On Wednesday, the Supreme Court ruled that a state government can charge a tax on lotteries that are run by other states in its area.
‘Lotteries’ are a “kind of gambling activity,” according to the bench of Justices M.R. Shah and B.V. Nagarathna. The court ruled that “betting and gambling” are included in the Constitution’s State List in the Seventh Schedule.
“All activities that are in the nature of ‘betting and gambling,’ including lotteries, are subject to taxation. “State legislatures have the power to tax lotteries under Entry 62 of the State List,” Justice Nagarathna, who authored the 122-page judgment, said.
The judgment came in response to petitions filed by the governments of Karnataka and Kerala against High Court orders to nullify statutes adopted by their legislatures to tax lotteries organised and promoted by the states of Nagaland, Arunachal Pradesh, Sikkim, and Manipur in Kerala and Karnataka.
The tax regulations imposed by the two states were ruled to be unlawful and unconstitutional by the High Courts, who even ordered Kerala and Karnataka to reimburse the money received as lottery tax to the north-eastern states.
“We find that the Division Benches of the High Courts of Kerala and Karnataka were incorrect in ruling that the respective state legislatures lacked legislative authority to levy a tax on lotteries run by other states in their respective states,” Justice Nagarathna said.
“There is a genus of betting and gambling. It encompasses a variety of activities, including horse racing, wheeling, and various regional variations or forms of “betting and gambling”… It is obvious from this court’s decisions that “lotteries” are a kind of gambling activity. As a result, lotteries fall under the heading of “betting and gaming,” as defined in Entry 34 List II… According to the judgment, the states of Karnataka and Kerala have the authority to adopt the acts and impose taxes on “betting and gambling.”
Source: The Hindu