Prospective overruling in lottery tax matters bars further pre-judgment recovery while leaving amounts already collected undisturbed

Lottery tickets were earlier treated as goods for trade tax purposes, but that view was prospectively overruled. The prospective overruling principle confined the effect of invalidity so that no refund was payable for tax already collected where relief was denied, while the taxing authority could not continue to recover tax for the pre-judgment period. The challenge to the levy therefore failed, and the effect of the later ruling was limited to stopping further recovery for the earlier period without disturbing amounts already realised.

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Issues: Whether the levy of trade tax on the sale of lottery tickets under clause (c-1) of sub-section (1) of section 3A of the U.P. Trade Tax Act, 1948 could be sustained in view of the prospective overruling of the earlier decision treating lottery tickets as goods, and what was the effect of such overruling on tax already collected and future recovery for the period prior to the judgment.

Analysis: The earlier view that lottery tickets were goods and that tax could be levied on the right to participate in the draw was later prospectively overruled, and the distinction between the right to participate and the chance to win was held to be unwarranted. On the principle of prospective overruling, the declaration of invalidity does not require refund of amounts already collected where the court has denied that relief, and it also does not authorize continued collection for the past period covered by the judgment. The respondent accepted that no refund would be claimed, while resisting any further liability for the earlier period.

Conclusion: The challenge to the levy did not succeed in the appeal, and the State was not entitled to collect any further tax for the period prior to the date of the judgment, while no refund of tax already collected was payable.

Final Conclusion: The appeal was dismissed, and the effect of the decision was confined to denying further recovery for the pre-judgment period without disturbing amounts already collected.

Ratio Decidendi: Where a prior view treating lottery tickets as goods has been prospectively overruled, the taxing authority cannot continue to recover tax for the pre-judgment period, and the relief granted or denied must be confined within the limits of prospective overruling.

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