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TMI Blog2024 (8) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership receiving the contract needs to take to receive points for the deal. During the auction, partners use their bids to exchange information about their hands including overall strength and distribution of the suits. No other means of conveying or implying any information is permitted. In the case of State of Andhra Pradesh v. K. Satyanarayana Ors. [ 1967 (11) TMI 109 - SUPREME COURT ], 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 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 cannot be said that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill. The chance in Rummy is of the same character as the chance in a deal at a game of bridge. In Games ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim and therefore shall not be liable to pay tax by way of organizing a tournament of physical /offline games of contract bridge when played for money. - DR TANISHA DUTTA, AND JOYJIT BANIK, MEMBER Applicant s Representative Heard : Mr. Sandeep Chilana, Advocate, Mr. Suhaan Mukherjee, Advocate. Preamble A person within the ambit of Section 100 (1) of the Central Goods and Services Tax Act, 2017 or West Bengal Goods and Services Tax Act, 2017 (hereinafter collectively called the GST Act ), if aggrieved by this Ruling, may appeal against it before the West Bengal Appellate Authority for Advance Ruling, constituted under Section 99 of the West Bengal Goods and Services Tax Act, 2017, within a period of thirty days from the date of communication of this Ruling, or within such further time as mentioned in the proviso to Section 100 (2) of the GST Act. Every such appeal shall be filed in accordance with Section 100 (3) of the GST Act and the Rules prescribed there under, and the Regulations prescribed by the West Bengal Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie that the applicant doesn t have any place of business in the state of West Bengal. The expression applicant , in terms of clause (c) of section 95 of the GST Act means any person registered or desirous of obtaining registration under this Act. The applicant is not registered under the GST Act. However, as the application is made before the West Bengal Authority for Advance Ruling constituted vide notification issued under section 96 of the West Bengal Goods and Services Tax Act, 2017, the applicant was asked to furnish a written submission as to why the applicant without having any place of business in the state of West Bengal will qualify to file an application of advance ruling before the West Bengal Authority for Advance Ruling. 1.7 The applicant accordingly has furnished a written submission wherein it has been contended that the GST Act envisages two conditions to be fulfilled for seeking an advance ruling which are as follows: Application is filed by an applicant who fulfills criteria mentioned in clause (a) of section 95 of the GST ACT teamed with clause (c) of section 95 of the GST ACT; Application is made for a determination of questions specified under sub section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct unequivocally requires an applicant either to be registered or desirous of obtaining registration to make an application for advance ruling. Further, as per section 96 of the Central Goods and Services Tax Act, 2017, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory. Constitution of authority for advance ruling is therefore state specific. 1.9 Under the GST Act, the provision for registration is also state specific. Sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017 thus states that every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both. Sub-section (3) of section 25 of the GST Act on the other hand makes provisions for voluntary registration. 1.10 Every person including a person desirous for voluntary registration other than the persons belonging to certain specific categories is required to make an application in F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category under Ministry of Youth Affairs and Sports, Government of India. The applicant is planning to organize bridge tournament through its associates or organizers in the State of West Bengal shortly. 2.2 The applicant intends to usher in organizing a tournament of contract bridge teamed with its state associations. The applicant submits that currently he is not collecting any participation fees for organizing physical tournaments of bridge or any fee as a totalizator. However, the applicant submits that the ambit of the present application is limited only to the extent of determining whether contributions/ participation money collected from players or winning of the players from physical /offline games of contract bridge (when played for money) would have any GST implications. 2.3 The nature of the tournament, as submitted by the applicant, is as follows: Information about the tournament being organized, is published on the website of the Organizer and also in local newspapers well in advance The players/ 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y several states but some states making their state amendments for the purpose of betting and gambling. 