By Ranjana Adhikari
There has been a long debate on the distinction between online skill game formats like online fantasy sports and online rummy on the one hand and games of chance such as betting and gambling on the other hand. Judicial intervention was able to delimit the two activities as completely distinct. As early as 1957, the Supreme Court of India ruled that competitions which require a preponderance of skill to succeed are not gambling activities. Subsequently, in several judgments over the years on rummy and fantasy sports in online, the Supreme Court of India reiterated this view in favor of online skill gaming platforms, emphatically stating that it is a legitimate business activity protected as a fundamental right under Article 19(1)(g) of the Constitution of India. Various High Courts in several states have time and again held the same view.
In light of this delineation between games of skill and gambling, as repeatedly provided by the judiciary, it should now be amply clear that the difference between the two activities in question is like chalk. and cheese. However, the misinterpretation of certain laws has been an obstacle to the operation of online skill games platforms. Entry 34 of Schedule II of the Seventh Schedule of the Constitution of India contains the provisions allowing State Governments to legislate on matters covering only the domain of “Betting and Gambling”. However, attempts have been made by various state governments in the form of amendments or ordinances enacted against the online skill gaming industry or bans on their operations under this provision. The High Courts in those States rightly struck down such legislation on the spot on the grounds, among other things, of lack of legislative jurisdiction.
Arguably, the constitutional provisions empower Parliament to be the legislative authority for online games of skill. Section 246 of the Constitution, read with Entry 31 of Schedule I of the Seventh Schedule to the Constitution, grants exclusive legislative authority to Parliament to enact laws on forms of communication such as wireless, telecommunications and broadcasting. Online gambling platforms are internet-based and may have similar characteristics to ‘intermediaries’ under the Information Technology Act 2000, including services such as
that interaction via chat features between users, etc.
Similarly, with regard to interstate trade and commerce, the territorial jurisdiction of the center and the states is also clearly delineated in the Constitution of India. Article 245 of the Constitution empowers Parliament to enact laws for all or part of the territory of India, while the States are limited to make laws governing the State only. Notably, in cases such as Narinder Batra v. Union of India (Delhi High Court, 2009) and Zee Telefilms v. Union of India (Supreme Court, 2005), courts held that states could not exercise
extraterritorial jurisdiction on any subject and thus rejected the erroneous exercise of extraterritorial jurisdiction by States in the field of sport and entertainment in the said cases.
The activity relating to the provision of an online platform for the conduct of online games of skill has the necessary corollary that the majority of its transactions are in the nature of the provision of interstate services (although not all transactions may not have an interstate element). In this regard, it should be noted that the Integrated Goods and Services Tax Act 2017, which provides for the levying of a tax on interstate supplies, contains a specific provision relating to services supplied by internet information technology.
and is essentially automated involving minimal human intervention (“Online Information Data Access and Retrieval” – OIDAR), and specifically covers “Online Games” below.
Further, under the Service Accounting Codes (SAC) classification which applies to classification of services under GST in India, online gaming is covered under telecommunication, broadcasting and supply services. information. This classification is similar to the words used under entry 31 of Schedule I of the Seventh Schedule to the Constitution. In addition to the legislative jurisdiction and fiscal policy arguments in favor of the center when it comes to making laws for the online gaming industry, there are also constitutional doctrines that further strengthen the argument. The constitutional law doctrine of “pith and substance” states that legislative jurisdiction to enact a law is to be judged on the basis of where the pith and substance of the enacted or proposed law lies. Arguably, the pith and substance of an online gambling law will correspond to the matters listed in entry 31 of Schedule I of the Seventh Schedule to the Constitution.
Further, Section 254 of the Constitution (which deals with the “repugnance doctrine”) states that if Parliament has passed any law which it is competent to pass under the provisions of the Constitution, then that law shall prevail. and the law passed by the State Legislature shall, to the extent of repugnance with the central law, be void.
The voice and clarity that the judiciary has provided to the gambling industry has now enabled the central government to step in and implement the judicial principles set forth in various cases to support the gambling industry. India online address. India is very well positioned and is now on the verge of enacting a central law that would provide the boost this industry really needs under the booming sector.
The author is Partner, Technology, Media and Games at IndusLaw
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