India’s Supreme Court Rules Lottery GST Constitutional

For some time now, Skill Lotto Solutions have been battling India’s GST on lotteries, and have just received their final blow. The Supreme Court ruled that the tax does not constitute, nor does it infringe their constitutional rights, hostile discrimination against them.

The December 3 decision upholds the validity of the 2017 Central Goods and Services Tax Act, enabling lotteries to be taxed by authorities. The definition of what “goods” are, Skill Lotto had hoped to set aside, claiming it was “discriminatory and violative” against them.

The court, headed by Ashok Bhushan, Justice, declared: “We are of the view that definition of goods under Section 2(52) of the Act..does not violate any constitutional provision nor it is in conflict with the definition of goods given under Article 366(12). Article 366 clause(12) as observed contains an inclusive definition and the definition given in Section 2(52) of Act, 2017 is not in conflict with definition given in Article 366(12).

“The Parliament was fully empowered to make laws with respect to goods and services tax. Article 246A begins with non obstante clause that is ”Notwithstanding anything contained in Articles 246 and 254, which confers very wide power to make laws.”

As early as September 2018, Skill Lotto and other lottery firms were charged with evading the GST. That forced the Central GST Commissioner to launch cases against them in Ludhiana. Other companies were accused of paying only 12 percent of the previous GST fee, or the amount needed by state lotteries. The particular evasion of Skill Lotto was not defined at the time.

GST hasn’t only been a lottery issue. Skill gaming operators such as Dream 11 have been challenged about how their tax rate is measured. The Ministry of Finance was afraid that GST payments would be measured on the basis of net revenues. The Indian Federation of Sports Gaming (IFSG), representing a number of operators, clarified that they would measure their taxes as operators would in any GST country.

Goa casinos have had their GST issues, too. In 2019, they were accused of fixing the books, dividing betting services to reduce their GST burden, as well as paying tax on their net profits only, rather than on each single bet as mandated by the GST Act.