9911796707
TMI Blog2024 (8) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... he outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression "GST Act" would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be an apex body for game of contract bridge (hereinafter referred to as "bridge") in India. The applicant works for the developmental and conduct of the bridge in line with guidelines issued by the World Bridge Federation (hereinafter referred as "WBF") for selection of national teams for various events at Asian and zonal level. The applicant states that it along with its designated associates is going to organize an offline/physical tournament of bridge played for money in the state of West Bengal in near future. 1.3 The applicant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed with clause (c) of section 95 of the GST ACT; * Application is made for a determination of questions specified under sub section (2) of section 97 of the GST Act. 1.7.1 A conjoint reading of these sections reveals that two conditions need to be fulfilled for earning eligibility the status of an applicant under GST Act. I. The applicant is a person either registered under the Act or desirous to get registered under this act and it either engaged in a business of supply of goods or services or desirous of engaging in such business in the state. II. The applicant seeking advance ruling to a question in relation to the supply of goods or services or both whether already being undertaken in the state or proposed to be undertaken in such state by such applicant. 1.7.2 The applicant has placed his reliance on an order of the Maharashtra Authority of Advance Ruling, in the matter of Ultra Tech Cement Ltd where the term "Applicant" was clarified by the Ld. Authority as under: "A perusal of the above clarifies that scope of the term "Applicant" as defined under sub section (c) of section 95 of the CGST Act shall include both, the person registered under CGST Act and also a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son including a person desirous for voluntary registration other than the persons belonging to certain specific categories is required to make an application in FORM GST REG-01. An applicant while filing for application for registration has to mandatorily declare the address of principal place of business in the application. Such address must be within the state in respect of which the application has been made. The only exception has been prescribed in sub-rule (1A) of rule 12 of the Central Goods and Services Tax Rules, 2017 and the West Bengal Goods and Services Tax Rules, 2017 related to grant of registration to persons required to deduct tax at source or to collect tax at source in accordance with the provisions of section 51 or section 52, as the case may be. 1.11 From a conjoint reading of the aforesaid provisions of the Act and rules, it transpires that unless a person doesn't have any place of business in a particular state, it cannot be said that the person is desirous of obtaining registration in that state. Desirous of carrying out business activities is not identical with the expression 'desirous of obtaining registration'. The GST Act, by way of making provisions for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayers/ participants interested in taking part in the tournament will enroll themselves with the Organizers of the tournament. * Players are required to participate in teams. * Matches during the tournaments may involve the players investing money or money's worth in each game. * Tournament organizers do not lien over this money or money's worth contributed by players. Contribution of money deposited in a common pool and an independent person sponsors prize money. * The winning teams would advance to the next rounds gradually till the final winning team is declared. * For selected recognized tournaments, players also accrue points based on their performance, which goes towards their selection in the national team to represent the country. 2.4 The applicant first discusses factual position of law prior to GST Amendment Act 30 of 2023 as this amendment raises certain queries in respect of their activities within the definition of supply under section 7 of the GST Act. Relevant portions of the provisions of section 7 of the GST Act are reproduced hereunder: "(2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ambit of gambling and betting. "Nothing in this chapter shall apply to any game of mere skill wherever played: Provided that when such game is played in a public market, fair, carnival or street or in any place where the public may have access, a permit from the Commissioner of Police, in Calcutta or the District Magistrate or the Sub-divisional Magistrate elsewhere, shall be obtained first, by the organizer thereof, or payment of such fee as may be prescribed. Any person contravening the provisions of this section shall be punishable." The applicant also articulates the fact that betting and gambling are always used as a phrase in any legal framework in India and is inextricably linked with each other. 2.8 The applicant places its reliance on the following judgments of the Hon'ble Supreme Court where betting and gambling are specifically excluded for games like Bridge which played for money or money's worth: * State of Andhra Pradesh vs K. Satyanarayana AIR 1968 SC 825 (Para 12) * Dr. K.R. Lakshmanan v. State of T.N., (1996) 2 SCC 226 (Para 19) The applicant also highlights judgment of Bombay High Court in the matter of Jaywant Balkrishna Sail and Ors. Vs State of Maha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant contends that a plain and simple reading of sub-section 102A of section 2 of the GST Act, 2017, which defines 'specified actionable claim' shows that offline playing games like bridge would not be fall under this category of 'online gaming'. 