Lottery operator M/s. Teesta Distributors filed a writ petition in the Calcutta High Court requesting exemption of lotteries from the ambit of the GST (Goods and Services Tax). A single judge bench of the Calcutta High Court has rejected the petition and denied to consider Teesta’s contention that lottery tickets were an actionable claim and outside the definition of goods.
The bench comprising of Justice Debangsu Basak also dismissed its claim that the dual taxation structure of the 12 per cent of GST on lotteries sold by the state governments within the state and 28 per cent GST of lotteries sold outside the organising state by the distributor is liable to strike down.
As per the report in Live Law, Justice Basak said that the lotteries fall within the category of an actionable claim as per the constitution bench decision of the Supreme Court in the Sunrise Associates v Government of NCT of Delhi.
The judge also said that the constitution considered lottery as ‘goods’. Under Article 366 (12) of the constitution, it was broad enough for allowing legislatures to classify lotteries as goods and charge tax on it. The order also noted that Schedule III of the Central Goods and Services Tax Act, 2017 and corresponding state laws exempt the actionable claims but it does not exempt gambling, betting and lotteries from coming under the category of goods and services.
The High Court asserted that since the lotteries were not granted an exemption from being considered as supply under the CGST Act and it won’t be possible excluding lotteries from the purview of GST and tax would automatically be attracted on the sale of the lottery tickets under the category of goods.
While stating that a GST of 28 per cent and 12 per cent of differential levy of lotteries is permissible the court underlined that the several legislatures have a different way of categorizing and differentiating between various products and stated that:
“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. The 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.”