what it will be until the dice is thrown, the wheel stops its revolution or the dealer has dealt with the cards. A game of skill, on the other hand - although the element of chance necessarily cannot be entirely eliminated - is one in which success depends princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cates gambling by depicting the woeful conditions of the Pandavas who had gambled away their kingdom. *** While Manu condemned gambling outright, Yajnavalkya sought to bring it under State control but he too in Verse 202(2) provided that persons gambling with false dice or other instruments should be branded and punished by the king. Kautilya also advocated State control of gambling and, as a practical person that he was, was not averse to the State earning some revenue therefrom. Vrihaspati dealing with gambling in Chap. XXVI, Verse 199, recognises that gambling had been totally prohibited by Manu because it destroyed truth, honesty and wealth, while other law-givers permitted it when conducted under the control of the State so as to allow the king a share of every stake. Such was the notion of Hindu law-givers regarding the vice of gambling. Hamilton in his Hedaya Vol. IV, Book XLIV, includes gambling as a kiraheeat or abomination." 7. The learned Chief Justice then referred to various statutes in India prohibiting public gambling and also referred to case-law on the subject in other countries. He quoted the following observations of McTiernan, J. of the Australian High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in essence are extra-commercium although the external forms, formalities and instruments of trade may be employed and they are not protected either by Article 19(1)(g) or Article 301 of our Constitution." 8. On the crucial question whether the games which depend to a substantial degree upon the exercise of skill come within the stigma of 'gambling', S.R. Das, Chief Justice, in Chamarbaugwala case [AIR 1957 SC 699 : 1957 SCR 874 : 59 Bom LR 945] held as under: "Thus a prize competition for which a solution was prepared beforehand was clearly a gambling prize competition, for the competitors were only invited to guess what the solution prepared beforehand by the promoters might be, or in other words, as Lord Hewart, C.J., observed in Coles v. Odhams Press Ltd. [(1936) 1 KB 416 : 1935 All ER Rep 598] , 'the competitors are invited to pay certain number of pence to have the opportunity of taking blind shots at a hidden target'. Prize competitions to which the second part of the qualifying clause applied, that is to say, the prize competitions for which the solution was determined by lot, was necessarily a gambling adventure. *** Nor has it been questioned that the third categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions. He argues that 'prize competition' as defined in Section 2(d) of the Act, properly construed, means and includes only competitions in which success does not depend to any substantial degree on skill and are essentially gambling in their character; that gambling activities are not trade or business within the meaning of that expression in Article 19(1)(g), and that accordingly the petitioners are not entitled to invoke the protection of Article 19(6); and that even if the definition of 'prize competition' in Section 2(d) is wide enough to include competitions in which success depends to a substantial degree on skill and Sections 4 and 5 of the Act and Rules 11 and 12 are to be struck down in respect of such competitions as unreasonable restrictions not protected by Article 19(6), that would not affect the validity of the enactment as regards the competitions which are in the nature of gambling, the Act being severable in its application to such competitions." The learned Judge thereafter observed as under: "... we must hold that as regards gambling competitions, the petitioners before us cannot seek the protection of Article 19(1)(g).... (5) As regards competitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following words: " 'Common gaming-house' means any house, room, tent, enclosure, vehicle, vessel or any place whatsoever in which cards, dice, tables or other instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using, or keeping such house, room, tent, enclosure, vehicle, vessel or place, whether by way of charge for the use of instruments of gaming or of the house, room, tent, enclosure, vehicle, vessel or place, or otherwise howsoever; and includes any house, room, tent, enclosure, vehicle, vessel or place opened, kept or used or permitted to be opened, kept or used for the purpose of gaming; 'Gaming'.- 'Gaming' does not include a lottery but includes wagering or betting, except wagering or betting on a horse-race when such wagering or betting takes place- (i) on the date on which such race is to be run; and (ii) in a place or places within the race enclosure which the authority controlling such race has with the sanction of the State Government set apart for the purpose. For the purposes of this definition, wagering or betting shall be deemed to comprise the collection or soliciting of bets, the receipt of distribution of win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than seven hundred and fifty rupees for the second offence; and (iii) such imprisonment shall not be less than one year and such fine shall not be less than one thousand rupees for the third or any subsequent offence." Section 49-A of the Police Act was substituted for the original section by Section 2(iii) of the Madras City Police and Gaming (Amendment) Act, 1955 (the 1955 Act). 12. The Gaming Act extends to the whole of the State of Tamil Nadu, with the exception of the city of Madras. Section 3 of the Gaming Act defines, common gaming-house, 'gaming' and instruments of gaming which is identical to the definitions given under the Police Act. Sections 5 to 10 of the Gaming Act are identical to Sections 42 to 47 of the Police Act. Section 11 of the Gaming Act is as under: "11. Nothing in Sections 5 to 10 of this Act shall be held to apply to games of mere skill wherever played." Section 4 of the Gaming Act to the extent relevant reads: "4. (1) Whoever- (a) being the owner or occupier or having the use of any house, room, tent, enclosure, vehicle, vessel or place, opens, keeps or uses the same for the purpose of gaming- (i) on a horse-race, or (ii)-(vi)*** (b)-(d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government, however, did not enforce Sections 2 and 4 of the 1949 Act till 1975. Although no notification enforcing Sections 2 and 4 of the 1949 Act was ever issued by the State Government, but the said provisions have been brought into existence and enforced by an Act of Legislature called the Tamil Nadu Horse Races (Abolition and Wagering or Betting) Act, 1974 (the 1974 Act). Section 2 of the said Act is in the following terms: "2. Amendment of Tamil Nadu Act VII of 1949.- In the Madras City Police and Gaming (Amendment) Act, 1949 (Tamil Nadu Act VII of 1949), in Section 1,- (1) in sub-section (2), the portion commencing with the expression 'and Sections 2 and 4' and ending with the expression 'appoint', shall be omitted; (2) after sub-section (2), the following sub-section shall be inserted, namely: '(3) Sections 2 and 4 shall come into force on 31-31975, notwithstanding anything contained in any law for the time being in force or in any notification or order issued by the Government'." 15. The 1974 Act was challenged before the High Court by way of writ petition under Article 226 of the Constitution. The challenge was primarily on two grounds. It was contended be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rses is a game of substantial skill. Horse-racing is a competition in speed which will depend on a variety of changing and uncertain factors which, with the best of knowledge and skill of the better, cannot be reduced to a certainty, though of course by such knowledge and skill the probability of success of a particular horse may be approximated. In our opinion, therefore, betting on horses does involve an element of gambling and we are unable to agree that staking on horses with expert knowledge and skill of the better is not betting involving an element of gambling." 19. We may now take up the second question for consideration. Section 49 of the Police Act and Section 11 of the Gaming Act specifically provide that the penal provisions of the two Acts shall not apply to the games of "mere skill wherever played". The expression "game of mere skill" has been interpreted by this Court to mean "mainly and preponderantly a game of skill". In State of A.P. v. K. Satyanarayana [(1968) 2 SCR 387 : AIR 1968 SC 825 : 1968 Cri LJ 1009], the question before this Court was whether the game of rummy was a game of mere skill or a game of chance. The said question was to be answered on the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not 'gambling' and (ii) despite there being an element of chance if a game is preponderantly a game of skill it would nevertheless be a game of "mere skill". We, therefore, hold that the expression "mere skill" would mean substantial degree or preponderance of skill. 21. The crucial question to be determined is whether a horse-race run on the turf of the Club is a game of 'chance' or a game of "mere skill". The relevant pleadings before the High Court in the writ petition were as under: "Racing is really a test of equine speed and stamina. The horses are trained to run and their form is constantly watched by experts.... As stated earlier, racing is not a game of chance. Experts on racing throughout the world would bear testimony to the fact, and indeed it has been so recognised, by decisions, that the result of a horserace on which bets are placed is not based on pure chance. A considerable degree of skill does come into the operation. It starts from the breeding and training of the race-horse on which much talent, time and money are expended by trained persons, jockeys have also to be specially trained and equipped. The horses themselves are not necessarily consistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of organized racing is not very firmly established. Presumably, organized racing began in such countries as China, Persia, Arabia, and other countries of the Middle East and of North Africa, where horsemanship early became highly developed. Thence came too the Arabian, Barb and Turk horses that contributed to the earliest European racing. Such horses became familiar to Europeans during the Crusades (11th to 13th centuries) from which they brought those horses back.... Eligibility rules were