Supreme Court of India States Lottery, Gambling, Betting Taxable under GST Act

Supreme Court of India States Lottery, Gambling, Betting Taxable under GST Act

The Supreme Court held on Thursday that lottery, gambling and betting are taxable under the Goods and Services Tax (GST) Act.

The court held that lottery, cricket betting and gaming are “available claims” and fall within the scope of “goods” as specified in Section 2(52) of the Central Goods and Services Tax Act, 2017.

Bench headed by Justice Ashok Bhushan, said that the GST levy on lotteries would not amount to “hostile discrimination.”

 “Lottery, betting and gambling are well known concepts and have been in practice in this country since before Independence and were regulated and taxed by different legislations. When Act, 2017 defines the ‘goods’ to include actionable claims and included only three categories of actionable claims, i.e., lottery, betting and gambling, for purposes of levy of GST, it cannot be said that there was no rationale for the Parliament in including these three actionable claims for tax purposes, and leaving others,” Justice Bhushan wrote in the 87-page judgment.

The court said that state laws, including taxes in one way or another, on lottery, betting in India and gambling have been in effect for decades.

Justice Bhushan responded to the claims put forward by Talent Lotto Solutions and other lottery agents that lottery is not ‘goods’ and that GST is unconstitutional. They said that taxing only lottery, online gambling and betting and no other practises demonstrated “clear hostile discrimination.”

But the court said that the Parliament has the full right to go for a “inclusive definition of the word “goods” to cover actionable statements such as lottery, gaming and cricket betting.

“The power to make laws as conferred by Article 246A fully empowers the Parliament to make laws with respect to goods and services tax and expansive definition of goods given in Section 2(52) cannot be said to be not in accord with the constitutional provisions,” Justice Bhushan wrote.

The court acknowledged the government’s opinion that the Parliament had authority to impose GST on lotteries according to Article 246A of the Constitution.

“Article 246A is a special provision with regard to goods and services tax w.e.f. 16.09.2016, which special power has to be liberally construed empowering the Parliament to make laws with respect to goods and services tax,” it said.

In addition, the court noted that Section 2(52) of the GST Act was in accordance with the judgement of the Supreme Court in the Sunrise Associates case, which ruled that the sale of a lottery ticket amounts to the transfer of an actionable claim.”

The court also dismissed a request to remove prize money from the GST when calculating the face value of the lottery tickets.

“The value of taxable supply is a matter of statutory regulation… it is not permissible to compute the value of taxable supply by excluding prize which has been contemplated in the statutory scheme,” the court held.


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