Lottery Tickets Sale not fall under ‘Auxiliary Service’, Service Tax Not Payable: Kerala HC [Read Order]

In a recent case, the Kerala High Court has held that service tax is not payable on the sale of lottery tickets, as it does not fall under the purview of auxiliary service or taxable service as defined under section 65 of the Finance Act, 1994.

Read More: New ISD Rules Effective April 2025: How Debit and Credit Notes Affect ITC Distribution

C.N.Mithran, the petitioner filed the writ petition seeking a declaration that the sale of lottery tickets does not come within the purview of auxiliary service or taxable service as defined under Section 65 of the Finance Act, 1994, and is consequently not a taxable service within the meaning of Section 65(105) of the Finance Act, 1994.

Complete Blueprint for Preparing Project Reports, click here

The bench submitted by both sides that the issue is covered against the Department by the judgment of the Honourable Supreme Court reported in Union of India v. Future Gaming Solutions Pvt. Ltd.

"Taxable service" means any service provided or to be provided by a person to another in the course of business or commerce, and which is specifically mentioned in the list of services notified by the government and chargeable to service tax.

Read More: Top Stories Income Tax, GST Depts Join Forces: Reopening Old I-T Assessments Over GST Invoice Mismatches and Fake ITC Claims

The single bench of Justice Mohammed Nias C.P. has relied on the decision of the Supreme Court in the case of Union of India v. Future Gaming Solutions Pvt. Ltd. in which it was held that the service tax is not leviable on the transactions between the purchaser of the lottery tickets and the Sikkim Government and that the conduct of lottery scheme is a betting and gambling activity.

Complete Ready to Use PDFs of 200+ Agreements Click here

While allowing the petition, the court found that since the sale process is not under the definition of taxable service as defined under Section 65 of the Finance Act, 1994, service tax demandable is not valid within the meaning of Section 65(105) of the Finance Act, 1994.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates