Supreme Court Rules: No Service Tax on Lottery Distributors

The Supreme Court ruled that lottery distributors are not liable to pay service tax to the Union government, dismissing an appeal by the Centre. Upholding the Sikkim High Court's decision, the court maintained that only state governments can tax lotteries under the 'betting and gambling' category.

The Supreme Court has ruled that lottery distributors are not obligated to pay service tax to the Union government, dismissing an appeal filed by the Centre. This decision was made by a bench comprising Justices BV Nagarathna and NK Singh, who upheld a Sikkim High Court judgement.

The court clarified that there is no agency relationship in the distribution of lottery tickets, thus exempting distributors from service tax. Justice Nagarathna emphasized that while service tax is not applicable, distributors will still be subject to state-level gambling taxes.

Reaffirming that only state governments can impose taxes on lotteries, the Supreme Court rejected the Centre's argument. The case was originally filed in response to a plea from Future Gaming Solutions Pvt Ltd, with the Centre pursuing the matter since 2013.

(With inputs from agencies.)