A bench headed by Justice Ashok Bhushan and comprising Justices R. Subhash Reddy and M.R. Shah said: "When the 2017 Act defines the goods to include actionable claims and included only three categories of actionable claims, i.e., lottery, betting and gambling for purposes of levy of GST, it cannot be said that there was no rationale for including these three actionable claims for tax purposes."

 

The bench noted that lottery, betting and gambling are well-known concepts and have been in practice in this country since before independence and were regulated and taxed by different legislations.

 

"When the Parliament has included above three for purpose of imposing GST and not taxed other actionable claims, it cannot be said that there is no rationale or reason for taxing above three and leaving others," it noted.

 

Upholding the validity of the provisions under the Central Goods and Services Tax Act, 2017, empowering authorities to tax lotteries, the bench said there is no hostile discrimination towards it, as it dismissed the plea of Skill Lotto Solutions Pvt Ltd, an authorised agent for sale and distribution of lotteries organised by Punjab government.

 

The petitioner has sought declaration that the levy of tax on lottery is discriminatory and violative of Articles 14, 19(1)(g), 301 and 304 of the Constitution.

 

But the court said: "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)."

 

It said that the Parliament was fully empowered to make laws with respect to the GST.

 

"The power to make laws as conferred by Article 246A fully empowers the Parliament to make laws with respect to the Goods and Services Tax and expansive definition of goods given in Section 2(52) cannot be said to be not in accord with the constitutional provisions."

 

The bench did not agree with lottery firm submissions that the inclusion of "actionable claim" in the definition of goods in Section 2(52) of CGST Act was contrary to the legal meaning of goods, therefore it was unconstitutional.

 

"The inclusion of actionable claim in definition 'goods' as given in CGST Act is not contrary to the legal meaning of goods and is neither illegal nor unconstitutional," it ruled.