In Brief
Karnataka and Kerala challenged High Court judgments that invalidated their lottery taxation laws. The Supreme Court held that State Legislatures have full power under Entry 62 of List II to tax lotteries, including those organized by the Central Government or other State Governments. Although lottery regulation was reserved to Parliament under Entry 40 of List I, taxation is a distinct legislative power. Entry 62 grants States broad taxation authority over all 'betting and gambling' activities, including state-organized lotteries, when permitted and conducted within their territory. The Court emphasized that excluding lotteries from regulation does not exclude them from taxation. Appeals were allowed, the High Court judgments were set aside, and no refund issue arose since the taxation laws were valid.
The lawyer headnote and full judgment text are available to registered users.