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Bombay High Court Upholds Indian State’s Tax on Lotteries

Indian Lottery

The High Court of Bombay ruled in favor of a state law that considers lottery a part of gambling activities. The court upheld the Maharashtra Tax on Lotteries Act, 2006, suggesting that lotteries must be taxed in the state according to law.

The division bench of Justice SC Dharmadhikar and Justice BH Dangre rules that the state of Maharashtra cannot be stopped from levying taxes on gambling and betting activities, including the lottery. They also said that the state government has the power to restrict or prohibit the sale of lottery tickets originating within our outside the state as well.

The bench was proceeding on a writ petition filed by Sri Mangal Murty Marketing. The petitioner is a sub-distributor of a state-organized lottery of the Government of Arunachal Pradesh and Nagaland, states located on the far north-east of the country. The petitioner sought for the Maharashtra Tax on Lotteries Act to be declared void and ultra vires to the Indian constitution.

The petitioner also wanted the state to be restricted from levying and/or collecting tax on the sale of lottery tickets. The writ petition was filed over a decade ago on June 27, 2007, and an interim direction was issued to the state that it would not collect any taxes from the petitioner or interfere with its operations.

The petition was earlier disposed in a November 29, 2016 order, which was covered by a judgment delivered by the division bench of Justice DK Deshmukh and Justice RS Mohite in a case involve NV Marketing Pvt. Ltd. and the State of Maharashtra and Ors. The case was decided on August 14, 2009, but a review petition was filed later, along with an application for condonation of delay. In a similar case, the High Court of Karnataka had taken a divergent view from that of Bombay which led to the restoration of the writ file.

Senior advocate PS Raman appeared in court for the petition, arguing that the tax was an attempt by the government to restrict/prohibit the sale of lottery tickets in the state. He also said that the lottery is subject to the Union list and the state does not have the authority to enact laws on the same, citing the Lottery Regulation Act, 1998.

He also argued that lottery is excluded from “betting and gambling” in List II in Entry 34 and put in Entry 40 of List I of Seventh Schedule to the Constitution.

The court, however, rejected the arguments and upheld the state laws.

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