State can impose tax on lotteries of other States within its jurisdiction: SC

What is the News?

The Supreme Court has held that a State legislature has the right to impose tax on lotteries conducted by other States within its jurisdiction.

What was the case about?

Karnataka and Kerala governments had enacted laws to tax lotteries organized and promoted by the States of Nagaland, Arunachal Pradesh, Sikkim, Manipur in Kerala and Karnataka.

However, the High Courts of both states found the tax laws invalid and unconstitutional. The court had even directed both states to refund the money collected as tax from lotteries to the north-eastern States.

Against this judgment, Karnataka and Kerala governments filed a petition in the Supreme Court.

What was the judgment of the Supreme Court?

The Supreme Court upheld the validity of the laws passed by Karnataka and Kerala to impose a tax on lotteries conducted by other States within its jurisdiction.

The court said that Lotteries are a “part of gambling activity”. Betting and gambling is part of the State List in the Seventh Schedule of the Constitution.

Hence, the State legislature has the right to impose tax on lotteries conducted by other States within its jurisdiction.

Source: This post is based on an article “State can impose tax on lotteries of other States within its jurisdiction: SC” published in The Hindu on 28th March 2022.