The Calcutta High Court has upheld the constitutional validity of bringing lotteries under the purview of Goods and Services Tax ( GST ) and held that a lottery can be treated as ‘goods’ for the purpose of West Bengal GST Act.
Before the High Court, the petitioners urged that lottery cannot come within the definition of ‘goods’ under the CGST Act, 2017 or any of the SGST Acts. According to them, the definition of ‘tax’ on the sale or purchase of ‘goods’ is an inclusive definition. However, there has to be a transfer of property. The petitioners contended that the ticket holder has a contingent interest in the prize money, which he may or may not get in the future, but does not get to possess any benefit for such payment in return. The sale of the lottery ticket is, therefore, a sale of chance. Consideration is paid for the chance to win. The sale of a lottery ticket, therefore, does not entail the transfer of any ‘goods’ or even beneficial interest in a movable property. Therefore, the person who sells the lottery ticket is not selling any ‘goods’ nor is the purchaser buying any ‘goods’.
Justice Debangsu Basak noted that “Schedule III under Section 7 of the CGST Act, 2017 deals with activities or transactions which shall be treated neither as a supply of goods nor as a supply of services. Entry 6 of Schedule III of CGST Act, 2017 takes out ‘actionable claims’ other than the lottery, betting and gambling from the scope of such Act. Consequently, since lotteries are generally speaking ‘goods’ and come within the definition of ‘actionable claims’, and since, lotteries are kept out of the purview of ‘actionable claims’ which do not attract the CGST Act, 2017, the lottery can, therefore, be charged to tax under the CGST Act, 2017. On the parity of the same reasoning, the lottery is chargeable to tax under the WB GST Act, 2017 also.”
“CGST Act, 2017 and WB GST Act, 2017 cannot be held to be unconstitutional. Lotteries come within the scope and ambit of CGST Act, 2017 and WB GST Act, 2017. Therefore, the lottery can be taxed under the CGST Act, 2017 and WB GST Act, 2017. The second issue is answered accordingly,” the Court said.
Advocates, Mr. Abhratosh Majumdar, A.A.G., Mr. T. M. Siddique, Mr. Avra Majumder appeared for the State.
