Lot­ter­ies from other states can be taxed in Maha: HC

The Times of India (Mumbai edition) - - TIMES CITY - Swati.Desh­pande @times­group.com

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.

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