High Court invalidates tax on lottery ticket sales, granting relief to petitioner

The High Court set aside the assessment order, ruling it invalid as the State could not levy tax on lottery ticket sales. Applying the principles from a Supreme Court case and the concept of prospective overruling, the Court granted relief to the petitioner, preventing the State from collecting any tax on lottery ticket sales. No costs were imposed on the petitioner.

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Issues:
Challenge to assessment order violating natural justice and procedures under Section 12 of Tamil Nadu General Sales Tax Act. Application of Supreme Court judgments on taxation of lottery tickets and principle of prospective overruling.

Analysis:
1. The petitioner contested the assessment order dated 31.12.2003, alleging it was illegal due to violations of natural justice and procedures under the Tamil Nadu General Sales Tax Act. The petitioner argued that the order was based on an inspection at an address where they no longer conducted business, and they were not registered under the Act as their sales office was in Bangalore. The petitioner's objections were disregarded, leading to the assessment order.

2. The High Court admitted the writ petition on 2.6.2004 and issued an interim stay on further proceedings pending disposal. The judgment highlighted the Supreme Court's decision in SUNRISE ASSOCIATES case, which clarified the taxation of lottery tickets, distinguishing between the right to participate and the chance to win. This decision was to be applied prospectively to all relevant cases.

3. The judgment emphasized that a Supreme Court decision merely interprets existing law and does not create new rights or obligations. It discussed the principle of prospective overruling, citing the case of Somaiya Organics, which illustrated that the Court may not grant refunds despite ruling in favor of the claimant if circumstances warrant such a decision.

4. Applying the principles from the SUNRISE case and the concept of prospective overruling, the High Court concluded that the assessment order was invalid as the State could not levy tax on the sale of lottery tickets. The Court allowed the writ petition, setting aside the assessment order and preventing the State from collecting any tax on lottery ticket sales. The petitioner was granted relief, and no costs were imposed.

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