Supreme Court Rules States Have Exclusive Authority to Tax Lotteries
The Court upheld a Sikkim High Court decision, striking down the Centre's attempt to impose service tax on lottery distributors under constitutional provisions.
- The Supreme Court ruled that only state governments can tax lottery-related activities, as lotteries fall under 'betting and gambling' in the State List of the Constitution.
- The judgment dismissed the Centre's appeal to impose service tax on lottery distributors, citing lack of constitutional authority.
- The Court upheld the Sikkim High Court's 2012 ruling, which struck down amendments to the Finance Act aimed at taxing lottery distributors as service providers.
- The ruling clarified that the relationship between state governments and lottery distributors is 'principal to principal,' not 'principal to agent,' negating the service tax argument.
- Lottery firms like Future Gaming and Hotel Services Pvt. Ltd. remain subject to state-imposed gambling taxes but are exempt from central service taxes.
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Hindustan Times 