HC upholds Act levying tax on lottery tickets sale

Mumbai: As lottery falls within the purview of betting and gambling, the Bombay high court has ruled, and upheld the Maharashtra government’s Act levying a tax on the sale of lottery tickets in the state.

A division bench of Justices S.C. Dharmadhikari and Bharati Dangre last week dismissed a petition filed by a company named Mangal Murti Marketing, challenging the validity of the Maharashtra Tax on Lotteries Act, 2006.

The company, a sub-distributor of the state-organised lottery of the governments of Arunachal Pradesh and Nagaland, sought direction to the Maharashtra government to restrain itself from levying and/or collecting tax on the sale of lottery tickets in the western state.

Under the Act, the government levied a tax on the promoter of the lottery tickets. It was made imperative for the promoter to submit to the tax authorities a statement relating to the lottery scheme, of which tickets were sold in the state. The promoter had to also pay in advance the amount of tax payable under the Act, as per the scheme.

The petitioner's counsel P.S. Raman argued that the Act was passed to indirectly restrict and prohibit sale of lottery tickets organised by other states in Maharashtra.

The petition added that the Parliament had already enacted the Lottery Regulation Act, 1998 to regularise the conduct of the state-organised lottery business and to offer security to ticket purchasers. It further claimed that the Maharashtra government could not levy taxes on another state government’s revenues.

Advocate general Ashutosh Kumbhakoni, appearing for the state government, argued that the Lottery Regulation Act was enacted only to regularise (the business) but it did not cover the element of taxation.

Advocate Kumbhakoni further told the court that the state legislature was empowered to impose the tax, as lotteries were included within the ambit of the meaning of the term "betting".