Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 22-10-2018 – Goods Section 2(52) of the Central Goods and Services Tax Act, 2017 ( Act for short) defines the term goods as every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Actionable claim Section 2(1) of the Act defines the expression actionable claim as that shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882 Section 3 of the Transfer of Property Act, 1882, defines the expression actionable claim as a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in possession either actual or constructive, of the claimant, which the civil courts recognize as af
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ST rate on lottery In respect of the Agenda Item on Lottery (17th GST Council Meeting) , the Council approved the following – The supply of lottery shall attract GST rates as under – Lottery run by State Governments – 12% of face value of lottery ticket (Face value to be inclusive of GST) Lottery authorized by State Governments – 28% of face value of lottery ticket (Face Value to be inclusive of GST ) Tax can be levied by the State Governments on the first point of sale by the State Government to the lottery distributor or the sole selling agent appointed by the State Government on reverse charge basis and to exempt agents/stockists below the distributor. Challenge before High Court on levy of GST on lotteries In Teesta Distributors and others v. Union of India and others – 2018 (10) TMI 941 – Calcutta High Court, the petitioners have sought a declaration that, lotteries are exempt from tax under Sl. No. 6 of Schedule III read with Section 72 of the Central Goods and Service Tax Act, 2
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Tax Act, 2017 can be made. When CGST, 2017 and IGST, 2017 propose to tax a lottery, it goes beyond the constitutional definition of goods . Since lottery is not goods within the meaning of the Constitution, neither Central nor the State Governments can enact any law for the purpose of levying sales tax on the lottery. Treating lottery to be a goods would do violence to the provisions of the Lotteries (Regulation) Act, 1998. Sale of lottery ticket is a trade under Article 301 to 304 of the Constitution. Differential rates of tax cannot be fixed for lottery tickets imported from other States and lottery tickets produced in the States. The discrimination in rates varies between 12 and 28 per cent. It is per se unsustainable and is required to be stuck down. All lottery tickets organized by the States have to be treated at par. The same percentage of tax is required to be levied. Otherwise it would violate the constitutional mandate. GST Council does not have any power or authority to bif
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he term goods used in Article 366(12) of the Constitution of India is very wide and includes all types of movable properties whether those properties are tangible or intangible and is an inclusive one. Lotteries are actionable claim and are included in the definition of goods . Lottery is not a commodity in the market which can be bought against consideration and on payment of consideration the property passes to the purchaser The Union Parliament and the State Legislature have the competence to levy tax on any item including lottery. The State is allowed to pick and choose districts, objects, persons, methods and rates of taxation, if the State, does so reasonably. The Legislature enjoys very wide latitude in classification for taxation. A statute cannot be declared unconstitutional solely on the ground that, it is unreasonable or arbitrary. The business of lottery partakes the character of betting and gambling. There exists no constitutional right to carry on the business of lottery.
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s 17th meeting. The rates are not discriminatory and are intended to preserve economic uniformity and the interest of the constituent States. According to him, the tax component is included in the price of the ticket. The end customer who purchased the ticket is not saddled with any additional tax burden. Union of India submitted the following before the High Court- Imposition of GST on lottery was discussed at length during the 17th GST Council meeting held on June 18, 2017. The States who are parties to the present writ petition were present in such Council meeting. The GST Council approved and resolved that, sale of lottery ticket will attract GST. The rates were also agreed upon. Therefore, the States should not be permitted to contend contrary to the resolution adopted by the GST Council in its meeting held on June 18, 2017. Since lottery tickets are sold at the price printed on them as inclusive price, that is, inclusive of all taxes, the value or supply of lottery under Section
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zed the various judgments of Supreme Court. In H Anraj v. State of Tamil Nadu – 1985 (10) TMI 258 – Supreme Court, it was held that lottery tickets to the extent that they comprise the entitlement to participate in the draw are goods falling within the definition of goods as given in Tamilnadu General Sales Tax Act, 1954 and Bengal Finance (Sales Tax) Act, 1941. Independent of the two state Acts under consideration therein, it has held that, a trade of a lottery ticket confers on the purchaser two rights. The High Court observed that a sale of a lottery ticket confers on the purchaser thereof two rights- a right to participate in the draw; and a right to claim a prize contingent upon his being successful in the draw. Both would be beneficial interests in movable property, the former in praesenti , the latter in futuro depending on a contingency. Lottery tickets, not as physical articles, but as slips of paper or memoranda evidence not one but both these beneficial interests in movable
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Act regarding goods , actionable claims , reverse charge , scope of supply , levy and collection which have also been found the State Goods and Services Tax Act. It regulates the levy and collection of tax on intra-State supply of goods or services or both in the State of West Bengal. Legislature enjoys very wide latitude in classification for taxation. Legislation or a provision contained in a statute can be invalidated on two grounds, namely, it is not within the competence of the legislature which passed the law; and/or it is in contravention of any of the fundamental rights stipulated in Part III of the Constitution or any other right/provision of the Constitution of India. A statute cannot be declared unconstitutional on the ground that, it is arbitrary or unreasonable. In the facts of the present case, it has not been substantiated that, the State Legislature promulgating the WB GST Act, 2017 did not have the competence to pass the law or that it violates any fundamental rights o
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, 2017 and WB GST Act, 2017. Third issue – levy of different taxes on lottery The rationale for imposing differential rates appears from the minutes of the 17th meeting of the GST Council. The rationale for the differential rate or the rates by themselves has not been substantiated to be breach of any provision of the Constitution. The State Government cannot challenge its own notification as unconstitutional as, it has the wherewithal to set the wrong, right. In the present case, the States of Sikkim, Mizoram, Nagaland and Arunachal Pradesh have supported the writ petitioner on the score that the rates of taxes are discriminatory. Such States were present in the GST Council Meetings. The resolution was carried by requisite majority. It was after extensive deliberations that, the GST Council had approved the rates as presently obtaining in respect of lottery. It is within the domain of such Council to decide the rate of tax. In such circumstances, the third issue is answered by holding
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