State Jurisdiction on Lottery Tax: SC

State Jurisdiction on Lottery Tax: SC

Part of: Prelims and GS II- Federalism, GS-III – Economy

In News: The Supreme Court has held that a State legislature has the right to impose tax on lotteries conducted by other States within its jurisdiction.

• A Bench of Justices M.R. Shah and B.V. Nagarathna observed that ‘lotteries’ is a “species of gambling activity”. The court said ‘betting and gambling’ is part of the State List in the Seventh Schedule of the Constitution.
• Since, there is no dispute that lotteries, irrespective of whether it is conducted or organised by the Government of India or the Government of State or is authorised by the State or conducted by an agency or instrumentality of State government or Central government or any private player, is ‘betting and gambling’, State legislatures have the power to tax lotteries under Entry 62 of the State List.

Appeal against HC verdicts

• The judgment came on appeals filed by the Karnataka and Kerala governments against the decisions of their respective High Courts to quash laws enacted by their legislatures to tax lotteries organised and promoted by the States of Nagaland, Arunachal Pradesh, Sikkim, Manipur in Kerala and Karnataka.
• The High Courts had found the tax laws enacted by the two States invalid and unconstitutional and had even directed Kerala and Karnataka to refund the money collected as tax from lotteries to the north-eastern States.