Lottery Can Be Taxed Under GST Acts: Calcutta HC [Read Judgment]

‘Since lotteries are generally speaking ‘goods’ and come within the definition of ‘actionable claims’, and since, lotteries are kept out of the purview of ‘actionable claims’ which do not attract the CGST Act, 2017, lottery can, therefore, be charged to tax under the CGST Act, 2017.’

The Calcutta High Court has held that lottery can be taxed under the Central and State Goods and Services Tax Act.

Justice Debangsu Basak dismissed a writ petition that sought a declaration that lotteries are exempt from tax under Sl. No. 6 of Schedule III read with Section 72 of the Central Goods and Service Tax Act, 2017 and Sl. No. 6 of Schedule III read with Section 72 of the State Goods and Service Tax Act, 2017.

It was contended that the sale of lottery ticket does not entail transfer of any ‘goods’ or even beneficial interest in a movable property and that the person who sells the lottery ticket is not selling any ‘goods’ nor is the purchaser buying any ‘goods, and thus lottery cannot come within the definition of ‘goods’ under the CGST Act, 2017 or any of the SGST Acts.

Referring to a Supreme Court judgment, the court held that a lottery is an ‘actionable claim’ and goods or moveable property. It also added that lottery can be taxed under the Central Goods and Services Tax Act as well as the West Bengal Goods and Services Tax Act, 2017. The court said: “Schedule III under Section 7 of the CGST Act, 2017 deals with activities or transactions which shall be treated neither as a supply of goods nor as a supply of services. Entry 6 of Schedule III of CGST Act, 2017 takes out ‘actionable claims’ other than lottery, betting and gambling from the scope of such Act. Consequently, since lotteries are generally speaking ‘goods’ and come within the definition of ‘actionable claims’, and since, lotteries are kept out of the purview of ‘actionable claims’ which do not attract the CGST Act, 2017, lottery can therefore be charged to tax under the CGST Act, 2017. On the parity of the same reasoning, lottery is chargeable to tax under WB GST Act, 2017 also.”

While holding that differential levy of tax is permissible, the bench said: “The Goods and Services Tax Council established under Article 279A of the Constitution of India at its 17th meeting deliberated extensively with regard to the rate of tax to be imposed on lotteries. Differential rate of tax was introduced in the 17th Goods and Services Tax Council Meeting held on June 18, 2017. The States before the Court were present in such meeting. It was after extensive deliberations that, the GST Council had approved the rates as presently obtaining in respect of lottery. It is within the domain of such Council to decide the rate of tax.”

The court clarified the decisions or the resolutions of the Goods and Services Tax Council were not immune from judicial review and were justiciable.  In a given case, where, a resolution adopted in the Goods and Services Tax Council Meeting is substantiated to be breaching any fundamental right or any provision of the Constitution of India, the same can be adjudicated upon by a Writ Court, it said.

Read the Judgment Here