Image Source : PTI Supreme Court of India
In a landmark order, the Supreme Court on Tuesday said the lottery distributors are not liable to pay service tax to the Centre. The lottery distributors are not liable to pay service tax to the Union government, the apex court held while dismissing an appeal of the Centre on the issue.
The clarification by the top court comes after the Centre moved the Supreme Court against the Sikkim High Court judgement. A bench comprising Justices BV Nagarathna and NK Singh did not agree to the appeal of the Centre against the High Court verdict.
“Since there is no agency in the relationship, the respondents (lottery distributors) were not liable to pay service tax. However, the respondents will continue to pay the gambling tax levied by the state under Entry 62, List II of the Constitution,” Justice Nagarathna said while pronouncing the verdict.
“Service tax is not leviable on the transactions between the purchaser of the lottery tickets and firm…In view of the aforesaid discussions, we find no merit in the appeals filed by the Union of India and others.
Hence, these appeals are dismissed,” the bench said.
Only state government can impose taxes on lotteries: SC
Upholding the Sikkim High Court verdict, the top court said it is only the state government that can impose taxes on lotteries and not the Centre.
The Centre had contended that it was entitled to impose service tax. The top court said the high court was right in holding that the lottery comes within the expression “betting and gambling” which is part of Entry 62 of the state list of the Constitution and only the state can impose the tax.
(With PTI inputs)
