Commission-based lottery retailers may be dealers, and online ticket sales remain taxable with licence fee as an alternative payment option.

A commission-based retailer selling online lottery tickets can fall within the definition of "dealer" when it sells at the authorised price, earns commission, and acts under the company's commercial arrangement. The sale is treated as completed at the retail outlet, so the transaction remains exigible to tax under the sales tax law; the licence-fee mechanism operates only as an alternative mode of payment, not as a removal of tax liability. Retail premises independently selected, funded, and staffed by the retailers are not additional places of business of the company.

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Issues: (i) Whether retail agents appointed for the sale of online lottery tickets fell within the definition of "dealer" under the Kerala General Sales Tax Act, 1963. (ii) Whether sales of online lottery tickets through the retail outlets constituted sales exigible to tax under section 5(1), with only an option to pay licence fee under section 5BA. (iii) Whether the retail outlets were additional places of business of the company.

Issue (i): Whether retail agents appointed for the sale of online lottery tickets fell within the definition of "dealer" under the Kerala General Sales Tax Act, 1963.

Analysis: The definition of "dealer" was construed broadly. The retailer agreement showed that the agents were appointed to sell computerised network lottery tickets, were required to sell at the authorised price, received commission on sales, and functioned under the commercial arrangement of the company. On the terms of the agreement, the relationship was not that of master and servant, but was akin to that of a commission agent acting on behalf of a principal.

Conclusion: The retail agents were dealers within section 2(viii) of the Kerala General Sales Tax Act, 1963, and the conclusion was against the assessee.

Issue (ii): Whether sales of online lottery tickets through the retail outlets constituted sales exigible to tax under section 5(1), with only an option to pay licence fee under section 5BA.

Analysis: The Court held that customers purchased tickets from the retail outlets and the sale was completed there, irrespective of the electronic system or central server arrangement. The fact that the tickets were part of an online system did not prevent the transaction from being a sale of goods for sales tax purposes. Section 5BA was treated as an option for dealers liable under section 5(1) to pay licence fee per draw in lieu of tax, not as a mechanism that removed the underlying tax liability on sales.

Conclusion: The sale of lottery tickets through the retail outlets attracted tax under section 5(1), subject to the statutory option under section 5BA, and the conclusion was against the assessee.

Issue (iii): Whether the retail outlets were additional places of business of the company.

Analysis: The agreement and surrounding arrangement showed that each retailer selected its premises, bore rent and operational expenses, and employed its own staff. The outlets were independent and self-governing commercial units, not branches controlled as additional establishments of the company.

Conclusion: The retail outlets were not additional places of business of the company, and the conclusion was against the assessee.

Final Conclusion: The clarification issued by the Commissioner was upheld, the retail agents were held liable to tax on their sales, and the writ appeal succeeded.

Ratio Decidendi: Where a retailer, under a commission-based arrangement, sells lottery tickets to customers from an independent outlet, the retailer is a dealer and the transaction is a sale exigible to tax under the sales tax law, with any licence-fee scheme operating only as an alternative mode of payment.

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