developed based on the age, sex, birthplace, and previous performance of horses and the qualifications of riders. Races were created in which owners were the riders (gentlemen riders); in which the field was restricted geographically to a township or country; and in which only horses that had not won more than a certain amount were entered.... All horse-racing on the flat except quarter-horse racing involves thoroughbred (q.v.) horses. Thoroughbreds evolved from a mixture of Arab, Turk and Barb horses with native English stock. Private stud books existed from the early 17th century, but they were not invariably reliable. In 1791 Weatherby published An Introduction to a General Stud Book, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuel betting on the result of horse-races, did not violate a provision of the State Constitution prohibiting lotteries. The Court observed as under: "The winning horse is not determined by chance alone, but the condition, speed, and endurance of the horse, aided by the skill and management of the rider or driver, enter into the result.... In our opinion the pari-mutuel system does not come within the constitutional inhibition as to lotteries.... 'In horseracing the horses are subject to human guidance, management, and urging to put forth their best efforts to win.' " 26. The question before the Michigan Supreme Court in Edward J. Rohan v. Detroit Racing Assn. [166 ALR 1246 SW 2d 987] was whether Act No. 199 Pub. Acts 1933, authorising pari-mutuel betting on horse-races violated the constitutional prohibition against lotteries. The Court answered the question in the negative on the following reasoning: "In the case of Commonwealth v. Kentucky Jockey Club [238 Ky 739 : 38 SW 2d 987] , a statute permitting pari-mutuel betting on horse-races was held to be constitutional and not in violation of a provision of the State Constitution prohibiting lotteries. See also, Utah State Fair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of chance observed as under: "The word game does not embrace all uncertain events, nor does the expression 'games of chance' embrace all games. As generally understood, games are of two kinds, games of chance and games of skill. Besides, there are trials of strength, trials of speed, and various other uncertainties which are perhaps no games at all, certainly they are not games of chance. Among this class may be ranked a horse-race. It is as much a game for two persons to strive which can raise the heaviest weight, or live the longest under water, as it is to test the speed of two horses. It is said that a horse race is not only uncertain in its result, but is often dependent upon accident. So is almost every transaction of human life, but this does not render them games of chance. There is a wide difference between chance and accident. The one is the intervention of some unlooked-for circumstance to prevent an expected result, the other is uncalculated effect of mere luck. The shot discharged at random strikes its object by chance; that which is turned aside from its well-directed aim by some unforeseen circumstance misses its mark by accident. In this case, therefore, we reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey club and the horse-owners observed as under: "To the unsophisticated racing man (if such there be) I should think that nothing less like a bet can well be imagined. It is payment of entrance money to entitle an owner to compete with other owners for a prize built up in part by entrance fees, the winning of the prize to be determined not by chance but by the skill and merit of horse and jockey combined.... Let us clear our minds of the betting atmosphere which surrounds all horse-racing, and affirm a few relevant propositions. There is nothing illegal in horse-racing; it is a lawful sport. There is nothing illegal in betting per se. There is all the difference in the world between a club sweepstakes on the result of the Derby and a sweepstakes horse-race as defined in the Rules of Racing. In each no doubt the winner is ascertained by the result of an uncertain event, but in the case of the former the winner is ascertained by chance, i.e. the luck of the draw not the result of the race (for the result is the same whether the draw is made before or after the race); in the case of the latter the winner is ascertained not by chance, but by merit of performance. The former is a lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 780], and the judgment of the Court of Appeal in Tote Investors Ltd. v. Smoker [(1967) 3 All ER 242 : (1967) 3 WLR 1239 : (1968) 1 QB 509], in support of the contention that dehors Section 49 of the Police Act and Section 11 of the Gaming Act, there is no 'wagering' or 'betting' by a punter with the Club. According to him, a punter bets or wagers with the totalizator or the bookmaker and not with the Club. It is not necessary for us to go into this question. Even if there is wagering or betting with the Club it is on a game of mere skill and as such it would not be 'gaming' under the two Acts. 35. Next comes question five for consideration. Section 49-A of the Police Act and Section 4 of the Gaming Act were brought into these two Acts by the 1955 Act by substituting the original sections. The provisions of these two sections have been operating since 1955. 'Gaming' as defined in the two Acts, prior to 31-3-1975, did not include wagering or betting on a horse-race when such wagering or betting took place (i) on the date on which such race was to be run; and (ii) in a place or places within the race enclosure which the authority controlling such race had with the sanction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity has also been taken to omit certain provisions which prohibit publications relating to horse-races as they have been held ultra vires the State Legislatures by the Madras High Court. It is proposed to amend these two Acts so as to give effect to the above objects." 36. It is obvious that the 1955 Act was brought to control gambling in public streets and motor vehicles. It is further clear from the Objects and Reasons that the Act did not intend to stop horseracing, because even the prohibition on publications relating to horse-racing was sought to be omitted under the Act. 37. We may examine the question from another angle. We have held horse-racing to be a game of skill and as such protected under Section 49 of the Police Act and Section 11 of the Gaming Act. Horseracing is not a game of chance and as such is not gambling. That being the situation, horse-racing which is conducted at the racecourse of the Club is not 'gaming' under the two Acts and as such cannot be made penal. We have, therefore, no hesitation in holding that Section 49-A of the Police Act and Section 4 of the Gaming Act are not applicable to wagering or betting on a horse-race when such wagering or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry 34 of List II of the Seventh Schedule to the Constitution to enact the 1974 Act. 3. The Apex Court came to the conclusion that for a game/sport not be considered as betting or gambling and to enjoy protection under Article 19(1)(g), it must have a substantial degree of skill which makes it unique. It was held that horse riding is one such sport which involves special skills of the horse as well as the rider and consequently, since horse riding was not betting or gambling declared the impugned Act as unconstitutional, as horse riding which involves substantial skill was rightfully given protection under Article 19(1)(g). 4. In Lakshmanan's case, the Hon'ble Supreme Court clearly notes that the term "gaming" can only be interpreted in light of the law laid down in the RMDC 1 and 2 and Satyanarayana, i.e., competition/game which substantially / preponderantly depends on skill is not gambling. The Hon'ble Supreme Court has held that "Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor." Thus, accordingly, the Hon'ble Supreme Court concludes "Even if there is wagering or betting with the Club it is on a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f money on horse racing is not gambling and the State legislature has no competence to enact the 1974 Act under Entry 34 of List II which enumerated "betting and gambling". It was also challenged on the ground that horse racing being a game of substantial skill, the provisions of the Police Act and the Gaming Act even as amended by the 1974 Act are not applicable to horse racing. Both these contentions were rejected by the Madras High Court. The Supreme Court in this case, was hearing an appeal from the judgment of the Madras High Court. It is in this context that the decision must be understood. The Supreme Court, after referring the RMDC-1 and RMDC-2 as well as K. Satyanarayana's cases (supra) held that where success depends on substantial degree of skill are not "gambling" and that despite there being an element of chance, if a game is preponderantly a game of skill, it shall be a game of mere skill. The Apex Court held that the expression "mere skill" would mean substantial degree or preponderance of skill. 8. Thereafter, the Apex Court held that horseracing is a game of skill in the following words: "We have no hesitation in reaching the conclusion that the horse-racing is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the winner of the horserace for stakes, which as submitted by them is an uncertain event and chance based, amounts to betting, and but for the exemption under Section 49 of the Police Act and Section 11 of the Gaming Act, activity amounts to gambling. First, the decision does not mention or imply a second game i.e., predicting the winner of a horse race and no such inference can be drawn. Even if such a second game of predicting or forecasting can be inferred, and be regarded as gambling, the game of rummy cannot be equated with it. Rummy is not a game where the outcome is being predicted or forecasted, but is a game being played where success and the outcome of the game is substantially and preponderantly dependent on the exercise of skill of the player. 11. Secondly, this submission fails in view the findings of the Court in paragraph - 33, wherein it was held that as a game of skill, it is exempt from the definition of "gaming" itself, as gaming is the act or practice of gambling on a game of chance and that gaming is staking on chance where chance is the controlling factor. Since horse racing was held to be outside the purview of "gaming", the exemptions under Section 49 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity depends on an element of chance which can never be eliminated, the Court held that the vagaries of the unknown and unpredictable, and yet possible, must be kept out of consideration to determine whether an activity is a game of skill. It held that if the odds favouring an outcome are guided more by skill than by chance, it would be a game of skill. 