High Court held that Lottery is an actionable claim, is taxable under GST law

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Fact: Teesta Distributors (“the petitioner”) was engaged in selling paper lotteries of various States within the State of West Bengal. The petitioners have filed a writ petition for seeking a declaration that, lotteries are exempt from tax under Sl. No. 6 of Schedule III read with Section 72 of the Central Goods and Services Tax Act, 2017 and Sl. No. 6 of Schedule III read with Section 72 of the State Goods and Services Tax Act, 2017.

Petitioner’s Interpretation of law: The petitioner contended that the sale of lottery ticket does not entail transfer of any ‘goods’ or even beneficial interest in a movable property and that the person who sells the lottery ticket is not selling any ‘goods’ nor is the purchaser buying any ‘goods’ nor is the purchaser buying any ‘goods, and thus lottery cannot come within the definition of ‘goods’ under the CGST Act, 2017 or any of the SGST Acts and therefore filed writ petition seeking a declaration that lotteries were exempt from tax under the Central Goods and Services Tax Act and the West Bengal Goods and Services Tax Act.

Held: The Hon’ble High Court of Calcutta in the case of Teesta Distributors Vs Union of India dated October 10, 2018 held by referring to a Supreme Court judgement, a lottery is an ‘actionable claim’ and goods or movable property. It also added that lottery can be taxed under the Central Goods and Services Tax Act as well as the West Bengal Goods and Services Tax Act, 2017. The court said: “Schedule III under Section 7 of the CGST Act, 2017 deals with activities or transactions which shall be treated neither as a supply of goods nor as a supply of services. Entry 6 of Schedule III of CGST Act, 2017 takes out ‘actionable claims’ other than lottery, betting and gambling from the scope of such Act.

Consequently, since lotteries are generally speaking ‘goods’ and come within the definition of ‘actionable claims’, and since, lotteries are kept out of the purview of ‘actionable claims’ which do not attract the CGST Act, 2017, lottery can therefore be charged to tax under the CGST Act, 2017. On the parity of the same reasoning, lottery is chargeable to tax under WB GST Act, 2017 also.”

Citation: [2018] 99 taxmann.com 162 (Calcutta)