In a boost to the online gaming sector, the Madras High Court on Thursday set aside the ban imposed by the Tamil Nadu government on online rummy and poker. Experts and online gaming associations welcomed the move and said that the Madras High Court has upheld the difference between games of skill and chance, which can also help strengthen their case on GST notices.
Payal Thaker, Partner, Indirect Tax, BDO India noted that while the Madras High Court has pronounced the judgment in the context of regulating the online games in the state of Tamil Nadu, it has again reiterated the distinction between the game of skill and chance which has been earlier laid down by the Supreme Court.
“This judgment will have a significant favourable impact on the stand taken by the online gaming companies to treat game of skill and chance separately for goods and services tax. The decision will help the online gaming companies to strengthen their defence against the huge GST demands raised on them for the past period,” she said.
Anuraag Saxena, CEO, E-Gaming Federation said the ruling holding online Rummy and Poker as games of skill is yet another validation for the legitimate online skill gaming industry. “Time and again, the Indian judiciary has struck down provisions seeking blanket prohibitions on skill gaming as Ultra Vires in the constitution,” he noted.
He also called for a forward-looking policy has the potential to significantly drive and support the growth of this emerging sector, he said.
Roland Landers, CEO, All India Gaming Federation, said the ruling is in line with over six decades of jurisprudence on the subject. “By reiterating that online rummy and online poker are games of skill, this decision by the Madras High Court is yet another validation of what the online skill gaming industry has always maintained in relation to online skill games being a legitimate business activity protected under the Constitution of India. This also adds to a long line of judgments from the Supreme Court, Karnataka, Kerala and Madras High Courts upholding the legitimacy of such games,” Landers said.
AIGF, which has over 100 online gaming companies as members, said it hopes this decision will be a great boost for this sunrise sector and generate more certainty among investors and the gaming community at large, and is a step in the right direction for this sunrise sector.
The Madras High Court ruling comes at a time when the online money gaming sector is under pressure post the implementation of 28% GST from October 1. Companies are looking at various measures to retain players such as cashbacks and subscription models and are also cutting down on ad spends to offset the impact of the tax.
Source: Business Today