TMI Blog2023 (5) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 predominant element, on the other hand game of skill has an exercise of skill which can control the chance. The element of chance cannot be completely overruled in any case but what is to be seen is the predominant element. In a game of rummy, certain amount of skill is required because the fall of the cards has to be memorised and the building up of rummy requires considerable skill in holding and discarding cards. Therefore, a game of rummy is a game of skill as held in Satyanarayana [ 1967 (11) TMI 109 - Supreme Court ]. It is concluded as under: There is a distinct difference between games of skill and games of chance; games such as rummy, etc. as was discussed in several decisions and particularized in the Division Bench decision of this Court in ALL INDIA GAMING FEDERATION AND ORS. VERSUS STATE OF KARNATAKA AND ORS. [ 2022 (2) TMI 1368 - KARNATAKA HIGH COURT] , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot of chance are also not gambling; The expressions, Betting and Gambling having become nomen juris, the same are applicable for the purpose of GST also and consequently, the said words, Betting and Gambling contained in Entry 6 of Schedule III to the CGST Act are not applicable to Online/Electronic/Digital Rummy, whether played with stakes or without stakes as well as to any other Online/Electronic/Digital games which are also substantially and preponderantly games of skill; The subject Online/Electronic/Digital Rummy game and other Online/Electronic/Digital games played on the Petitioners platforms are not taxable as Betting and Gambling as contended by the respondents under the CGST Act and Rules or under the impugned show cause notice issued by the respondents. The impugned Show Cause Notice dated 23.09.2022 issued by the respondents to the petitioners is illegal, arbitrary and without jurisdiction or authority of law and deserves to be quashed - Petition allowed. - WRIT PETITION No. 19570 OF 2022 C/W WRIT PETITION Nos. 22010 OF 2021, 18304 OF 2022 19561 OF 2022, 20119 OF 2022 AND 20120 OF 2022 (T-RES) - - - Dated:- 11-5-2023 - HON'BLE MR. JUSTIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.11.2021, respondents passed Provisional Attachment Orders attaching the Bank accounts of GTPL under Section 83 of the CGST Act, to which, objections were filed by GTPL, pursuant to which, respondents passed an Attachment Confirmation order dated 30.11.2021. 3. W.P. No. 22010/2021 is preferred by GTPL challenging the aforesaid attachment orders and on 03.12.2021, this Court passed an interim order permitting the petitioner to operate the Bank accounts for limited purposes mentioned in the said order. 4. Meanwhile, the officials / founders / employees of GTPL were summoned by the respondents for recording of statements and the same continued upto August, 2022. On 02.08.2022, in addition to the interim order passed earlier in W.P.No. 22010/2021, this Court directed that no precipitative action be taken against the petitioner GTPL and the matter was heard finally and reserved for orders on 07.09.2022 by continuing the interim orders / directions. 5. Subsequently, on 08.09.2022, respondents issued Intimation Notice under Section 74(5) of the CGST Act, calling upon GTPL to deposit a sum of Rs. 2,09,89,31,31,501/- along with interest and penalty by 16.09.2022. The said Notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basic construct of an online skill-based game facilitated by the Petitioner is that the Petitioner has no role/ influence insofar as the playing of the games are concerned. The users/players choose the games based on the amount they want to stake to match their skills against other players who want to play for a similar amount. The Petitioner merely hosts the games and the discretion to play a game and the stake for which it is to be played entire lies with the players with no role of the Petitioner, who seeks to demonstrate the same by the following illustration: Assuming that A and B have downloaded the mobile application of the Petitioner and intend to play a game of rummy against each other by using the Petitioner s online platform/mobile application. As per the construct of the game, A and B has to deposit INR 200 each for participation in the game. The winner at the end of the game gets INR 360 as winnings. Further, for allowing A and B to use its platform for participating in the game of rummy hosted by the Petitioner, it would charge INR 20 each from A and B . Therefore while A and B deposit INR 200 each, the winner gets INR 360 and INR 40 is ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a malicious attempt on part of the Respondents to mischievously and maliciously inflate the figure. The buy-in amounts are not the property of the Petitioner. The Petitioner has no lien or right over such money and the same has to be disbursed to the winning players once the game is over. The Respondents with a view to mislead this Hon ble Court is trying to portray an inflated figure, which in reality is not even the income of the Petitioner. Further, the absurdity in the allegations made in the impugned SCN can be gauged from the fact that the Respondents have not even mentioned the Terms Conditions of the game plays facilitated by the Petitioner. In the Terms Conditions, it is specifically stated that the monies deposited by the players are held in trust by the Petitioner. This undisputed contractual understanding between the Petitioner and its players completely negates the allegations in the Impugned SCN that the entire buy- in amount is the Petitioner s income. The Impugned SCN has also alleged that the Petitioner by providing discounts / bonuses induce the players to indulge in more game plays. At the outset, it is to be noted that the withdrawal wallet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors., - 2022 SCC Online Kar 435 (DB). The Impugned SCN is per se arbitrary, is in complete violation of the principle of audi alteram partem , is bereft of any reasoning and woefully fails to satisfy the Wednesbury test of reasonableness and therefore, violates the Petitioners fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution of India. The Impugned SCN is actuated by malice, since it comes in the backdrop of pendency of W.P.22010 / 2021 and W.P.18304 / 2022, wherein interim orders have been granted. The Impugned SCN is a colourable exercise of power and gross attempt the overreach the orders of this Hon ble Court. The allegations raised against the Petitioner in the earlier proceedings by the Respondents changed all of a sudden in the present proceedings. Initially the thrust of the allegation was that the Petitioner evaded GST by claiming ineligible discounts from its platform fee . This was the narrative for most part of the investigation when suddenly the same changed and it was alleged that the Petitioner was involved in betting . The very fact that the Respondents have kept on changing their narrative shows the utter arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1995)6 SCC 289; (5) Dr. K. R. Lakshmanan v. State of Tamil Nadu (1996)2 SCC 226; (6) Head Digital Works Private Limited v. State of Kerala (2021) SCC Online Ker 3592; Junglee Games India Pvt. Ltd. v. State of Tamil Nadu - (2021) SCC OnLine Mad 2762; (7) All India Gaming Federation v State of Karnataka Ors (2022) SCC OnLine Kar 435 (DB); (8) Whirlpool Corporation vs. Registrar General (1998) 8 SCC 1; (9) Linde Engineering Pvt. Ltd., vs. Union of India (2022) 57 GSTL 358 (GUJ); (10) Calcutta Discount Co., Ltd., vs. Income Tax Officer (1961) 2 SCR 241; (11) Magadh Sugar and Energy Ltd., vs. State of Bihar (2021) SCC Online (SC) 801; (12) Director General of Foreign Exports vs. Kanak Exports (2016) 2 SCC 226; (13) Collector of Central Excise vs. ONGC (1999) 1 SCC 257; (14) Narendra Udeshi vs. Union of India (2002) SCC Online Bom 962; (15) Siemens Ltd., vs. State of Maharastra (2006) 12 SCC 33; (16) ORYX Fisheries vs. Union of India (2011) 266 ELT 422; (17) Spirotech Heat Exchangers vs. Union of India (2016) 341 ELT 110 (Del); (18) Topland Engines Pvt. Ltd., vs. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India (2021) SCC Online KAR 14702; (48) Union of India vs. PFIZER Ltd., - (2018) 2 SCC 39; (49) Jitendra Kumar Singh vs. State of Uttar Pradesh (2010) 3 SCC 119; (50) Bombay Dyeing vs. Bombay Environmental Action Group (2006) 3 SCC 434; (51) Associated Management vs. State of Karnataka ILR 2008 KAR 2895; III. SUMMARY OF PLEADINGS OF RESPONDENTS REVENUE Respondents have filed their statement of objections denying and disputing the claims and contentions of the petitioners and the same can be summarized as hereunder: The petitions challenging a mere show cause notice is premature and not maintainable and is liable to be dismissed. The platform of the Petitioner allows players of online rummy to place stakes and bet on the outcome of such games of rummy. In addition to this, the Petitioner is making profits and gains from such games of rummy played on its platform, which according to the Hon ble Supreme Court in the case of State of Andhra Pradesh v. K. Satyanarayana Ors., AIR 1968 SC 825 would amount to betting and gambling. The contention of the Petitioner that the game of rummy played in its platform is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tcome of games of rummy and is covered by the decision of the Hon ble Supreme Court in Satyanarayana s case supra. The Petitioner terming the 10% commission as service fee for using the platform deserves to be rejected, as service fee must be charged purely for meeting expenses and must apply uniformly across the board to all players and must most importantly be independent of the games of rummy. To the contrary, the alleged service fee changes from table to table depending on total amount of stakes at a particular table. For this very reason, this submission of the Petitioner must be rejected. Assuming but not admitting that the Game of Rummy played in the Petitioner s platform is a Game of Skill, playing it with stakes and the Petitioner making profits and gains from such stakes would still be betting. When this is the ratio of the Hon ble Supreme Court in Satyanarayana s case supra, any number of judgments holding the contrary is per incuriam. A game of skill played for stakes would still amount to betting and the Hon ble Supreme Court has not specially blessed such games alone to be played with stakes. Any submission contrary to this settled position deserves to be rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. 2006(5) SCC 603; (9) M/s.Gaussian Networks Private Limited vs. Monica Lakhanpal and State of NCT 2012 SCC Online Dis Crt (Del) 1; (10) Varun Gumber vs. Union Territory of Chandigarh Ors., - CWP No.7559 of 2017; (11) Director General of Police vs. Dilibabu MANU/TN/3983/2017; (12) Gurdeep Singh Sachar vs. Union of India 2019 (30) GSTL 441 (Bom); (13) Ravindra Singh Chaudhury vs. Union of India 2020 (42) GSTL 195 (Raj); (14) Junglee Games Pvt. Ltd., vs. State of Tamil Nadu 2021 SCC Online Mad 2762; (15) Head Digital Works Private Limited Ors. Vs. State of Kerala Ors. 2021 SCC Online Ker 3592; (16) All India Gaming Federation vs. State of Karnataka Ors., - 2022 SCC Online Kar 435; (17) State of Karnataka vs. State of Meghalaya Ors. C.A.Nos. 10466-10476 of 2011; (18) State of Bombay vs. R.M.D. Chamrbaugwala AIR 1957 SC 699; (19) Mahalakshmi Cultural Association v. The Director, Inspector General of Police and Ors. 2011 SCC Online Mad 1997; (20) Director General of Police, State of Tamilnadu vs. Mahalakshmi Cultural Association - 2012 SCC Online Mad 1130; (21) Mahala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hek Manu Singhvi and Sri. Udaya Holla, learned Senior Counsel appearing on behalf of Sri. Siddhartha H.M, Sri. Suhaan Mukherji, Sri. Nikhil Parikshith, Sri. B.R.Vyasakiran Upadhya, Sri. Abhishek Manchanda, Sri.Chandan Prakash Pandey, Sri. Manjunath.B, Sri.Nidhiram Sharma, Sri. Onkar Sharma and Sri.Varun Thomas Mathew, learned counsel for petitioners. I have heard Sri. Mukul Rohatgi, learned Senior Counsel along with Sri.Pradeep Nayak, Smt.Anupama Hebbar, Sri.Sankeerth Vittal and Sri.Karan Gupta, learned counsel for impleading applicant on I.A.1/2022. I have heard Sri.Aravind Datar and Sri.Sajjan Poovayya, learned Senior Counsel along with Miss.Raksha Agarwal, Sri.Sameer Singh and Sri.Ravi Raghavan, learned counsel for impleading applicant on I.A.2/2022. I have also heard Sri.N.Venkataman, learned Additional Solicitor General along with Sri.Jeevan J.Neeralgi and Sri.Amit Anand Deshpande, learned counsel for Respondents Revenue and Smt. Jai M.Patil, learned counsel for respondent ICICI Bank. V. SUBMISSIONS OF PETITIONERS The Impugned SCN is wholly illegal, arbitrary, untenable and without jurisdiction or authority of law for the following reasons: Game ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or betting on a game of skill is not gaming in view of RMDC-1, RMDC-2 and Lakshmanan s cases supra. It is also no longer res integra that wagering or betting on a game of skill is not gambling , since the outcome depends on the substantial degree of skill of the players as per Lakshmanan s case; The distinction between games of skill and games of chance has always been in the context of gambling , i.e., wagering or betting or staking on a game of chance. The distinction between skill and chance is not necessary for hosting tournaments (as alleged) with an ultimate prize money or trophy, since no wagering or betting occurs in such tournaments; this is because in all the State enactments, the pre-condition for gaming and the accompanying penalties is wagering or betting . In other words, a competition without wagering or betting would not be gaming and therefore, the distinction between skill and chance becomes immaterial. Competitions involving substantial skill or predominantly skill are business activities that stand protected under Article 19 (1) (g) of the Constitution. This has been held so in RMDC-2 s case supra, while discussing the consequences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of prize competition as amended in 1952 is extracted, which retains the tripartite categorisation. Paragraphs 18 and 19 do not lay down any general legal principles but only conclude that Category I prize competitions [under Section 2 (1) (d) (i)] are of a gambling nature. Paragraph 20 of RMDC-1 deals with Category II which are also not games of skill. Prize Competitions, i.e., competitions described under Section 2 (1) (d) (ii) as 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 . The Apex Court holds that it would difficult to treat the invitation to the general public to participate in these competitions as an invitation to a game of skill . And that for most of the general public the forecast is nothing better than a shot at the hidden target . The said sentence at paragraph-20 does not lay down any general legal principle that can be applied to the game of rummy played with stakes. The said sentence is a finding qua the specific competitions covered under sub-clause (ii)/Category II competitions offered through the medium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 3 of the Madras Gaming Act, 1930. According to the High Court, the relevant question in the said case was whether the club was utilised for gaming purposes for the profit of the club, which according to the High Court was essentially a question of fact . In the said case, the conviction was sustained on account of the fact that it had been proven that the premises of the club was utilised for gaming purposes for the profit of the club . The said decision does not lay down any general legal principle that charging a commission for playing a game of skill played between players for stakes would amount to running a common gaming house and such a principle would fall foul of RMDC-2 s case. The judgment of the Apex Court in the case of K.Satyanarayana was relied upon to contend that making a profit or gain by charging players for playing rummy is impermissible and that rummy played for stakes is an offence. The said contention is also misconceived and untenable, since 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, be it a game of pure chance or of mixed skill and chance. Reliance has been placed on paragraphs - 7 and 8 of M.J.Sivani s case, which contains the dictionary meaning of gaming . However, the definition makes it clear that gaming is confined to playing a game of chance for stake or wager and nothing more and that gaming is synonymous with gambling. In other words, the said definition nowhere holds that playing a game of skill for stake or wager also amounts to gaming or gambling . Though reliance is placed upon paragraph14, the true meaning of the said para becomes clear from the nature of games that were in question viz., video games such as Super Continental, High Low, Black Jack, etc., all of which are pure games of chance. These are single mode 