2.11 The applicant draws attention to other similar changes inserted vide Notification No. 51/2023 Central Tax dated 29.09.2023 in rule 31B and 31C where clarifications have been cited for value of supply in case of online gaming including online money gaming and value of supply of actionable claims in case of casino. The applicant thus contends that notification itself gives no room to the application of physical /offline game of bridge played for money. As evident from the above, even under the amended provisions of the GST Act, organizing tournament or games for physical/offline game of bridge, participating therein or winnings have not in a manner been included in the definition of "supply" or "actionable claim" as contemplated under the amended GST Act and therefore such activities are not chargeable to GST. 2.12 At present, organizers of the bridge are required to discharge GST liability at the rate of 18% only on service fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when bridge is played for money in a physical/offline mode, it does not get covered by the definition of 'specified actionable claim' and would continue to remain outside the periphery of GST. 3.2 As per sub-section (2) of section 97 of the GST Act, the question on which the advance ruling is sought under this Act, shall be in respect of, - (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. 3.3 We find that the applicant, in the instant application in FORM GST ARA-01, has specified the issue under the category 'determination of the liability to pay tax on any goods or services or both' stating that "ruling clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We like to reiterate that the applicant, in regard to the game of bridge played for money, has submitted as follows: * Matches during the tournaments may involve the players investing money or money's worth in each game. * Tournament organizers do not lien over this money or money's worth contributed by players. Contribution of money deposited in a common pool and an independent person sponsors prize money. * The winning team would advance to the next level gradually till final winning team is declared. In a recognized tournament, players gather points based on their performance which smooths their journey towards the selection in national arena for representing India. 3.8 In the case of State of Andhra Pradesh v. K. Satyanarayana & Ors. 1968 AIR 825, the Hon'ble Supreme Court tested the game of Rummy on the principle of skill versus chance and held that "The game of Rummy is not a game entirely of chance like the 'three-card' game mentioned in the Madras case to which we were referred. The 'three card' game which goes under different names such as 'flush', 'brag' etc. is a game of pure chance. Rummy, on the other hand, requires certain amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bling; exceptions which are of no relevance since the games facilitated by the Petitioner qualify as 'games of skill' as has been confirmed by this Hon'ble Court). * The petitioner is an online intermediary who only provides services of facilitating skill-based game plays between the players and contractual terms of service with the player(s), would show that the petitioner was not supplying any "actionable claim": "Actionable claim" means a claim to an unsecured debt or to a beneficial interest in a moveable property. An actionable claim is a "chose 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. * "Betting and gambling" under the CGST Act is to be ascribed the same meaning as that under the Constitution of India. Betting and Gambling" under Entry 34 List II has attained co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the scope of the term "supply" in view of Section 7 (2) of the CGST Act, 2017 read with Schedule III of the Act." * "There is no difference between offline/physical Rummy and Online/Electronic/Digital Rummy and both are substantially and preponderantly games of skill and not of chance;" * "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". However, the Hon'ble Supreme Court of India, vide order dated 06.09.2023 has stayed the aforesaid order of the Hon'ble Karnataka High Court. 3.13 Thus we find that the issue whether offline/online games such as Rummy which are played with/without stakes tantamount to 'gambling or betting' as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017 is pending before the Hon'ble Supreme Court. 3.14 However, the above-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efrom the money is transferred back to the winner at the end of the game. However, in the instant case, the applicant neither provides any online platform for participating in the game of bridge nor retains any amount of money as 'platform fee' from the deposit amount made by each player. Further, the applicant being the organizer of the bridge tournament does not lien over the money or money's worth contributed by players. The applicant has submitted that the contribution of money is deposited in a common pool and an independent person sponsors prize money. 3.16 Undisputedly organizing a tournament and allow the players to take part in the tournament against participation fee would qualify to be a supply of services by the organizer to the participants. However, even it is held that playing of bridge against money qualifies to be 'specified actionable claim', the applicant cannot be held to be engaged in supply of specified actionable claim by organizing the tournament of bridge where contribution of money deposited in a common pool and the applicant does not lien over this money or money's worth contributed by players. In view of the above discussions, we rule as under: RULING ..... X X X X Extracts X X X X X X X X Extracts X X X X
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