SC Rules: Only States Can Tax Lotteries – No Service Tax by Centre
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SC Rules: Only States Can Tax Lotteries – No Service Tax by Centre Introduction In a significant verdict , the Supreme Court of India ruled that lottery distributors are not liable to pay service tax to the Central Government . The apex court upheld the Sikkim High Court's 2012 decision , stating that only state governments have the power to impose taxes on lotteries under Entry 62, List II of the Seventh Schedule of the Constitution of India. This ruling brings clarity to the taxation of lotteries , reinforcing the exclusive authority of states over gambling-related activities. The Supreme Court's Judgment Key Observations by the Bench 🔹 The bench of Justices BV Nagarathna & N Kotiswar Singh dismissed the Centre’s appeal, citing that the Finance Act amendments of 2012, 2015, and 2016 , which sought to levy service tax on lottery distributors, were ineffective . 🔹 The SC upheld that the business of lotteries operates on a Principal-to-Principal basis , meani...