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 Articles 19(1)(g) and 21 of the Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in action or a right to claim/enforce a debt. In colloquial terms, it can be described as an I owe you . Since the Petitioner Company does not have any right or claim over the prize pool and merely holds it in a fiduciary capacity only to facilitate the game plays, the very basic criteria for qualifying as an actionable claim is not met qua the Petitioner - Company and thus no question of supply of actionable claim by the Petitioner-Company arises. VI. SUBMISSIONS OF APPLICANT IN I.A.No.2/2022 INTERVENOR: E-GAMING FEDERATION The Intervenor is a not-for-profit organisation established under the Societies Registration Act, 1860 and comprises of various stakeholders in the online gaming industry as members. The members of the Applicant ( Operators ) are inter alia engaged in the business of providing technology-based platforms, which allow players to play the online versions of the game of rummy with other players on a real-time basis. The players on these platforms are eligible to play the games upon payment of a platform fee (A) to the Operators which is charged as a consideration for providing the technology-based platform to the players to play such game ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the likelihood of anything occurring or not occurring. In RMDC-1 and RMDC-2 s cases supra, the Apex Court recognized the distinction between gambling activities and games of substantial skill and excluded games of skill (where success depends on skill to a substantial degree) from the scope of gambling (and consequently from the scope of entry betting and gambling ). The test for what is a game of skill and what are games of chance has been clearly laid down by the Hon ble Supreme Court in RMDC-1 which has been consistently followed by the Apex Court, this Court and other High Courts. In RMDC-2, it was held that a statute that applies to both betting or gambling as well as a game of skill, will be severed to only apply to activities which amount to betting or gambling , while rejecting the submission of the State that the Prize Competition Act, 1955, in so far it applies to competitions of skill will be governed under Entry 26 of List II. Therefore, in interpreting the Constitutional entry i.e., Entry 34 of List II, the Apex Court held that the phrase betting and gambling featuring in Entry 34 does not include games of skill. The contentions urged by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -AIR 2008 SC 690. Further, the question before this Court is whether the proper Officer issuing the impugned SCN can ignore the decision of the Division Bench of this Court in the case of All India Gaming Federation and in doing so, whether he was acting without jurisdiction. In this regard, reliance is placed on the decision of the Supreme Court in East India Commercial v. Collector of Customs - AIR 1962 SC 1893, wherein it was held that the authorities subordinate to the High Court (such as the proper officer in this case) are bound by its rulings. Without prejudice to the above, it is submitted on merits that the decisions of the Apex Court referred to above have been misread and misinterpreted by the Respondents and do not aid the case of the Respondents. It is thus submitted that playing games of skill for stakes does not amount to gambling. Gambling is the act of playing a game of chance for stakes and such staking in gambling amounts to betting. Betting and gambling are compendious terms and cannot be separated from one another. The term betting partakes the colour and character of the term gambling , which means that the term betting can only be interpreted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondents on paragraph-100 of Junglee Games case supra is erroneous. As is evident from a reading of this paragraph, the Hon ble Madras High Court was discussing the meaning of gambling in the common parlance. Subsequently, the legal and constitutional meaning is adverted to in paragraph -104, wherein the Hon ble Court has observed that in law, gambling is equated with gaming, where chance is the predominant factor. Paragraph-104 is the ratio emanating from the judgment of the Madras High Court, and not paragraph-100. Thus in summary: - betting and gambling has been interpreted to mean wagering or betting on a game of chance; - There is no independent category of betting, separate from betting and gambling; and - Wagering on a game of skill does not amount to betting and gambling . Betting and gambling having attained constitutional significance and being nomen juris, betting and gambling under the Goods and Services Tax regime should be interpreted in the same manner as that in the Constitution of India. Prior to the 101st amendment to the Constitution of India, the State legislatures had the power to tax betting and gambling under entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol 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 of games of skill and cannot be read to mean that all manner of forecasting is gambling. The Respondents contention that Satyanarayana s case is a clear enunciation of law that games of skill played with stakes amounts to gambling and that when the Club makes a profit, it amounts to the offence of running a common gaming house is wholly erroneous. The Hon ble Supreme Court went into the question of profits only because this was the only point considered by the High Court in the impugned order therein, as the High Court did not consider whether rummy was a game of skill or not. The Hon ble Supreme Court 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 attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed with approval the judgment of the Michigan Supreme Court in Edward J. Rohan vs. Detroit Racing Association - 166 ALR 1246 SW 2d 987, where the Michigan Supreme Court has held that pari-mutuel betting on a horse race is not a lottery (or in other words in not gambling). It is important to keep in mind that in all cases referred above that have been decided by the Hon ble Supreme Court, the games in question always involved playing with stakes. In none of the cases above, the Hon ble Supreme Court has held by inference or by a clear unambiguous declaration of law that playing of games of skill for wager amounts to gambling. It was submitted that placing of stakes by a player who plays a game of skill (as in the case in the platform run by the petitioners), cannot be equated to gambling by third persons placing bets on the outcome of the cricket match. Playing a game of skill is a protected activity under Article 19(1) (g) and therefore, classifying such activity only on account of placing of stakes as gambling (and therefore a pernicious activity) will be manifestly arbitrary. Article 19(1)(g) guarantees the right to practice any profession or to carry on any occupation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts are held by online gaming platforms in trust in a fiduciary capacity and these platforms have no right or beneficial interest thereon. An actionable claim has been defined in Section 2(1) of the CGST as having the same meaning assigned to it in the Transfer of Property Act, 1882. The stakes placed by a player while playing a game of skill amount to actionable claims but the platform itself is not involved in or providing the actionable claim. It is only the players that provide the actionable claim inter se. Thus, the claim that the Petitioner is involved in supply of actionable claims is fallacious. Since the petitioner is not creating or transferring any actionable claims, the stakes placed by the players on the games cannot be treated as a supply of goods or services. VIII. SUBMISSIONS OF RESPONDENTS-REVENUE Going by the nature and character of a game, Courts have classified them either as a game of skill or a game of chance. When the success in a game depends on skill or a substantial degree of skill, it gets classified as a game of skill or predominantly a game of skill. On the other hand, when the success in a game, depends on chance, then it becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placing stakes on forecasting i.e., predicting in anticipation the unknown and uncertain future event, it makes no difference whether the player of the game does it or if a stranger to the game does it. To both, the player and the stranger, the outcome is equally uncertain and placing stakes on such unknown uncertainty will qualify as betting and gambling which is reiterated in Sivani s case and Lakshmanan s case by the Apex Court, thereby leading to the following conclusions: The act of placing stakes on forecasting the outcome i.e., predicting in anticipation of a future event which is uncertain and unknown is nothing but betting and gambling as the same is nothing but a shot at the hidden target.(RMDC-1 Paras 20 and 21). If 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 i.e., the club will be a common gambling house and persons therein would be betting and gambling (K. Satyanarayana - Para 12). 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. For a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rummy undoubtedly falls under the category of mixed chance and skill as the Hon ble Supreme Court in Satyanarayana s case has held rummy to be mainly and preponderantly a game of skill . The act of gambling requires three elements, viz., (a) staking of an amount, (b) an element of uncertainty i.e., chance and (c) a reward which is usually higher than the amount staked. In short, Gambling is staking of money for a chance to win more money. It was submitted that the answer to this question must lie in the negative. Be it a game of skill or a game of chance, both the games have one aspect in common and that is the uncertain outcome of the game. No player of the game knows with certainty the outcome of the game and it always remains an uncertain event until the game concludes. Therefore, placing stakes on an outcome of a game, irrespective of the game being of skill or chance, it amounts to betting and gambling. This contention can be explained by way of certain illustrations. Assuming for a moment that two players A and B are placing a stake of INR 10 each on the outcome of a game of Mankatha. The outcome of the game is determined by a particular card number falling o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioner s platform, the first choice a player has to make is the amount of stakes that is willing to be put in the game (Buy in amount). Once the amount to be staked is determined by the player, the platform takes the player to the gaming table, where all the players have staked a similar amount, after deducting the amount from the in-app wallet of the player. For example, if a player has determined INR 10,000 to be staked in a game of rummy, then the platform takes the player to a table where all players have staked INR 10,000 after deducting INR 10,000 from the wallet of the player. Assuming there are four players in a table playing the Game of Rummy on the Petitioner s platform and each of them have staked INR 10,000, then the total amount staked on that particular table is INR 40,000. The Petitioner makes an average 10% profit at each game of Rummy played on the their platform and therefore, in this particular table, the profit of the Petitioner would be 10% of INR 40,000 i.e., INR 4,000. If this amount is reduced, then the four players are playing the game of rummy by placing INR 10,000 each with a hope to win INR 36,000. In this example, what is important and pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alternate Remedy (1) In the case of M/s Radha Krishan Industries vs State of Himachal Pradesh and others (2021) SCC OnLine SC 334 , the Apex Court held as under: The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well; The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is, where an effective alternate remedy is available to the aggrieved person; Exceptions to the rule of alternate remedy arise where, (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged; An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Roman law doctrine that translates to things outside commerce . In RMDC-1 s case, the Apex Court introduced this doctrine to India in order to constrict the scope of freedom of trade and commerce, a fundamental right, guaranteed under Article 19(1)(g) of the Indian Constitution. The said doctrine constricts the scope by excluding certain immoral or noxious trade activities from the scope of Article 19(1)(g) and thereby, depriving them of Constitutional protection. It was held that the doctrine of res extra commercium can be applied having regard to the obnoxious nature of trade. Gambling activities from their very nature are in essence are extra-commercium and are hence, not entitled to protection under Article 19(1)(g) of the Constitution. 2. In the case of State of Punjab Vs Devans Modern Breweries Ltd - [2004] 13 ILD 481 (SC), the Apex Court held that Res extra commercium means, things beyond commerce, i.e., which cannot be bought or sold, such as public roads, rivers, titles of owners etc. Similarly, in the case of Khoday Distilleries Ltd Vs State of Karnataka (1995) 1 SCC 574, it was held as under: What articles and goods should be allowed to be produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o because of the directive principle contained in Article 47, except when it is used and consumed for medicinal purposes. 3. In the case of B.R. Enterprises Vs State of UP 2001 (1999) 9 SCC 700 , it was held as under: Lottery is Gambling Activity. State government prohibiting the sale of lottery tickets of other states within its territory valid only if that state is declared to be a lottery free zone. There are three ingredients in the sale of lottery tickets, namely, (i) price, (ii) chance and (iii) consideration. So, when one purchases a lottery ticket, he purchases for a prize, which is by chance and the consideration is the price of the ticket. The holder of such ticket knows, the consideration which he has paid may be for receiving nothing (para 55). Trade [in Article 19(1)(g) or 301] is an exchange of any article either by barter or for money or for service rendered. In other words, it is exchange between two parties one who tenders the consideration and the other who returns for this consideration, goods, money, service or such other thing. Party paying consideration in any trade is aware for what he is paying the consideration. He receives for the considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean Countries where gambling and even sale of narcotic drugs subject to licensing provisions, if any, is permissible. The concept of res extra commercium may in future be required to be considered afresh having regard to its origin to Roman Law as also the concept thereof. Conceptually, business may be carried out in respect of a property which is capable of being owned as contrasted to those which cannot be. Having regard to the changing concept of the right of property, which includes all types of properties capable of being owned including intellectual property, it is possible to hold that the restrictions which can be imposed in carrying on business in relation thereto must only be reasonable one within the meaning of clause (6) of article 19 of the Constitution of India. Right of property although no longer a fundamental right, but indisputably is a human right. [ See Vimlaben Ajitbhai Patel v. Vatslaben Ashokbhai Patel [2008] 4 SCC 649 and Karnataka State Financial Corpn. v. N. Narasimahaiah [2008] 5 SCC 176]. 5. It is therefore clear that there is sufficient jurisprudence to show that lottery, betting and gambling will be seen as noxious and per se classified res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of goods /or Services Integrated Tax (IGST) would apply On inter-State supply of goods /or Services at maximum rate of 40%. How to determine place of supply Refer to Sections 7 to 10 of IGST Meaning of phrases goods and services Goods : The term Goods has been defined in Section 2(52) of CGST Act, 2017 as every kind of movable property but, Excludes Includes money and securities actionable claim , growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply Service: The term Services has been defined in Section 2(102) of CGST Act, 2017 to mean anything other than the following : (a) goods, (b) money and (c) securities but Services includes the following : (a) activities relating to the use of money or (b) conversion of money by cash or by any other mode, from one form, currency or denomination, to another form, currency or den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (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 notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. Note : As amended by CGST (Amendment) Act, 2018 with retrospective effect from 1st July 2017. Notified to be effective from retrospective date vide Notification No. 2/2019-C.T., dated 29-1-2019 which came into effect from 1-2-2019. (4) It is interesting to note that though the supply of goods or serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons 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 from 1st July, 2017. Note : This amendment was notified with retrospective effect from 1.7.2017 vide Notification No. 2/2019-C.T., dated 29-1-2019 which came into effect from 1-2-2019. 