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October 23, 2018

‘Lottery’ an Actionable Claim, Liable to GST, Upholds Levy of Differential Tax: Calcutta HC

Lottery an Actionable Claim

•  HC held that lottery can be taxed under Central CGST Act as well as West Bengal (WB) GST Act, 2017 while rejecting assessee’s plea that lottery is neither ‘goods’ or ‘service’ under said Acts;

•  Relying upon SC ruling in Sunrise Associates wherein it was held that the distinction drawn in H. Anraj between the chance to win and right to participate in the draw was unwarranted, held that, “lottery is an ‘actionable claim’ and goods or moveable property”;

•  Referring to various judicial precedents, stated that “Legislature enjoys a very wide latitude in classification for taxation” and “The State is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it is done reasonably”;

•  Further opined that “It has not been substantiated that, either the Central or the State Legislatures have exceeded their jurisdiction in promulgating any of the Acts governing goods and services”;

•  Moreover, It has not been substantiated that, State Legislature while promulgating WB GST Act, 2017 did not have the competence to pass a law or that it violated any fundamental or any other right of the assessee or any provision of Constitution;

•  HC stated that Entry 6 of Schedule III of CGST Act, 2017 which deals with activities or transactions which shall be treated neither as the supply of goods nor services takes out ‘actionable claims’ other than a lottery, betting and gambling from the scope of such Act;

•  Consequently since definition of ‘goods’ in Article 366(12) of Constitution allows Legislatures to classify lottery as ‘goods’ and charge tax thereon and since, lotteries are kept out of purview of ‘actionable claims’ which do not attract GST, lottery can therefore be charged to tax under CGST/WB GST Act, 2017;

•  Moreover, upheld differential levy of tax in respect of lottery, while stating that it was after extensive deliberations that GST Council in its 17th meeting approved rates and resolution was carried by the requisite majority;

•  However, HC remarked that, where, a resolution adopted in Council meeting is substantiated to be breaching any fundamental right or provision of the Constitution of India, the same can be adjudicated upon by a Writ Court.

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