Bringing the lottery under GST is valid

The Supreme Court has validated the imposition of products and Services Tax (GST) on lotteries and gambling. A bench of Justices Ashok Bhushan, Justice R Subhash Reddy and Justice MR Shah dismissed the plea of lottery dealer Skill Lotto Solutions Pvt Ltd stating that the lottery can’t be placed under the definition of ‘commodity’.

The lottery isn’t an item but an actionable claim. Under Article 366 (12) of the Constitution, goods are often only material, commodities, and articles.

In such a situation, it’s unconstitutional to bring lotteries under the purview of GST, but the Supreme Court rejected the plea of the petitioner that under the Central Goods and Services Tax Act, 2017, the notification to bring lotteries and gambling under GST is valid. Within the GST Council meeting held in December last year, a choice was taken to impose 28 percent GST on lotteries.

Supreme Court has termed the inclusion of lottery and gambling within the Goods and Services Tax (GST) as legal. The prize within the lottery is additionally taxed. A personal lottery company challenged the government’s decision to incorporate lotteries in GST.

In the GST Council meeting held in December last year, it had been decided to impose 28% GST on the lottery from March 1, 2020. The GST Council was highly critical of this issue. This was the primary time during a GST Council meeting that a vote had to be resorted to by a majority decision on a problem.

Before that, there have been two sorts of the system in taxation on lotteries. Under this, GST was levied at the speed of 12 percent on the sale of the state lottery and 28 percent on the sale outside the state. 21 states supported the imposition of GST at the speed of 28 percent, while seven states opposed it.