3. The provisions of Section 7 consequent to the aforesaid retrospective amendment are analysed as under: (i) Section 7 has been amended to make it clear that the entries covered in Schedule II to the CGST Act, 2017 are merely for classification purposes and would not by itself constitute supply on standalone basis. Accordingly, the subsection (1)(d) has been omitted. (ii) The sub-section (1A) makes it clear that where certain activities or transactions, which constitute a supply in accordance with the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished 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 Section 7 after omission of sub-section (d) to Section 7(1). Definition of Business : We must necessarily notice the definition of business in the GST legislations, as there is a marked departure as is highlighted below and as found in Section 2(17) of CGST Act, 2017, which reads as under:- business includes (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity , whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of subclause (a), whether or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 they shall gain or lose on the happening of an uncertain event or upon the ascertainment of a fact in dispute, where the parties have no interest in the event except that arising from the possibility of such gain or loss. The word wagering is practically synonymous with the words betting and gambling and the terms are so used in common parlance and in statutory and constitutional enactments ( Mc Donald v Bryant, 238 Ark. 338, 381 S.W.2d 736, 738 ] Any other similar activity Rule of Ejusdem Generis shall apply. As per this doctrine, when particular words per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: SCHEDULE III [See Section 7] Activities or transactions which shall be treated neither as a supply of goods nor a supply of services 1 .. 6. Actionable claims, other than lottery, betting and gambling. As per Entry No. 6 of Schedule III, actionable claims except lottery, betting and gambling are neither considered as goods nor services. Section 2(1) of CGST Act, 2017; Actionable claim shall have the same meaning as assigned to it in Section 3 of the Transfer of Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tection 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 realm of the sub sect of actionable claim, that is, lottery, betting and gambling so that they could be subjected to tax in the latter category. If they are in the former category, they would not be exigible to tax by virtue of Schedule III. 2. The scope of betting and gambling came to be considered by the Hon ble Supreme Court in RMDC-2 wherein the Apex Court followed its decision in RMDC-1 and recognized the distinction between gambling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nforceable 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 duty in an underlying contract with an arbitration clause and in the context had drawn a distinction between the first and second part of Section 7(2) of the Arbitration Act, albeit the observations made and quoted above with reference to existence and validity of the arbitration agreement being apposite and extremely important, we would repeat the same by reproducing para 29 thereof: (SCC p. 238) 29. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 legal precedent is the principle upon which the case is decided and, for this reason, it is important to analyse a decision and isolate from it the obiter dicta. RMDC-1 This is an appeal by the State of Bombay from the judgment and order passed on January 12, 1955 by The court of appeal of the High Court of Judicature of Bombay confirming, though on somewhat differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 another new section was inserted after Section 12 and numbered as Section 12-A. By this new Section 12-A provision was made for the levy in respect of every prize competition contained in a newspaper or a publication printed outside the State of Bombay for which a licence was obtained under the Act of a tax at such rates as might be specified not exceeding the rates spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse 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 conducted by the petitioners were a lottery. (b) The provisions of the impugned Act were valid and competent legislation under Entries 33, 34 and 62 of the State List. (c) The impugned Act was not extra-territorial in its operation. (d) The prize competitions conducted by the petitioners were opposed to public policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners, 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 topic of legislation was gambling and the Legislature was competent to enact it under Entry 34 of the State List. It, however, agreed with the learned trial Judge that the tax levied under Section 12-A was not a tax on gambling but that it was a tax which fell under Entry 60. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners 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 under Entry 60 and not taxes on betting and gambling under Entry 62. We are unable to accept the correctness of the aforesaid contentions for reasons which we proceed immediately to state. 17. As it has already been mentioned, the impugned Act replaced the 1939 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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 sentence, they have been set out one below another with a separate number assigned to each of them. The qualifying clause has been amended by inserting the words or is not after the word is and before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 taxing apply to all prize competitions. If it were intended to include innocent prize competitions in the first category, one would have expected the Legislature to have made separate provisions for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 through any news paper, or in connection with any trade or business or the sale of any article to the public (a) any competition in which prizes are offered for forecasts of the result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary 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 taxing provisions of Section 12-A cannot be said to impose a tax on betting and gambling under Entry 62 but imposes a tax on trade under Entry 60. Once it is held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 on the tax to the gamblers, that circumstance is not a decisive or even a relevant consideration for ascertaining the true nature of the tax, for it does not affect the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 may include competitions, in which the exercise of knowledge and skill is present was rejected by the Apex Court, which that such a competition is a game of chance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensic 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 of games of skill and cannot be read to mean that all manner of forecasting is gambling. 11. That there is an element of chance in each ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise) 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 fee is charged in respect of a prize competition, such fee shall be paid in money only and not in any other manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion 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 Sections 4 and 5 and Rules 11 and 12 which are, ex concessi void, as regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 appropriate. While control and regulation would be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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, both the contentions must be found agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egories 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. The Court herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r otherwise howsoever. