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Lottery Falls Within Purview Of Betting & Gambling; Says Bombay HC, Upholds Vires Of Maharashtra Tax On Lotteries Act, 2006 [Read Judgment]

The Bombay High Court has upheld the validity of the Maharashtra Tax on Lotteries Act, 2006 and held that lottery comes under the purview of betting and gambling.

The division bench of Justice SC Dharmadhikari and Justice BH Dangre ruled that the state is empowered to levy tax on betting and gambling. Also, that the state government is empowered to prohibit or restrict within its state the sale of lottery tickets of any other state.

Case Background

The bench was hearing a writ petition filed by Sri Mangal Murty Marketing, a sub-distributor of state-organized lottery of Government of Arunachal Pradesh and Nagaland. The petitioner sought the Maharashtra Tax on Lotteries Act to be declared void, being ultra vires to the provisions of the Constitution.

Also, a direction was sought to restrain the state levying and/or collecting tax on the sale of lottery tickets in Maharashtra. The said writ petition was admitted on June 27, 2007, and an interim direction was issued to the effect that the State shall not levy or collect any taxes from the petitioner and it shall not obstruct the petitioner as long as it is carrying on lawful business.

The said petition was disposed of in an order dated November 29, 2016, in view of the fact that the challenge in the writ petition was already covered by a judgment delivered by the division bench of Justice DK Deshmukh and  Justice RS Mohite in the case of N.V. Marketing Pvt. Ltd vs. State of Maharashtra and Ors decided on August 14, 2009.

However, a review petition along with an application for condonation of delay was filed. The court, on March 23, 2017, condoned the delay and was also pleased to restore the writ petition to its file.  This order came to be passed when it was noted that a division bench in the High Court of Karnataka had delivered a judgment in a case filed in the High Court of Karnataka and one of the judges was Justice Manjula Chellur (who later became the Chief Justice of Bombay High Court) who was a party to the said judgment. The said division bench of the High Court of Karnataka had taken a divergent view to the decision delivered by the Bombay High Court.

Thus, the said writ petition was restored to file.


Senior Advocate PS Raman appeared on behalf of the petitioner and submitted that the Maharashtra Tax on Lotteries Act is nothing but another attempt by the government to attempt to restrict/prohibit the sale of lottery tickets of other states in the state of Maharashtra.

He further submitted that lottery is a subject included in the Union List, therefore, the state did not have the legislative competence to bring in such a law. In exercise of its power, the Parliament has already enacted the Lottery Regulation Act, 1998 to regularize the conduct of lottery business in respect of the State Organized lotteries and with a view to offer security to the purchaser of lottery tickets, Raman said.

Raman also questioned the judgment of the high court in NV Marketing, he relied on the Supreme Court’s decision in H. Anraj vs. State of Maharashtra, holding that the state-organized lotteries and the lotteries are excluded from the expression “betting and gambling” in List II in Entry 34 and put in Entry 40 of List I of   Seventh Schedule to the Constitution.

Advocate General AA Kumbhakoni sought to draw a distinction between entries in the seventh schedule relating to taxation and entries related to regulation. He submitted that the Lotteries (Regulation) Act 1998, was enacted by the Parliament to regulate the lotteries and to provide the matters connected therewith.  However, this does not cover the element of taxation, Kumbhakoni said. He told the Court that the Maharashtra Tax on Lotteries Act provides for the levy and collection of tax on the lotteries and this enactment authorizes the State to levy and collect tax on lotteries of the State as well as lotteries of other States which are conducted as per provisions of Lotteries (Regulation) Act 1998.


The court accepted the Advocate General’s submissions and agreed with the decision of the division bench in NV Marketing:

“We do not find any error in the observations of the Division Bench which is based on the foundation that since lottery is gambling, Entry 62 of List II gets attracted. We are in agreement with the learned Advocate   General who had canvassed before us the submissions that the fields of legislation in the entries either in the Union List or in the State List are distinct when it provides for taxation and when it intends to confer a power of Regulation. List I of Entry 40 which authorizes the Parliament to regulate the lotteries organized by the Government of India or Government of a Sate necessarily do not cover a taxing element.”

The court further held that lottery comes under the purview of betting and gambling:

We do not find any flaw in the observation of the Division Bench when it proceeds to hold that lottery falls within the purview of betting.

The State Government is empowered to prohibit or restrict within its State the sale of lottery tickets of any other State. The State has invoked Entry 62 of List II while enacting the impugned legislation. This entry   specifically empowers the State to tax on betting and gambling.

Thus, the petition was dismissed.

Read the Judgment Here

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