3. A person may be gifted in card games, or another's talent may lie in word games. Rationally, such persons should be free to exploit their skills; and only reasonable restrictions that do not completely blunt their chance to show off or make a living out of their skills may be permissible. Both rummy and poker are games of skill as they involve considerable memory, working out of percentages, the ability to follow the cards on the table and constantly adjust to the changing possibilities of the unseen cards. It observed that though poker may not have been recognised in any previous judgment in India to be a game of skill, but the Law Commission in its 276th Report has accepted poker as a game of skill. All India Gaming Federation Case - Karnataka High Court(DB) The Karnataka Government amended the Karnataka Police Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n notion of morality on the free & rational citizens by clamping a blanket ban on online games of skill. This is constitutionally unsustainable. IV. RESPONDENTS' OBJECTIONS TO THE PETITIONS: The respondents oppose the petitions on the grounds as summarized below: (i).......... (ii) In the preceding two decades or so, because of digital revolution, there has been a proliferation of online gaming platforms which engage in 'betting & wagering' unbound by time & place unlike traditional betting, and this has proved disastrous to the public interest in general and public order & public health in particular. The menace of cyber games having reached epic proportions, the police in the past three years or so, have registered about 28,000 cases, all over the State. Several persons have committed suicide and millions of families have been ruined. Therefore, the Amendment Act is made criminalizing wagering, betting or risking money on the unknown result of an event, be it a game of chance or a game of skill. The persons owning these premises or online platforms wherein such games are played are also liable to be punished. The State derives legislative power under Article 246 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e' under Section 2(13). Thus, the amendment encompasses in its fold games of skill too, offered to users through the online platforms/portals/applications played with monetary stakes or not. (b) Section 78(1)(vi) & (vii) post amendment proscribe the act of running online gaming platforms offering games of skill to its users. These expanded definitions are the building blocks of penal provisions such as Sections 78, 79, 80, 87, 114 & 128A. The net effect of Amendment Act is: owners of online gaming houses, providers of online gaming facilities and players of online games, all become offenders liable to be jailed & fined in terms of penal provisions. Added, amended Section 128A makes these offences both cognizable & non-bailable. As mentioned in the Comparative Tables above, the definition of 'pure game of skill' under the Principal Act has undergone a substantial change by virtue of amendment. The amended section retains an exclusion for 'pure games of skill' while omitting the exclusion that benefited the players of games of skill with financial stakes, in the pre-amendment regime. The amended definition of 'gaming' prohibits online games of skill when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A great Tamil book by Thiruvalluvar 'Tirukkural' fumes against gambling. (d) John Dunkley's 'Gambling: A social & moral problems in France', 1958 Edn. discusses about the historicity of gambling in France. In 17th 18th centuries, French cities were attracting gamblers from all over Europe and the Resolution on Hazardous Games was passed way back in the year 1697 providing general guidelines on how to gamble and for easing the problems associated with gambling; however, French moralists were opposing the same contending: "Gambling spoils an individual's ability to reason; gambling poisons gamblers' relations with others; gambling makes a gambler neglect his religious and social duties". It is not impertinent to quote a stanza from Shakespeare's 'Merchant of Venice': "If Hercules and Lychas play at dice Which is the better man, the greater throw May turn by fortune from the weaker hand; So is Alcides beaten by his page, And so may I, blind Fortune leading me, Miss that which one unworthier may attain, And die with grieving." VII. CONSTITUENT ASSEMBLY DEBATES ON 'Betting & gambling': (a) There was a considerable discussion in the Constituent Assembly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as distinguished from its common parlance or the dictionary meaning. These legal concepts employed in a Constitution if construed by the Courts as such, acquire the constitutional spirit. Further when such terms are construed by the Apex Court to mean a particular thing, other Courts cannot venture to interpret the same to mean something else. What we are construing is a constitutional concept, i.e., 'Betting & gambling' and not just two English words. Learned Advocate General's argument of 'widest amplitude' therefore cannot stretch the contours of a constitutional concept like this to the point of diluting its identity. Gambling, betting and other associated concepts are not of recent origin. They have been there in American and English realm of laws since centuries as mentioned in CHAMARBAUGWALLA-1 itself. We are not required to start afresh every time we want to examine the operation of some terms employed in the Constitution, even if it transpires that these terms do need a revised construction; we have a basis from which we can start our critique. In A-G FOR NSW vs. BREWARY EMPLOYEES UNION (1908) 6 CLR 469, 611-12, the High Court of Australia (5 judges) observed "... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ze competition" in the said legislation was examined with all its constituents & variants such as "gambling prize competition", "gambling adventure", "gambling nature" & "gambling competition". After undertaking this exercise, the Court observed: "...On the language used in the definition section of the 1939 Act as well as in the 1948 Act, as originally enacted, there could be no doubt that each of the five kinds of prize competitions included in the first category to each of which the qualifying clause applied was of a gambling nature. Nor has it been questioned that the third category, which comprised " any other competition success in which does not depend to a substantial degree upon the exercise of skill", constituted a gambling competition. At one time the notion was that in order to be branded as gambling the competition must be one success in which depended entirely on chance. If even a scintilla of skill was required for success the competition could not be regarded as of a gambling nature. The Court of Appeal in the judgment under appeal has shown how opinions have changed since the earlier decisions were given and it is not necessary for us to discuss the matter again. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore inescapable that the impugned provisions, assuming that they apply by virtue of the definition in s. 2(d) to all kinds of competitions, are severable in their applications to competitions in which success does not depend to any substantial extent on skill..." (iii) In K. SATYANARAYANA, the Apex Court was examining as to whether the rummy was a game of chance or a game of skill. Strangely, CHAMARBAUGWALAS I & II do not find a reference in this decision; however, what the Court observed being consistent with the said decisions and the following observations are profitably reproduced: "12. ... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and adroitness of the player." "33. The expression `gaming' in the two Acts has to be interpreted in the light of the law laid-down by this Court in the two Chamarbaugwala cases, wherein it has been authoritatively held that a competition which substantially depends on skill is not gambling. Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor. `Gaming' in the two Acts would, therefore, mean wagering or betting on games of chance. It would not include games of skill like horse-racing. ... We, therefore, hold that wagering or betting on horseracing - a game of skill - does not come within the definition of `gaming' under the two Acts. 34... Even if there is wagering or betting with the Club it is on a game of mere skill and as such it would not be 'gaming' under the two Acts." X. AS TO WHAT OTHER HIGH COURTS IN THE COUNTRY VIEWED GAMES OF SKILL AS: (i) The Punjab & Haryana High Court in VARUN GUMBER, supra held that the fantasy games predominantly involve skill and therefore, do not fall within gambling activities and that the said games are protected u/a 19(1)(g) of the Constitution. The matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a criterion to find out whether a game is a game of skill. ... The game of Online Rummy will also have to be held to be a game of skill..." (v) A Division Bench of Hon'ble Rajasthan High Court in RAVINDRA SINGH CHAUDHARY vs. UNION OF INDIA AND OTHERS was considering in PIL jurisdiction as to whether online fantasy sports/games offered on dream 11 platform amounted to gambling/betting. Having inter alia referred to CHAMARBAUGWALA and K.R.LAKSHMANAN, the question was answered in the negative and writ petition was dismissed with costs. The Court also discussed its decision in CHANDRESH SANKHLA vs. STATE OF RAJASTAN which had already considered the said issue. Further, challenge to the said decision in AVINASH MEHROTRA vs. STATE OF RAJASTAN came to be repelled by the Apex Court on 30.7.2021. It is relevant to mention that the Court referred to the decision of New York Supreme Court in WHITE vs. CUOMO, which had taken the view that games of the kind were games of chance. This should be a complete answer to the learned AG who heavily banked upon decision of a US Court in support of his contention. Note: The collective ratio unmistakably emerging from all the decisions mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hamarbaugwala jurisprudence as explained in K.R.LAKSHMANAN. We are of a considered view that the games of skill do not metamorphise into games of chance merely because they are played online, ceteris paribus. Thus, SIVANI is not the best vehicle for drawing a distinction between actual games