Skill Lotto Solutions PVT. LTD. vs. Union Of INDIA & Ors.

Held

The Court held that the writ petition was maintainable under Article 32 as it alleged a violation of Article 14 concerning a parliamentary Act. Regarding the definition of 'goods', the Court found that Article 366(12) provides an inclusive definition, and the definition in Section 2(52) of the CGST Act, 2017, which includes actionable claims, is constitutional and not in conflict with the constitutional provision. The Court affirmed that the Constitution framers were aware of the Sale of Goods Act definition and intended an expansive meaning for 'goods'. The Court also held that the observations in Sunrise Associates regarding lotteries being actionable claims constituted the ratio decidendi and were binding. On the issue of discrimination, the Court found a rational basis for taxing lotteries, betting, and gambling due to their long history of regulation and taxation, thus not violating Article 14. Concerning the valuation of lottery tickets, the Court held that prize money cannot be excluded for GST levy as Section 15 of the CGST Act and Rule 31A of the CGST Rules provide a clear statutory mechanism for determining the value of taxable supply, and legislative schemes of other countries are not relevant.

Facts

Skill Lotto Solutions Pvt. Ltd. filed a writ petition under Article 32 of the Constitution of India challenging the definition of 'goods' under Section 2(52) of the Central Goods and Services Tax (CGST) Act, 2017. The petitioner argued that including actionable claims in the definition of goods was unconstitutional and violated Article 14 of the Constitution by selectively taxing lotteries, betting, and gambling while excluding other actionable claims. The petitioner also contended that prize money should be excluded when determining the face value of lottery tickets for GST levy. The Union of India and other respondents defended the provisions of the CGST Act.

Key Issues

1. Whether the inclusion of actionable claims in the definition of 'goods' under Section 2(52) of the CGST Act, 2017, is contrary to the legal meaning of goods and unconstitutional, particularly in light of Article 366(12) of the Constitution? The petitioner argued that the definition in the Sale of Goods Act, 1930, excludes actionable claims, and the CGST Act's inclusion is restrictive and unconstitutional. The revenue contended that Article 366(12) provides an inclusive definition, allowing Parliament to expand the scope of 'goods'. 2. Whether the observations in the Constitution Bench judgment in Sunrise Associates, holding lottery as an actionable claim, were obiter dicta or a binding declaration of law? The petitioner argued they were obiter dicta, while the revenue asserted they formed the ratio decidendi. 3. Whether the exclusion of lotteries, betting, and gambling from Schedule III of the CGST Act, 2017, for GST levy, constitutes hostile discrimination and violates Article 14 of the Constitution? The petitioner argued it was discriminatory, while the revenue submitted there was a rational basis for taxing these activities due to their regulatory history. 4. Whether prize money should be excluded when determining the face value of lottery tickets for the levy of GST? The petitioner argued for exclusion, citing other tax regimes, while the revenue relied on Section 15 of the CGST Act and Rule 31A of the CGST Rules.