Predominance of skill keeps rummy outside betting or gambling for GST, and a contrary show cause notice falls.

Rummy, whether played online or offline and with or without stakes, was held to remain a game of skill under the predominance-of-skill test, and therefore not to constitute betting or gambling for GST purposes under Entry 6 of Schedule III. The Court treated the expressions "betting" and "gambling" as carrying the same settled legal meaning as in gambling-law jurisprudence, which excludes games of skill. On that footing, a show cause notice premised on treating rummy as betting or gambling was held illegal, arbitrary and without jurisdiction, and was quashed.

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Issues: (i) Whether offline and online rummy, when played with or without stakes, amounts to betting or gambling under Entry 6 of Schedule III of the Central Goods and Services Tax Act, 2017. (ii) Whether the impugned show cause notice asserting GST liability on the basis of betting and gambling was without jurisdiction and liable to be quashed.

Issue (i): Whether offline and online rummy, when played with or without stakes, amounts to betting or gambling under Entry 6 of Schedule III of the Central Goods and Services Tax Act, 2017.

Analysis: The Court applied the settled distinction between games of skill and games of chance, holding that the controlling test is the predominance of skill. It relied on the line of authority recognising that a game does not become gambling merely because some element of chance exists or because stakes are involved, if the game remains substantially and preponderantly one of skill. The Court treated rummy as a game of skill and held that online or digital form does not change that character. It further held that the expressions betting and gambling, being nomen juris, must receive the same legal meaning under the GST regime as in constitutional and gambling-law jurisprudence, which excludes games of skill.

Conclusion: Rummy, whether played online or offline and whether with stakes or without stakes, does not amount to betting or gambling and is outside Entry 6 of Schedule III.

Issue (ii): Whether the impugned show cause notice asserting GST liability on the basis of betting and gambling was without jurisdiction and liable to be quashed.

Analysis: Since the foundational premise of the notice was that the petitioners were engaged in betting and gambling, and that premise failed on the merits, the notice could not sustain a GST demand on that basis. The Court also held that the notice was an attempt to treat games of skill as taxable betting and gambling, which was contrary to the settled legal position and therefore beyond authority of law.

Conclusion: The impugned show cause notice was illegal, arbitrary and without jurisdiction and was quashed.

Final Conclusion: The petitions succeeded, the impugned notice was set aside, and the connected proceedings and interim arrangements came to an end.

Ratio Decidendi: For GST purposes, games that are substantially and preponderantly games of skill do not become betting or gambling merely because they are played for stakes, and therefore they fall outside Entry 6 of Schedule III.

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