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shuffled and dealt out, there is an element of chance, because the distribution of the cards is not according to any set pattern but is dependent upon how the cards find their place in the shuffled pack. From this alone it cannot be said that Rummy is a game of chance and there is no skill involved in it. 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes of rummy when played for stakes would take it into the realm 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider whether rummy was a game of skill or not. The Hon ble Supreme Court 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 judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh', '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. ... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on opening one such machine, it is noticed by the Technical Officer, Control Room, that there is a provision for 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulated under the Mysore Police Act, 1963 and the notifications issued thereunder and the Madras City Police Act, 1888 and the orders 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 basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat were in question viz. video games such as Super Continental, High Low, Black Jack, etc. all of which are pure games of chance. These are single mode 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 31-C of the Constitution. If not, whether the 1986 Act is liable to be struck down as violative of Articles 14 and 19(1)(g) of the Constitution. 3. The New Encyclopaedia Britannica 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not with dice: no, cultivate thy cornland. Enjoy the gain, and deem that wealth sufficient. There are thy cattle, there thy wife. O gambler, so this good Savitar himself hath told me. The Mahabharata deprecates 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certainly be taken as one of them. We are convinced and satisfied that the real purpose of Articles 19(1)(g) and 301 could not possibly have been to guarantee or declare the freedom of gambling. Gambling activities from their very nature and 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 . Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess depended to a substantial extent on skill, and that as the impugned law constituted a single inseverable enactment, it must fail in its entirety in respect of both classes of competitions. Mr Seervai who appeared for the respondent, disputes the correctness of these contentions. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther horse-racing is a game of chance or a game involving substantial skill. 10. The Police Act extends to the whole of the city of Madras, as defined in Section 3 of the said Act. Section 3 of the Police Act defines common gaming-house , gaming and instruments of gaming in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of special and adequate reasons to the contrary to be mentioned in the judgment of this Court (i) such imprisonment shall not be less than three months and such fine shall not be less than five hundred rupees for the first offence. (ii) such imprisonment shall not be less than six months and such fine shall not be less 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words 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 have been omitted from the definition of gaming in the two Acts. The State 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a probability of success; but the most astute better by using his substantial skill may still fail to be successful in his stake. The element of chance is not outweighed by any skill of the better or the horse. The figures we were shown would only show that successful betting on horses sometimes, not necessarily every time, goes with substantial skill of the one who stakes. But we are not persuaded that betting on horses 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pattern but is dependent upon how the cards find their place in the shuffled pack. From this alone it cannot be said that rummy is a game of chance and there is no skill involved in it. 20. The judgments of this Court in the two Chamarbaugwala cases and in the Satyanarayana case [(1968) 2 SCR 387 : AIR 1968 SC 825 : 1968 Cri LJ 1009] clearly lay down that (i) the competitions where success depends on substantial degree of skill 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paedia: Horse-racing, sport of running horses at speed, mainly, thoroughbreds with a rider astride or Standardbreds with the horse pulling a conveyance with a driver. These two kinds of racing are called racing on the flat and harness-racing. Some races on the flat involve jumping . Knowledge of the first horse-race is probably lost in prehistory. Both four-hitch chariot and mounted (bareback) races were held in the Olympic Games of 700-40 BC. Other history 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, training and the past record of the race-horses are prominently published and circulated for the benefit of prospective bettors. Jockeys are experts in horse-riding and are extensively trained in various aspects of horse-racing. They are supposed to know the horse they are riding and the turf on which the horse is to run. 25. Judicial pronouncements on the subject are primarily of American courts. In People of Monroe [85 ALR 605] , it was held that the pari-mutuel 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racing, like foot racing, boat racing, football, and baseball, is a game of skill and judgment and not a game of chance. Utah State Fair Assn. v. Green [(1926) 68 Utah 251 : 249 P 1016]. Therefore, we conclude that Act No. 199, Pub. Acts 1933, authorising pari-mutuel betting on horseraces, does not violate the constitutional prohibition against lotteries. 27. In Harless v. United States [(1843) Morris (Iowa) 169] , the Court while holding that horse-racing was not a game 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was held not to be a game of chance within the prohibition of a State Constitution, which provided that the legislature should not authorize any game of chance, lottery, or gift enterprise, since in respect thereto the elements of judgment, learning, experience, and skill predominate over the element of chance. 29. Russell, L.J. in Earl of Ellesmere v. Wallace [(1929) 2 Ch 1 : 1929 All ER Rep Ext 751] , while dealing with the question whether there was a contract by way of wagering between the jockey 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 wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ames of chance. It would not include games of skill like horse-racing. In any case, Section 49 of the Police Act and Section 11 of the Gaming Act specifically save the games of mere skill from the penal provisions of the two Acts. We, therefore, hold that wagering or betting on horse-racing a game of skill does not come within the definition of gaming under the two Acts. 34. Mr Parasaran has relied on the judgment of the House of Lords in Attorney General v. Luncheon and Sports Club Ltd. [1929 AC 400 : 1929 All ER Rep Ext 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. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered necessary that the offence of betting on cotton prices figures and bullion price figures, etc., in the open streets should also be made punishable and that the punishment, which is at present very inadequate, should be made more deterrent. It is also considered desirable to bring the language of the provisions relating to gaming in the City Police Act in line with that in the Gaming Act and also to combine the sections relating to gaming on horserace and on other forms of gaming which are separate in the respective Acts at present. Opportunity 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness or trade will not be gambling or betting and will be provided protection under Article 19(1)(g), provided it involves predominantly and substantially skill without which its performance would be impossible. 