A single judge bench of the Calcutta High Court rejected lottery operator M/s. Teesta Distributors writ petition to exempt lotteries from the ambit of the Goods and Services Tax (GST), rejecting Teesta’s contention that lottery tickets were an actionable claim and outside the definition of goods.
The bench comprising of Justice Debangsu Basak also rejected Teesta Distributor’s claim that the dual taxation structure of 12% GST on lotteries sold by state governments within the state and 28% GST on lotteries sold outside the organising state by private distributors is per se discriminatory and liable to be struck down.
As per a report in Live Law, Justice Basak held that lotteries fall within the ambit of actionable claim as per the constitution bench decision of the Supreme Court in Sunrise Associates v. Government of NCT of Delhi.
The judge further held that the definition of ‘goods’ under Article 366(12) of the constitution is broad enough to allow legislatures to classify lotteries as goods and charge tax thereon. The order further noted that Schedule III of the Central Goods & Services Tax Act, 2017 and corresponding state laws, exempt actionable claims except gambling, betting and lotteries from being treated as supply of goods or services.
The High Court held that since lotteries have not being afforded the exemption from being treated as supply under the CGST Act, it would not be possible to exclude lotteries from the purview of GST and consequently, tax would be attracted on sale of lottery tickets under the category of goods.
While holding that differential levy of 12% and 28% GST on different kinds of lotteries is permissible, the court noted that legislatures have wide latitude in categorising and differentiating between various products and held:
“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.”