State can levy tax on Lotteries organised by other States/Centre; SC rejects review petition

Case Details: State of Sikkim vs. State of Kerala & Others - [2022] 145 taxmann.com 9 (SC)

Judiciary and Counsel Details

• • M.R. Shah & B.V. Nagarathna, JJ.

Facts of the Case

The Division Benches of the High Courts of Kerala and Karnataka had held that the State Legislatures had no legislative competence to impose tax on the lotteries conducted by other States in their State. On appeal, the Honorable Apex Court has concluded that taxation contemplated under Entry 62 of List II of Constitution is on ‘betting and gambling’ activities which also includes lotteries, irrespective of entity conducting same.

Supreme Court Held

The Supreme Court found that Division Benches of the High Courts of Kerala and Karnataka were not right in holding that the respective State Legislatures had no legislative competence to impose tax on the lotteries conducted by other States in their State. Therefore, it was held that Karnataka Tax on Lotteries Act, 2004 and Kerala Tax on Paper Lotteries Act, 2005 are valid as these two State Legislatures possessed legislative competence to enact such Acts.

Thereafter, the review petition was filed against the decision of Supreme Court. The Apex Court has dismissed review petition by observing that there was no error apparent on face of record to reconsider impugned order.