Service tax cannot be levied on lotteries: SC

The Supreme Court on Tuesday held that service tax cannot be levied on lotteries in the country. The bench said that it had decided the issue keeping in view various decisions of the apex court holding that lottery being gambling comes within the purview of the doctrine of res extra commercium.

The Supreme Court on Tuesday held that service tax cannot be levied on lotteries in the country.

HT Image

A bench headed by Justice S B Sinha has upheld the Sikkim High Court's order that quashed the excise department's notice demanding service tax to the tune of over Rs 2,000 crore from Coimbatore-based Martin Lottery Agencies (MLA) between July 2003 and December 2006.

"We have no other option but to hold that the High Court judgement, albeit for different reasons, warrants no interference," the bench said while dismissing the Centre's appeal. It also imposed cost of Rs one lakh on the government.

It further said that the notice issued to MLA by the government had "rightly been held to be liable to be set aside. Subject to the constitutionality of the Act, in view of the explanation appended to this, we are of the opinion that the service tax, if any, would be payable only with effect from May 2008 and not with retrospective effect".

The bench said that it had decided the issue keeping in view various decisions of the apex court holding that lottery being gambling comes within the purview of the doctrine of res extra commercium.