LexSTATE OF KARNATAKA & ANR. ETC. versus STATE OF MEGHALAYA & ANR. ETC.
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A B C D E F G H 516 SUPREME COURT REPORTS [2022] 18 S.C.R. [2022] 18 S.C.R. 516 516 STATE OF KARNATAKA & ANR. ETC. v. STATE OF MEGHALAYA & ANR. ETC. (Civil Appeal Nos.10466-10476 of 2011) MARCH 23, 2022 [M. R. SHAH AND B. V. NAGARATHNA, JJ.] Constitution of India, 1950 – Article 246 – Seventh Schedule – Entry 40 of List 1 – Entry 34 of List II – Entry 62 of List II – Karnataka Tax on Lotteries Act, 2004 – Kerala Tax on Paper Lotteries Act, 2005 - Division Bench of the High Court of Karnataka vide impugned judgments dated 27th December, 2010 and 7th March, 2011 held that the Karnataka Legislature had no legislative competence to pass the Karnataka Tax on Lotteries Act, 2004 - The Division Bench of the High Court of Kerala by the impugned judgments dated 30th April, 2020, 9th August, 2021 and 10th August, 2021, held that the Kerala legislature had no legislative competence to enact the Kerala Tax on Paper Lotteries, Act, 2005 and declared it as unconstitutional and invalid – The respondents herein are the States of Nagaland, Arunachal Pradesh, Meghalaya, Sikkim, and others who are the organisers of the lotteries as well as promoters, inter alia, in the States of Karnataka and Kerala – As per the decision of the High Courts, the States of Karnataka and Kerala were directed to refund the amounts deposited by the Respondents States who had organised the lottery schemes - The present set of appeals have been preferred by the States of Karnataka, Kerala and others being aggrieved by the judgments passed by the Division Benches of the High Courts of the respective States – Held:The subject ‘betting and gambling’ in Entry 34 of List II is a State subject– From the judgments of the Supreme Court, it is clear that ‘lotteries’ is a species of gambling activity and hence lotteries is within the ambit of ‘betting and gambling’ as appearing in Entry 34 List II – The expression ‘betting and gambling’ is thus a genus it includes several types or species of activities such as horse racing, wheeling and other local variations/forms of ‘betting and gambling’ activity – The subject ‘lotteries organised by the Government of India or the Government of a State’ in Entry 40 of List I is a Union subject – It is only lotteries organised by the Government of India or the A B C D E F G H 517 Government of State in terms of Entry 40 of List I which are excluded from Entry 34 of List II –‘betting and gambling’ is a State subject except to the extent of it being denuded of its powers insofar as Entry 40 of List I is concerned –Entry 62 of List II is a specific taxation Entry on ‘luxuries, including taxes on entertainments, amusements, betting and gambling’ – The power to tax is on all activities which are in the nature of ‘betting and gambling,’ including lotteries – Since, there is no dispute that lotteries, irrespective of whether it is conducted or it is organised by the Government of India or the Government of State or is authorized by the State or is conducted by an agency or instrumentality of State Government or a Central Government or any private player, is ‘betting and gambling’, the State Legislatures have the power to tax lotteries under Entry 62 of List II – This is because the taxation contemplated under the said Entry is on ‘betting and gambling’ activities which also includes lotteries, irrespective of the entity conducting the same – Hence, the legislations impugned are valid as the Karnataka and Kerala State Legislatures possessed legislative competence to enact such Acts –The scope and ambit of lotteries organised by Government of India or Government of State under Entry 40 of List I is only in the realm of regulation of such lotteries – The said Entry does not take within its contours the power to impose taxation on lotteries conducted by the Government of India or the Government of State – lottery schemes by the Government of other States are organised/ conducted in the State of Karnataka or Kerala and there are express provisions under the impugned Acts for registration of the agents or promoters of the Governments of respective States for conducting the lottery schemes in the State of Karnataka and the State of Kerala – This itself indicates sufficient territorial nexus between the respondents- States who are organising the lottery and the States of Karnataka and Kerala – Division Benches of the High Courts of Kerala and Karnataka were not right in holding that the respective State Legislatures had no legislative competence to
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