Keala HC upholds regulation of lotteries of other States

Sets aside single judge’s order on sale of lottery tickets of Nagaland

A Division Bench of the Kerala High Court on Monday set aside a single judge’s judgement restraining the State government from interfering with marketing and sale of lottery tickets of Nagaland government in the State

The single judge had passed the verdict after declaring ultra vires the amendments brought to Kerala Paper Lotteries (Regulation) Rules in 2018 which regulated marketing and sale of lotteries organised by other States in the State. The single judge had held that the Central government alone had the power to regulate, control and interfere with lotteries, if it was run in violation of the law.

The Bench comprising Justice S.V. Bhatti and Justice Bechu Kurian Thomas set aside the single judge’s verdict, while allowing an appeal filed by the State government.

The court held that that the Kerala Paper Lotteries(Regulation) Amendment Rules 2018 were valid and within the legislative competence of the State government.

However, the Bench declared amended rule 4(4) ultra vires of the Lotteries(Regulation)Act ,which empowered the taxes secretary or any authority constituted under the rules to conduct lotteries including the ones run/organized/promoted by other States.

The court further observed that a host State was entitled to make rules to monitor the conduct of lotteries of other States within the territory of the host State. The amended rules except rule 4(4) did not contravene any provisions of either the Constitution or the parent Act.

The Bench added that if the host State was of an opinion that the conduct of lottery by other States was in contravention of the Act, or the rules, then it need not continue to let its subjects be exploited by the organising State or its promoter until the Centre takes a decision.

The government contended that lottery was a goods which attracts tax liability on every supply, after the introduction of GST Act and Rules and that the chances of evasion of taxes were higher. The evasion could be prevented only by formulating necessary rules by respective States.

The single judge’s verdict came on a petition filed by a private company engaged in marketing and sale of lottery tickets organised by the State of Nagaland. The petitioner contended that the amended rules had interfered with the power of other States to organize, conduct and promote their State lottery in Kerala.

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