2.6 Stressing on section 12 of Public Gambling Act, 1867 specifically excludes playing of or organizing of games like Bridge played for money or money s worth from being treated as activities which are betting and gambling , the applicant contends that relevant statutes of the West Bengal Gambling and Prize Competitions Act, 1957 cement this logic, which is reproduced as under: 2(b) gaming or gambling includes wagering or betting , except wagering or betting or betting upon a horse race, when such wagering or betting takes place (iii) with a licensed book-maker or by means of a totalizator as defined in Section 14 of the Bengal Amusement Tax Act, 1922, but does not include a lottery or games of cards like Bridge , Poker, Rummy or Nap 2.7 Section 12 of West Bengal Gambling and Prize Competitions Act, 1957 excludes game of skill from the 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble Supreme Court: i. State of Bombay v R.M.D. Chamarbaugwala., 1957 SCR 874 (paragraph 17) ii. R.M.D. Chamarbaugwala and Anr. v Union of India and Anr., 1957 SCR 930 (paragraphs 5, 23) iii. Dr. K.R. Lakshmanan v State of Tamil Nadu Anr., (1996) 2 SCC 226 (paragraph 33) 2.9 The applicant discusses its viewpoint regarding betting, gambling and lottery as those were featured in entry no 6 of schedule III of the GST Act prior to the GST amendment (30 of 2023) and actionable claims sans betting, gambling and lottery were considered as neither supply of goods nor service in GST. The activities of the applicant of organizing physical/offline tournament remained outside the domain of GST. After the amendment of entry no 6 of Schedule III, it is crucial of the applicant to throw light on other features under specified actionable claims to sustain their position in respect of bridge. 2.10 The 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 simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Goods and Services Tax (Amendment) Act, 2023 substituting the expression 'specified actionable claims' in place of 'lottery, betting and gambling' w.e.f. 01.10.2023. The expression specified actionable claim as defined in clause (102A) of section 2 of the GST Act covers betting, casinos, gambling, horse racing, lottery or online money gaming. Playing bridge in a physical/offline mode doesn t fall under casinos, horse racing, lottery and online money gaming. Further, betting and gambling have a well-understood legal definition, which has been interpreted and defined by Courts to apply only to Games of Chance . Bridge is a card game which is a game of skill. The result of the game is influenced by the expertise, knowledge, and training of the player and therefore it cannot be regarded as a game chance. Therefore, 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) class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimant. The applicant has submitted that contract bridge or simply bridge is a trick taking card game using a standard 52 card deck. In its basic format, it is played by four players in two competing partnerships with partners sitting opposite to each other around a table. The game consists of a number of deals each progressing through four phases. The cards are dealt with the players then the players call or bid in an auction seeking to take the contract specifying how many tricks the partnership receiving the contract needs to take to receive points for the deal. During the auction, partners use their bids to exchange information about their hands including overall strength and distribution of the suits. No other means of conveying or implying any information is permitted. 3.7 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no lien or right. The money is transferred back to the winner at the end of the game. It is well settled that games of skill played with monetary stakes does not partake the character of betting and it still remains within the realm of games of skill only. The term betting and gambling cannot be artificially bifurcated by the Respondents to carve out an exception by stating that games of skill played with monetary stakes can also partake the character of betting and hence, be taxable at the rate of 28%. Actionable claim if any is between the players, which is also not taxable under GST laws, [as per Entry No. 6 of Schedule III of CGST Act] since actionable claims are excluded from the ambit of GST (except for lottery, betting and gambling; 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 unsecu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the Hon ble Supreme Court in Skill Lotto Solutions Pvt Ltd v. Union of India - 2020 SCC Online SC 990 , such a transaction would be a supply of actionable claims in the form of betting and gambling. Consequently, the scheme of CGST r/w Rule 31A will govern the transaction to be taxed at 28% on 100% of the bet value. 3.12 The Hon ble Karnataka High Court held as follows: 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. Taxation of games of skill is outside the scope of the term supply in view of Section 7 (2) of the CGST Act, 2017 read with Schedule III of the Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly, supply of specified actionable claims. The issue in the present case is also to determine whether organizing games/tournaments of bridge (when played for money) qualifies as supply of specified actionable claims . However, the aforesaid proviso specifically mentions that consideration in money or money s worth has to be paid or conveyed to the supplier or through the supplier or placed at the disposal of the supplier. In Gameskraft Technologies (P.) Ltd supra, the petitioner retains a certain percentage of money from the amount which is placed by the players as stakes and the balance amount is held by him in a designated account wherefrom 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 priz ..... X X X X Extracts X X X X X X X X Extracts X X X X
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