On Thursday, the Supreme Court upheld that the Goods and Service Tax (GST) is to be imposed on the sale of lottery tickets, plus betting and gambling activities.
The apex court bench headed by Justice Ashok Bhushan - alongside Justices R Subhash Reddy and MR Shah - upheld the notification issued under the Central Goods and Services Tax Act, 2017, which brought the lottery and gambling under the GST.
The bench also dismissed a plea filed by Skill Lotto Solutions which sought to declare the levy of GST on the lottery as discriminatory and in violation of the constitution of India.
Various lottery dealers have argued that Central government has wrongfully classified lottery as "goods". The plea argued that the lottery tickets are pieces of paper and devoid of any value.
The 87-page judgment the top court was reserved on 4 November after an extensive hearing by a three-judge bench.
The petitioners highlighted the practice that sees 12% GST on lotteries sold within the same state, but 28% GST for sale of tickets from other states. The Goods and Services Tax Council has previously recommended a uniform tax rate for lotteries.
The judgment observed in details: "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 including these three actionable claims for tax purposes. Regulation including taxation in one or other form on the activities namely lottery, betting and gambling has been in existence since last several decades.
"When the parliament has included above three for purpose of imposing GST and not taxed other actionable claims, it cannot be said that there is no rationale or reason for taxing above three and leaving others."
The country's lottery trade last year begged the government to relax GST rates, with the high tax blamed for a collapse in sales.