File Copyright Online - File mutual Divorce in Delhi - Online Legal Advice - Lawyers in India

Taxation on Lottery And Gambling

Citation: Skill Lotto Solutions (P) Ltd. v. Union of India, (2021) 15 SCC 667
Statutes: Sale of Goods Act, 1930, Constitution of India, 1950, Central Goods and Services Tax Act, 2017. Transfer of Property Act, 1882
Bench: Ashok Bhushan, R. Subash Reddy, M.R Shah, JJ
Status: Decided

Facts Of The Case And Background:

  • The petitioner, an authorized agent for sale and distribution of lotteries, has challenged the definition of goods under Section 2(52) of Central Goods and Services Tax Act, 2017 and aggrieved by the provisions of Act No.12 of 2017. The petitioner seeks a declaration that the levy of tax on lottery is discriminatory and violates Articles 14, 19(1)(g), 301 and 304 of the Constitution of India.
  • The Lotteries (Regulation) Act, 1998 regulates lotteries in India. It defines a lottery as a scheme for distribution of prizes by chance to those who participate by purchasing tickets. Section 4 allows State Governments to organize, conduct or promote lotteries subject to conditions.
  • Litigation on the taxability of lottery tickets has resulted in several judgments by the Court. In 1994, service tax was introduced on lottery tickets. The Central Government also framed Lotteries (Regulation) Rules, 2010 to regulate lotteries organized by the States.
  • The Central Goods and Services Tax Act, 2017 (Act No.12 of 2017) was enacted by the Parliament for the levy and collection of tax on intra-State supply of goods or services by the Central Government, and for related Sale of Goods Acts, 1930, the term "goods" has been defined which provides that "goods" means every kind of movable property other than money and securities but includes actionable claim.


  • Whether the writ petition is not maintainable under Article 32 of the Constitution of India since the writ petition relates to lottery, which is res extra commercium and the petitioner cannot claim protection under Article 19(1)(g)?
  • Whether the inclusion of actionable claim in the definition of goods as given in Section 2(52) of Central Goods and Services Tax Act, 2017 is contrary to the legal meaning of goods and unconstitutional?
  • Whether the Constitution Bench judgment of this Court in Sunrise Associates (supra) in paragraphs 33, 40, 43 and 48 of the judgment has laid down as the proposition of law that lottery is an actionable claim or the observations made in the judgment were only an obiter dicta and not declaration of law?
  • Whether exclusion of lottery, betting and gambling from Item No.6 Schedule III of Central Goods and Services Tax Act, 2017 is hostile discrimination and violative of Article 14 of the Constitution of India?
  • Whether while determining the face value of the lottery tickets for levy of GST, prize money is to be excluded for purposes of levy of GST?