2. The State contended that Horse riding is a form of betting which involves a skill neither from the horse nor from the rider but from the better who has to keep a keen check over the horses to determine its capability by observing various matches, which is a pure skill that any better should possess. Further the State legislature reserves its authority under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 7. Section 49 of the Police Act and Section 11 of the Gaming Act specifically provided that the provisions of those Acts do not apply to games of mere skill wherever played . The exclusion of horse racing from the definition of gaming was omitted by the Tamil Nadu Horce Races (Abolition and Wagering or Betting) Act, 1974. This 1974 Act was challenged before the Madras High Court on the ground that staking of 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49 of the Police Act and Section 11 of the Gaming Act specifically save the games of mere skill from the penal provisions of the two Acts. We, therefore, hold that wagering or betting on horse-racing - a game of skill - does not come within the definition of `gaming' under the two Acts. 10. The activity of horse-racing is a game of skill and staking on horse-racing has been held to not be gambling. The Respondents, however, seeks to infer a second game i.e., predicting the winner of a horserace for stakes, by suggesting that the decision implies so. As per the Respondents, predicting or forecasting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reted. Irrespective of what meanings are ascribed to these words in dictionaries, gambling is equated with gaming and the activity involves chance to such a predominant extent that the element of skill that may also be involved cannot control the outcome. 2. It was held that a game of skill may not necessarily be such an activity where skill must always prevail. According to the Court, it would suffice for an activity to be regarded as a game of skill if, ordinarily, the exercise of skill can control the chance element involved in the activity such that the better skilled would prevail often. Every future event, game or like 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 complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incompetent unreasonable restriction vide CHINTAMAN RAO vs. STATE OF MADHYA PRADESH (1950) SCR 759, MOHD. FAROOQ vs. STATE OF MADHYA PRADESH (1969) 1 SCC 853, game of skill not being a res extra commercium (CHAMARBAUGWALA-II, supra) and embargo being de hors Article 19 (6). (v) Manifest arbitrariness SHAYARA BANO vs. UNION OF INDIA (2017) 9 SCC 1 since the Amendment Act fails to recognize the blatant normative difference between a game of skill and a game of chance , in gross derogation of Chamarbaugwala Jurisprudence of more than six decades. (vi) The impugned legislative measure is a result of excessive paternalism populism. The State is imposing its own 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 trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2021. It came into force on being published in the official gazette on 5.10.2021. The Amendment Act introduces an expansive definition of 'gaming' under Section 2(7) by including all online games which involve all forms of wagering or betting. The definition of the term 'wagering or betting' itself is widened to engulf even a game of skill involving money or otherwise, however, excluding horse racing subject to certain conditions. Similarly, it expansively alters the definitions of 'common gaming house' under Section 2(3), 'wagering or betting' in Explanation (i) to Section 2(7), 'instruments of gaming' under Section 2(11), 'online gaming' under Section 2(12A), 'place' 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Yudhistira the eldest brother of Paandavaas gambles away his kingdom, brothers, wife Draupadi and lastly himself to his cousins i.e., Kauravaas and all they as stipulated go to woods. Yaajnavalkya Smriti has a verse which states that son should not pay the paternal debt that was contracted for the purpose of liquor, lust or gambling. Kaatyaayana Smriti states that gambling, if cannot be stopped in the kingdom, should be discouraged by imposing tax. Manusmriti injuncts that gambling betting, the king shall exclude from his realm since those two vices may cause the destruction of kingdom; a wise man should not practise them even for amusement. Kautilya of arthashaastr fame treats all gamblers as cheats and therefore suggests severe punishment. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a constitutional significance having been so treated by the Apex Court in two CHAMARBAUGWALLA cases, K.SATYANARAYANA and K.R.LAKSHMANAN, supra. Learned Advocate General appearing for the respondents per contra contended that the legislative competence of the State extends to and beyond Entry 34. He points out Entry 1 (Public order), Entry 2 (Police), Entry 6 (Public health and sanitation) and Entry 26 (Trade and commerce) in the same List. According to respondents, the Amendment Act is a piece of ragbag legislation , to borrow the words of Hon'ble M.N.Venkatachalaiah,J. in UJAGAR PRINTS vs. UNION OF INDIA. (d) When a word or an expression acquires a special connotation in law, it can be safely assumed that the legislature has used such word or expression in its legal sense 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., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the legislative competence of the State. To put it in a different way, the word betting employed in this Entry takes its colour from the companion word gambling . Thus, it is betting in relation to gambling as distinguished from betting that does not depend on skill that can be regulated by State legislation; the expression gambling by its very nature excludes skill. It is chance that pervasively animates it. This interpretation of the said Entry gains support from the six decade old CHAMARBAUGWALA jurisprudence, as discussed below: (i) In CHAMARBAUGWALA-I, supra the Apex Court inter alia was considering whether the Bombay Lotteries and Prize Competition Act, 1948, is a legislation relatable to Entry 34, List II, i.e., Betting and gambling . To answer this question, the definition of prize 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competitions in which success does not depend to any substantial extent on skill but on chance...that competitions in which success depends to a substantial extent on skill and competitions in which it does not so depend, form two distinct and separate categories ... The distinction between the two classes of competitions has long been recognised in the legislative practice of both the United Kingdom and this country, and the Courts have, time and again, pointed out the characteristic features which differentiate them. And if we are now to ask ourselves the question, would Parliament have enacted the law in question if it had known that it would fail as regards competitions involving skill, there can be no doubt, having regard to the history of the legislation, as to what our answer would be ... The conclusion is therefore inescapable that the impugned provisions, assuming 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the amount played. Gambling consists of consideration, an element of chance and a reward... Gambling in a nut-shell 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 principally upon the superior knowledge, training, attention, experience 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 chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislate on, apart from the betting involved in gambling. Since gambling is judicially defined, the betting that the State can legislate on has to be the betting pertaining to gambling; ergo, betting only on games of chance. At any rate, even otherwise, the judgments in the two Chamarbaugwala cases and in K.R.Lakshmanan also instruct that the concept of betting in the Entry cannot cover games of skill... (iv) Following the Apex Court Rulings and the above Madras decision, a learned Single Judge of Hon ble Kerala High Court in HEAD DIGITAL WORKS PRIVATE LIMITED vs. STATE OF KERALA quashed a statutory notification that was issued under Section 14A of the Kerala Gaming Act, 1960 which had proscribed online rummy played for stakes. The Court at paragraph 36 of its judgment observed: .... As such playing for stakes or playing not for stakes can never be 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 fanta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... combination of both, is not supported by his reliance on M.J SIVANI vs. 