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of <h1>Denial of Reduced Tax Rate on Lottery Tickets for Government Use</h1> <h3>Canara Security Press Private Limited Versus State of Karnataka</h3> Canara Security Press Private Limited Versus State of Karnataka - [2009] 20 VST 282 (Kar) Issues:Interpretation of a notification reducing sales tax for specific government departments for official use only.Analysis:The petitioner, a company engaged in printing high-security documents, supplied lottery tickets to the Department of Small Savings and State Lotteries based on an order. The Government of Karnataka issued a notification reducing sales tax to four percent for specific departments for official use, subject to conditions. The petitioner argued that the lottery tickets supplied were for official use, relying on the notification and produced a declaration form. However, the assessing officer held that the tickets were not for official use but for commercial venture, thus not eligible for the reduced tax rate.An appeal was made to the Joint Commissioner of Commercial Taxes (Appeals) who upheld the assessing officer's decision. The key legal question raised was whether the purchase of lottery tickets by the department for conducting lotteries constitutes official use as per the notification. The petitioner contended that the declaration form issued by the department should be binding and that the term 'used by them' should not be restricted to personal use but include commercial activities. The Government Advocate argued that the notification intended to reduce tax only for official use, not commercial ventures.The High Court analyzed the notification and declaration form, emphasizing that the intention was to reduce tax for goods required for regular official use, not for profit-making ventures. The court noted that the lottery tickets were printed for the lottery division, not for personal use, indicating a commercial purpose. Despite the certificate issued by the department, the court concluded that the goods were not for official use as per the notification, thus upholding the decision of the authorities to deny the reduced tax rate. The court rejected the petition, finding no substantial legal question as the terms 'used by them' and 'for official use' were intended for official departmental use, not commercial activities.
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