The tax determination dispute surrounding skill games such as Rummy and chess continues to ferment within India, with the Supreme Court recently engaging in a heated debate on whether the revenue from such games should be subject to Goods and Services Tax (GST). The bench, consisting of Justices JB Pardiwala and R. Mahadevan, heard opposing views from the government and representatives of online gambling companies during the hearing on May 5.
Represented by Deputy Solicitor General N. Venkataraman, the government presented a key argument: when betting elements are introduced into skill games, their nature fundamentally changes. "Even if originally skill games, once betting is involved, it transforms into gambling," Venkataraman emphasized, "from a legal perspective, betting in skill games should be recognized as gambling."
This stance was strongly contested by representatives of the gambling companies. Senior advocate AM Singhvi questioned, "According to the government's logic, does betting in a chess match change the inherently skill-based nature of the sport?" He further cited judicial precedents, noting that benches consisting of five and seven judges had previously ruled that skill games should not be classified as games of chance.
The background of this legal debate is noteworthy. In February this year, the Advertising Standards Council of India (ASCI) signed a memorandum of understanding with three sports organizations to combat illegal gaming advertisements. At a parliamentary session at the end of March, the Union Minister for Information Technology, Ashwini Vaishnaw, addressed the jurisdictional issues of gambling laws among states in response to DMK MP Dayanidhi Maran's inquiry about the central government's stance on online gambling.
As a specific measure to strengthen regulation, the Indian government has recently blocked over 1,400 gaming websites based on complaints. This legal debate over the nature of games not only relates to the collection of substantial taxes but will also profoundly affect the future development trajectory of India's gaming industry. The Supreme Court's final decision may put an end to this long-standing dispute.
