STATE OF KARNATAKA & ANR. ETC. v. STATE OF MEGHALAYA & ANR. ETC.

A to lottery of every kind, with no distinction as to the entity organizing the same.

121Copy pinpoint121. Thus, in the context of lotteries, the organisation and conduct of a lottery scheme being a pan India activity, when any State Government permits the Government of India or any other State B Government to organise the lottery scheme in that State, Entry 62 of List II would enable the Legislature of that State to levy taxes on the same.

122Copy pinpoint122. Hence, in our view, the Legislatures of the State of Karnataka and Kerala were fully competent to enact the impugned Acts and levy taxes on the activity of ‘betting and gambling’ being organised and conducted in the said respective States, including lotteries conducted by the Government of India or the Government of any State.

123Copy pinpoint123. The Division Benches of the High Courts was not right in holding that the State Legislatures had no power to levy tax on lotteries conducted by the Government of India or the Government of any State or Union territory in the State of Karnataka as such a power could be read in Entry 40 or Entry 97 of List I and only the Parliament could levy such a tax. Since we have held that the States of Karnataka and Kerala had the legislative competence to enact the impugned Acts, the question of refund of tax collected under the same does not arise. E Summary of Conclusions :

124Copy pinpoint124. In view of the aforesaid discussion, we come to the following summary of conclusions: - (i) That the subject ‘betting and gambling’ in Entry 34 of List F II is a State subject. (ii) From the judgments of this Court, it is now 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. G (iii) The expression ‘betting and gambling’ is relatable to an activity which is in the nature of ‘betting and gambling’. Thus, all kinds and types of ‘betting and gambling’ fall within the subject of Entry 34 of List II. The expression ‘betting and gambling’ is thus a genus it includes several types or H species of activities such as horse racing, wheeling and other

STATE OF KARNATAKA & ANR. ETC. v. STATE OF 603 MEGHALAYA & ANR. ETC. [B. V. NAGARATHNA, J.]

local variations/forms of ‘betting and gambling’ activity. The A 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 Government of State in terms of Entry 40 of List I which are excluded from Entry 34 of List II. In other words, if lotteries are conducted by private parties or by instrumentalities or agencies authorized, by Government of India or the Government of State, it would come within the scope and ambit of Entry 34 of List II. (iv) Thus, the State legislatures are denuded of their powers under Entry 34 of List II only to the extent of lotteries organised by the Government of India or the Government of a State, in terms of Entry 40 of List I. In other words, except what is excluded in terms of Entry 40 of List I, all other activities which are in the nature of ‘betting and gambling’ would come within the scope and ambit of Entry D 34 of List II. Thus, ‘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. (v) Entry 62 of List II is a specific taxation Entry on ‘luxuries, including taxes on entertainments, amusements, betting and E 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 F 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 G 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. H

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A (vi) Thus, 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. B (vii) We also hold that 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 C 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. D (viii) In view of the aforesaid conclusions, we find that 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 impose tax on the lotteries conducted by other States in their State (in the State of E Karnataka and Kerala respectively).

125Copy pinpoint125. In the result, the appeals filed by the State of Karnataka and State of Kerala and others are allowed by setting aside the impugned judgments passed by the Division Benches of the High Courts of Karnataka and Kerala. F Parties to bear their respective costs.

Ankit Gyan and Amarendra Kumar Appeals allowed. (Assisted by : Ajay, LCRA)