In Brief
K. Arumugam and others were purchase distributors of state lottery tickets purchased in bulk from state lotteries and resold to retailers. Tax authorities demanded service tax under 'business auxiliary service' rules. The High Courts upheld the demand, interpreting the service tax law's 2008 Explanation to include lottery promotion. The Supreme Court allowed the appeals, holding that lottery tickets are actionable claims—not goods—under settled law. Since goods are excluded from the definition of actionable claims, and service tax applies only to promotion of goods or services, not actionable claims, no service tax could be levied. The Explanation could not override this exclusion. Appeals allowed with full relief and consequential directions for refund consideration."
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