Indian Supreme Court declares GST on lotteries constitutional

Gavel in top of a book

Gavel in top of a bookSkill Lotto Solutions have been fighting against India’s GST on lotteries for some time now, and they have just received their final blow. The Supreme Court has ruled that the tax does not amount to hostile discrimination against them, nor does it violate their constitutional rights.

The December 3 ruling upholds the validity of the Central Goods and Services Tax Act, 2017, allowing authorities to tax lotteries. Skill Lotto had hoped to set aside the definition of what “goods” are, saying it was “discriminatory and violative” against them. The court, headed by Justice Ashok Bhushan, 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.”

Skill Lotto and other lottery firms had been accused of evading the GST as early as September, 2018. That forced the Central GST Commissioner in Ludhiana to launch cases against them. Other firms were accused of paying the previous GST rate of only 12%, or the amount required by state lotteries. Skill Lotto’s specific evasion wasn’t specified at the time.

The GST hasn’t only been a problem for lotteries. Skill gaming operators like Dream 11 have been questioned over how they calculate their tax rate. The Ministry of Finance was afraid they were calculating GST payments based on net revenues. The Indian Federation of Sports Gaming (IFSG), which represents several operators, clarified that they calculate their taxes the way operators in any country with a GST would.

Casinos in Goa have also had their problems with the GST. They were accused of fixing the books in 2019, splitting betting services to reduce their GST burden, as well as only paying tax on their net revenue, rather than on every single bet as required by the GST Act.