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 parlours and not banning of video games; true it is that the Apex Court treated certain video games as falling within the class of 'games of chance' and not of 'games of skill'. However, such a conclusion was arrived at because of manipulation potential of machines that was demonstrated by the reports of a committee of senior police officers; this report specifically stated about the tampering of video game machines for eliminating the chance of winning. This decision cannot be construed repugnant to Chamarbaugwala 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 gam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular, the Amendment Act is made criminalizing the cyber games. In support of his contention, he banks upon CHAMARBAUGWALAS, K.R.LAKSHMANAN M.J. SIVANI, supra . He draws attention of the Court to a spate of suicides in the State, a plethora of criminal cases registered by the police and to the debates in the Legislative Assembly that culminated into the Amendment Act. He contends that the policy of proscribing cyber games is a matter left to the legislative wisdom and the writ Court should loathe to interfere. (c) Learned advocates appearing for the petitioners do not much dispute that the State has power to regulate the business activities, as provided under Article 19(6). They contend that in view of CHINTAMAN RAO MOHD. FAROOQ supra , the onus lies on the State to demonstrate the reasonableness of restrictions and that where the restriction amounts to absolute embargo, this onus is onerous vide NARENDRA KUMAR vs. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State should prohibit activities which amount to gambling as such and not the games of skill which are distinct, in terms of content and produce. The State action suffers from the vice of paternalism since there is excessive restriction on the citizens freedom of contract. However, the ground of legislative populism does not avail against the plenary power of legislation. It has long been settled that the motive of the legislature in passing a legislation is beyond the scrutiny of courts vide a Five Judge Bench decision of the Apex Court T VENKATA REDDY vs. STATE OF ANDHRA PRADESH. (i) A mere likelihood or propensity of misuse of online gaming platforms, without anything more, does not constitute a legal justification for the banning of commercial activities. Article 300A has been expansively construed to include intangible property like intellectual property which is a product of original thought and skill, i.e., creation of the mind, 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 ski ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developments and the new challenges associated with the same. There has been a paradigm shift in the whole lot of activities in the society owing to advancement of science technology. New implications and difficulties are cropping up in the society justifying innovative ventures on the part of the State to effectively manage them. A greater leverage needs to be conceded to the State in devising appropriate measures for curbing the menace of online gaming. He passionately submitted that what was true of things that happened in the bygone decades i.e., when CHAMARBAUGWALAS were decided, need to be examined afresh. In support of this, he cites the decision in SIVANI supra contending that the absolute embargo on videogames has been upheld by the Apex Court, despite CHAMARBAUGWALAS (c) However, the submission of learned Advocate General overlooks one important factor: CHARMARBAUGWALAS were decided decades ago is true, but that jurisprudence has been validated 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cers who are equal in fact with other players of games of skill. For saving such a blatant discrimination, the respondents have failed to establish the reasonable basis on which such a classification is founded and the rational nexus identifiable between the differentia of and the object sought to be achieved by such a classification vide STATE OF WEST BENGAL vs. ANWAR ALI SARKAR. (c) Learned Advocate General pressed into service the decision in SHREYA SINGHAL, supra to justify classification between 'actual games' and 'virtual games' and that the Amendment Act that would focus the latter would not suffer any infirmity on the touchstone of equality clause. He contends that there is an intelligible differentia between online media and offline media as recognized by the Apex Court and therefore, the legislature in its wisdom has chosen to proscribe the online games since they are injurious to public interest. True it is that, the Apex Court treated online media being 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 inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g' under Section 2(7) to the extent it does not admit the difference between skill games and chance games, is in direct contradiction to the amended Section 176 which intends to maintain such a difference. The very definition of 'gaming' as amended, suffers from the vice of overinclusiveness/over-broadness of the idea of gaming as enacted in the charging provisions of the Act that are animated by CHAMARBAUGWALA Jurisprudence. The content of 'gaming' as capsuled under Section 2(7) thus bruises the legislative intent enacted in Section 176 ab inceptio and continued post-amendment, for protecting a class of citizens who plays the games of skill and therefore, fits into the text context of this provision. (c) The rule of law is recognized by the Apex Court as a 'basic feature' of our Constitution vide KESAVANANDA ... The Amendment Act suffers from the infirmity of this kind inasmuch as Section 2(7) which encompasses all games regardless of skill involved, renders the charging 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 mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents. 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 perincuriam which is a completely absurd proposition. Thus, it cannot be said that the decision of the 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). Principle of Nomen-Juris In the case of State of Madras vs. Gannon Dunkerley Company (Madras) Ltd - 2015 (330) ELT 11 (SC), the issue before the Apex Court was whether the provisions of the Madras General Sales Tax Act are ultra vires, insofar as they seek to impose a tax on the supply of materials in execution of works contract treating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Entry 62 of List II. As the expression betting and gambling was omitted from Entry 62 to give way for taxation on betting and gambling to be subsumed under the GST regime, the expression betting and gambling in Entry 6 of Schedule III of the CGST Act must also be interpreted in the same manner. 2. Further, the decisions referred to above, in the context of betting and gambling have been interpreted in the context of Entry 34 of List II of the Seventh Schedule to the Constitution and the Public Gambling Act, 1867. When words acquire a technical meaning because of their authoritative construction by superior courts, they must be understood in that sense when used in a similar context in subsequent legislations. 3. The Supreme Court in the case of Diwan Brothers v. Central Bank of India - AIR 1976 SC 1503 quoted Craies on Statute law: There is a well-known principle of construction, that where the legislature uses in an Act a legal term which has received judicial interpretation, it must be assumed that the term is used in the sense in which it has been judicially interpreted, unless a contrary intention appears. 4. So also, in the said judgment, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove and particularized in the Division Bench decision of this Court in All India Gaming Federation s case supra, whether played online or physical, with or without stakes would be games of skill and test of predominance would apply; the said judgment is a total and complete answer not only to the various contentions urged by the respondents but also covers the issues / questions that arise for consideration in the instant petitions. Though Section 2(17) of the CGST Act recognises even wagering contracts as included in the term business, but that in itself would not mean that lottery, betting and gambling are the same as games of skill. The meaning of the terms lottery, betting and gambling as contemplated in Entry 6 of Schedule III of the CGST Act should be construed nomen juris in the light of the decisions of the Hon ble Supreme Court, this Court and other High Courts supra which do not include games of skill. Entry 6 in Schedule III to the CGST Act taking actionable claims out of the purview of supply of goods or services would clearly apply to games of skill and only games of chance such as lottery, betting and gambling would be taxable. Taxation of games of skill ..... X X X X Extracts X X X X X X X X Extracts X X X X
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