Contentions Of The Parties:
  • Mr. Shrivastava, counsel, argued that GST should not be applicable to lotteries because they are not considered goods under the Central Goods and Services Tax Act of 2017. It is further submitted that the Constitution Article 366 clause (12) defines goods to include all materials, commodities and articles.
  • The definition in the Constitution exclude actionable claims since it only refers to materials, commodities and articles. The Constitution Bench of the Court has also ruled in the case of Sunrise Associates v. State (NCT of Delhi) that lotteries are not goods. Therefore, the provisions of the 2017 Act that treat lotteries as goods are unconstitutional.
  • The inclusion of lottery as an actionable claim in the definition of goods under Section 2(52) of the 2017 Act is self-contradictory. The provisions of the 2017 Act are self-contradictory in as much as the definition of actionable claim is as per the definition of the Transfer of Property Act, which is only the claim and not the goods.
  • Additionally, levying GST on the face value of lottery tickets is not permissible as it includes prize money for winners.
  • The definition of goods as occurring in the Sale of Goods Act, 1930 clearly excludes actionable claims from the definition of goods, which definition has been held to be definition of goods under the Constitution by this Court in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.
  • It is unequivocally evident that the deliberate attempt to include actionable claims within the ambit of goods for GST purposes is a blatant contradiction to the legal definition of goods as established by the Indian Constitution. This is further emphasized by the landmark Gannon Dunkerley case.
  • Shri Shrivastava confidently asserts that the exclusion of actionable claims, other than lottery, betting, and gambling, from taxation as goods or services under Schedule III to the 2017 Act is discriminatory. This unjust treatment of these items must be rectified without delay rectified immediately.
  • Shri Vikramjit Banerjee, learned Additional Solicitor General refuting the submissions of learned senior counsel for the petitioner at the very outset submits that the writ petition filed by the writ petitioner under Article 32 is not maintainable. It is submitted that lottery is "res extra commercium" and no right under Article 19(1)(g) and Article 301 can be claimed by the petitioner with regard to lottery.
  • The transaction of lottery tickets cannot be raised to the status of trade, commerce or intercourse. There is no right with the petitioner which can be enforced by writ petition filed under article 32 of the Constitution, hence, the writ petition being not maintainable deserves to be dismissed.
  • Mr. Banerjee believes economic laws should be viewed more flexibly than civil rights laws. Courts are hesitant to interfere with state taxation policies. Not taxing actionable claims, except for lotteries, betting, and gambling, is not discriminatory.
  • According to the Constitution Bench of the court in Sunrise Associates, an actionable claim is a movable property and goods in a broader sense. The definition of goods in the Act 2017's Section 2(52) is consistent with the decision of the Constitution Bench in Sunrise Associates, and the argument against it is unfounded.
  • The term 'goods' under CGST, 2017 covers lottery as it is considered an actionable claim, based on Article 366(12) of the Constitution and 2(52) of Central Goods & Services Tax, 2017.
  • The petitioner's argument on the ground of discrimination in the rate of tax is no longer valid due to an amendment made on 02.03.2020. The State of Madras Vs. Gannon Dunkerley case cited by the petitioner's counsel does not apply as it dealt with the definition of "sale" and not the interpretation of "goods".
  • The levy of GST on Lottery, betting, and gambling is not in violation of any fundamental right. In doing so the court also said that such activities are 'res extra commercium'; rendering such levy of GST on lottery, betting, and gambling lawful.
  • The considered opinion that on the grounds, which have been raised in the writ petition, the writ petition cannot be said to be not maintainable under Article 32 and the preliminary objection made by the learned ASG that the writ petition cannot be entertained under Article 32 and is overruled.
  • The inclusion of actionable claim in definition "goods" as given in Section 2(52) of Central Goods and Services Tax Act, 2017 is not contrary to the legal meaning of goods and is neither illegal nor unconstitutional.
  • The Constitution Bench judgment of this Court in Sunrise Associates has laid down that lottery is an actionable claim as proposition of law. The observation cannot be said to be obiter dicta.
My Views:
  • Section 30 of the Indian Contract Act, 1872 states that agreements by way of wager are void. Furthermore, the Consumer Protection Act prohibits conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest.
  • Article 301 of the Constitution gives freedom to trade, commerce and intercourse within the territory of India, and Article 302 gives the legislature the power to impose reasonable restrictions on trade, commerce and intercourse.
  • Considering the shady and moreish nature of Betting, Gambling, Casinos, Horse Racing, Lottery & Online Money Gaming, I believe imposing the GST is the right move. Bringing these games in the ambit of actionable claim keeps a check on these activities.
Written By: Arshdeep Kaur, (LLB (1st) Manav Rachna University, Faridabad)

Law Article in India

Ask A Lawyers

You May Like

Legal Question & Answers

Lawyers in India - Search By City

Copyright Filing
Online Copyright Registration


How To File For Mutual Divorce In Delhi


How To File For Mutual Divorce In Delhi Mutual Consent Divorce is the Simplest Way to Obtain a D...

Increased Age For Girls Marriage


It is hoped that the Prohibition of Child Marriage (Amendment) Bill, 2021, which intends to inc...

Facade of Social Media


One may very easily get absorbed in the lives of others as one scrolls through a Facebook news ...

Section 482 CrPc - Quashing Of FIR: Guid...


The Inherent power under Section 482 in The Code Of Criminal Procedure, 1973 (37th Chapter of t...

The Uniform Civil Code (UCC) in India: A...


The Uniform Civil Code (UCC) is a concept that proposes the unification of personal laws across...

Role Of Artificial Intelligence In Legal...


Artificial intelligence (AI) is revolutionizing various sectors of the economy, and the legal i...

Lawyers Registration
Lawyers Membership - Get Clients Online

File caveat In Supreme Court Instantly