Published on 10 Sep 2025
The Supreme Court recently invoked the Doctrine of Pith and Substance in a case relating to service tax on lottery distributors.
SC held that the Centre cannot impose service tax on the distributors engaged in lottery business, as only the state governments have the power to do so.
The Supreme Court ruled that lotteries are a form of gambling, not a service, and therefore, the relationship between states and lottery distributors is that of a buyer and seller, not a principal-agent, making service tax inapplicable.
It emphasized that the power to tax betting and gambling, including lotteries, lies exclusively with state legislatures under Entry 62 of List II.
This prevents Parliament from imposing service tax through its residuary powers under Entry 97 of List I.
The Doctrine of Pith and Substance originated in Canada and was later adopted in India through the Government of India Act, 1935.
It helps courts determine the true purpose of a law, even if it overlaps with another jurisdiction.
It applies when a law's legislative authority is in question due to jurisdictional ambiguities.
While minor overlaps are permitted, the doctrine ensures that the law’s core objective remains within the enacting legislature’s domain.
Doctrine of pith and substance
Doctrines
pith and substance
judiciary
Supreme court
Fundamental rights
Article 32
federalism
Government of India Act 1935