and virtual games. What heavily weighed with the Court in the said decision was the adverse police report. It is pertinent to recall Lord Halsbury's observation in QUINN vs. LEATHAM that a case is only authority for what it actually decides in a given fact matrix and not for a proposition that may seem to flow logically from what is decided. This observation received its imprimatur in STATE OF ORISSA vs. SUDHANSU SEKHAR MISRA. XIX. AS TO ARTICLE 19 (1) (g) AND ENTRY 26 (TRADE AND COMMERCE) IN STATE LIST: (a) The Apex Court while considering CHAMARBAUGWALA-II, supra opined that "...we find it difficult to accept the contention that those activities which encourage a spirit of reckless propensity for making easy gain by lot or chance, which lead to the loss of the hard earned money of the undiscerning and improvident common man and thereby lower his standard of living and drive him into a chron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UNION OF INDIA. They draw attention of the Court to the observations of Madras High Court in JUNGLEE GAMES, supra, to the effect that the State has not adopted the 'least intrusive approach test' and therefore, the Amendment Act should be voided. They also invoke the doctrine of proportionality for the invalidation of impugned legislative measure. (d) The online gaming activities played with stake or not do not fall within the ambit of Entry 34 of the State List i.e., 'Betting and gambling', if they predominantly involve skill, judgment or knowledge. They partake the character of business activities and therefore, they have protection under Article 19(1(g). Apparently, the games of skill played online or offline with or without stakes, are susceptible to reasonable restrictions under Article 19(6). The Amendment Act brings in a blanket prohibition with regard to playing games of skill. The version & counter version as to the nature & reasonableness of the restrictions need to be examined in the light of norms laid down by the Apex Court......... (g) The Amendment Act puts games of skill and games of chance on par, when they are poles asunder, in the light of obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, and essentially used in commerce vide K.T. PLANTATIONS vs. STATE OF KARNATAKA. An activity predominantly involving skill cannot be readily banned at a stroke of legislative pen. In any organized society, knowledge, wisdom, talent & skill are the invaluable tools for wealth generation. They are the unseeming ingredients of economic rights such as rights to profession, property, etc. Our Constitution modelled on the principle of 'limited government' normally frowns upon the measures which stultify & negate these invaluables, whether acquired by Man or gifted by his Maker. On the contrary and ideally speaking, State in the larger public interest has to create an atmosphere which nurses them. Story of civilizations is replete with instances of bonsaing of economies in communities that failed to do this. An absolute embargo on the business activities runs the risk of invalidation, unless the State produces relevant material for the ouster of 'least restrictive test'. This test is normally employed as a 'Litmus Test' in judicial review of State action in all civilized jurisdictions. (k) The Tamil Nadu Gaming and Police Laws (Amendment) Act 2021 that was put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time and again by the Apex Court in K.R.LAKSHMANAN (1996) and other subsequent cases. Thus it is not that what was decided in CHARMARBAUGWALAS is being re-visited for the first time now. In the recent past, several High Courts in the country have followed the same after critical examination viz., VARUN GUMBER (P&H2017), GURDEEP SINGH (BOMBAY-2019), RAVINDRA SINGH (RAJASTAN-2020), JUNGLEE GAMES (MADRAS-2021), HEAD DIGITAL WORKS (KERALA-2021), supra. Some of these cases went to Apex Court and came to be affirmed, the latest being AVINASH MEHROTRA, supra decided on 30.7.2021. All this is already discussed at paragraphs (IX) & (X) above. We need not refer to SIVANI again since it is already discussed in detail infra. The PIL case does not in any way come to the rescue of the respondents since the prayer therein is related to banning of all online gambling as such. Apparently, case of the petitioners is not one of gambling; their business does not involve any act which is determined by the wheel of fortune. XXI. AS TO DISCRIMINATION AND VIOLATION OF EQUALITY UNDER ARTICLE 14: (a) Learned Advocates appearing for the petitioners are justified in complaining that the Amendment Act is vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng different from offline. However, such a differential treatment was in the context of distinction that lies between dissemination of information via traditional media and dissemination of information via online media. Whilst there are multiple layers of prior editorial control in case of publication through traditional media, such layers may not exist in the case of publication of information through online media, as information in the case of latter "travels like lightning". It hardly needs to be stated that the cases at hand are not one of unregulated information travelling at the speed of lightening. We are at loss to know how the observations made in the decision would