2018 (10) TMI 941 - HC - GST

Lotteries ruled as actionable claims and taxable under CGST Act 2017 and West Bengal GST Act 2017

Teesta Distributors & Ors. Versus Union of India & Ors.

Teesta Distributors & Ors. Versus Union of India & Ors. - [2018] 59 G S.T.R. 35 (Cal), 2018 (19) G. S. T. L. 29 (Cal.) Issues Involved:1. Is lottery a 'goods' or an 'actionable claim'Rs.2. Can lottery be taxed under the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017Rs.3. If so, is differential levy of tax permissibleRs.4. To what reliefs, if any, are the parties entitled toRs.Issue-wise Analysis:1. Is lottery a 'goods' or an 'actionable claim'Rs.The petitioners argued that a lottery cannot be classified as 'goods' under the CGST Act, 2017, and SGST Acts, citing the Supreme Court's decision in Sunrise Associates v. Government of NCT of Delhi, which held that a lottery is an 'actionable claim'. The definition of 'goods' in Article 366(12) of the Constitution includes all materials, commodities, and articles, which the petitioners argued should not encompass lotteries since they do not entail the transfer of any tangible property or beneficial interest. The court, referencing H. Anraj v. Government of Tamil Nadu and Sunrise Associates, concluded that a lottery is an 'actionable claim' and, generally speaking, 'goods' or movable property.2. Can lottery be taxed under Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017Rs.The petitioners contended that the CGST and SGST Acts exceed constitutional mandates by taxing lotteries, which are not 'goods' within the meaning of the Constitution. The court examined the constitutional amendments and provisions introduced by the 101st Amendment Act, 2016, including Articles 246A, 269A, and 279A, which empower the Parliament and State Legislatures to levy GST on goods and services. The court noted that the definition of 'goods' in Section 2(52) of the CGST Act includes actionable claims, thereby validating the inclusion of lotteries under the GST regime. The court found no constitutional violation in taxing lotteries under the CGST and WB GST Acts, thus affirming their taxability.3. If so, is differential levy of tax permissibleRs.The petitioners argued against the differential tax rates for lotteries run by the State and those authorized by the State, claiming it violated the constitutional mandate of uniform taxation. The court referred to the extensive deliberations of the GST Council, which justified differential rates to preserve economic uniformity and the interests of constituent States. The court emphasized that legislative bodies have wide latitude in taxation matters, including differential rates, provided they are reasonable. The court concluded that the differential levy of tax is permissible and not in breach of any constitutional provisions.4. To what reliefs, if any, are the parties entitled toRs.The petitioners sought relief from the differential tax rates and the classification of lotteries as 'goods'. However, the court found no merit in their arguments, upholding the constitutionality of the CGST and WB GST Acts and the differential tax rates. Consequently, no relief was granted to the petitioners, and the writ petition was dismissed with no order as to costs.Conclusion:The court concluded that a lottery is an 'actionable claim' and generally 'goods' under the GST regime. It upheld the taxability of lotteries under the CGST and WB GST Acts and validated the differential tax rates imposed by the GST Council. The petitioners were not entitled to any relief, and the writ petition was dismissed.