Lotteries from other states can be taxed in Maha: HC
Mumbai: The Bombay high court recently held that “lottery falls within the purview of betting” and upheld a more than a decade-old Maharashtra law to impose a tax on such schemes of other states.
It dismissed a petition filed by Sri Mangal Murty Marketing, which had challenged a 2006 state law to tax lotteries.
The petitioner was a sub-distributor of the state-organized lottery of Arunachal Pradesh and Nagaland. It had approached the high court seeking a declaration to the effect that the Maharashtra Tax on Lotteries Act, 2006, be declared void and unconditional as, among other things, the state lacked legislative competence to frame such a law. The high court upheld its validity.
The government is empowered to prohibit or restrict within its state the sale of lottery tickets of any other state, observed the high court.
A ground on which the Act was attacked was that Maharashtra itself organizes, conducts and promotes its own lotteries. Another ground was that it was “a colourable exercise of legislative powers” as it was another method of taxing lottery tickets. The third ground on which the Act was assailed was that it sought to tax lottery coupons and tickets, which are collected in advance for schemes conducted outside the state.
The law was brought into force to provide for levy and collection of tax on lotteries of the state as well those of other states, conducted under provisions of Lotteries (Regulation) Act 1991 and marketed in Maharashtra.
The state justified the law, its competence and also made an elaborate submission that the tax is not collected on the sale of lottery tickets but in relation to lottery schemes. A group of petitions had earlier challenged the law and a division bench of the high court has concluded that the state is empowered to impose tax in relation to lotteries because these are included within the ambit of “betting”.
The earlier ruling had also held that the Act does not levy tax on draws or sale of tickets but on betting and gambling, offered within Maharashtra by organizing sale of tickets or participation in a lottery.
“We have no reason to differ from the reasoning in the division bench’s judgment,” said the bench of Justice SC Dharmadhikari and Justice Bharati Dangre in its November 2 judgment. “We are inclined to dismiss the writ petition and hold and declare that the Maharashtra Tax on Lotteries Act, 2006, is well within the legislative competence of the state legislature,” said the court.