advance the case of respondents, when its contextual substratum is miles away from that of these petitions. The ratio in this decision being relevant albeit for different reasons is discussed below. XXII. AS TO MANIFEST ARBITRARINESS AND VOIDING OF PLENARY LEGISLATIONS: (a) The expression "pure game of skill" as employed in legislations of the kind i.e., Section 176 of the Principal Act has been judicially construed to be "mere skill" and that the games mainly & preponderantly involving skill, fall into this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions enacted in section 176 read with Sections 79 & 80 of the Principal Act so vague that the men of common intelligence will not be in a position to guess at its true meaning and differ as to scope of its application and therefore, is liable to be voided. (d) The above view of ours gains support from the following observations of the Hon'ble Madras High Court in JUNGLEE GAMES, supra: "120. It is true that, broadly speaking, games and sporting activities in the physical form cannot be equated with games conducted on the virtual mode or in cyberspace. However, when it comes to card games or board games such as chess or scrabble, there is no distinction between the skill involved in the physical form of the activity or in the virtual form. It is true that Arnold Palmer or Severiano Ballesteros may never have mastered how golf is played on the computer or Messi or Ronaldo may be outplayed by a team of infants in a virtual game of football, but Viswanathan Anand or Omar Sharif would not be so disadvantaged when playing their chosen games of skill on the virtual mode. Such distinction is completely lost in the Amending Act as the original scheme in the Act of 1930 of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it as a sale of goods by the contractor. In this context, the Apex Court interpreted the words "sale of goods" in Entry 48 in List II of Schedule VII to the Government of India Act, 1935 and applied the principle of nomen-juris to come to the conclusion by holding that the expression "sale of goods" in Entry 48 cannot be construed in its popular sense but that it must be interpreted in its legal sense. The Court held that if the words "sale of goods" have to be interpreted in their legal sense, that sense can only be what it has in the interpretation that words of legal import occurring in a statute should be construed in their legal sense is that those words have, in law, acquired a definite and precise sense, and that, accordingly, the legislature must be taken to have intended that they should be understood in that sense. 2. Based on the aforementioned jurisprudence, the words "gambling", "game of chance", "game of skill" have developed meanings in judicial parlance. Therefore, applying the principle of nomen-juris, the words should be construed in their legal sense, instead of general parlance. While "gambling" or "game of chance" have been held to involve chance as a predomin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en judicially interpreted, unless a contrary intention appears." 4. So also, in the said judgment, the Apex Court referred to the case of Barras v. Aberdeen Steam Trawling and Fishing Company - [(1933) 45 LI.L.Rep 199], in which Lord Buckmaster observed as follows: "It has long been a well-established principle to be applied in the consideration of Acts of Parliament that where a word of doubtful meaning has received a clear judicial interpretation, the subsequent statute which incorporates the same word or the same phrase in a similar context must be construed so that the word or phrase is interpreted according the meaning that has previously been ascribed to it. Lord Macnaghten has stated that "In construing Acts of Parliament, it is a general rule, that words must be taken in their legal sense unless the contrary intention appears". 5. Thus, the terms "betting" and "gambling" under in Entry 6 of Schedule III of the CGST Act must be given the same interpretation given to them by the courts, in the context of Entry 34 of List II of the Seventh Schedule to the Constitution and the Public Gambling Act, 1867. Therefore, the terms "betting" and "gambling" appearing in Entry 6 of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as lottery, betting and gambling would be taxable. * Taxation of games of skill is outside the scope of the term "supply" in view of Section 7(2) of the CGST Act, 2017 read with Schedule III of the Act. * A game of chance whether played with stakes is gambling; * A game of skill whether played with stakes or without stakes is not gambling; * A game of mixed chance and skill is gambling, if it is substantially and preponderantly a game of chance and not of skill; * A game of mixed chance and skill is not gambling, if it is substantially and preponderantly a game of skill and not of chance; * Rummy is substantially and preponderantly a game of skill and not of chance; * 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; * Online/Electronic/Digital Rummy whether played with stakes or without stakes is not gambling; * Other Online/Electronic/Digital games which are also substantially and preponderantly games of skill and not of chance are also not gambling; * The expression ..... 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