Lottery tickets as actionable claims: sales tax liability and unsanctioned prosecution under a special statute were held unsustainable.

Lottery tickets are treated as actionable claims, not goods, because they confer only a conditional right to a prize; on that basis, sales tax cannot be levied on their sale as goods. The earlier contrary view was overruled prospectively. The document also states that, under a special statute with its own prosecution scheme, police investigation and cognizance on a police report are not maintainable unless authorised by the statute, and prosecution without the required prior sanction is procedurally unsustainable. On that reasoning, the criminal proceeding was held to be without jurisdiction and quashed.

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Issues: (i) Whether lottery tickets are goods liable to sales tax under the Bihar Finance Act, 1981; (ii) Whether the criminal proceeding and cognizance could be sustained when the prosecution was launched without prior sanction and the police investigated a special statute.

Issue (i): Whether lottery tickets are goods liable to sales tax under the Bihar Finance Act, 1981

Analysis: The decision relied on the Constitution Bench ruling that a lottery ticket represents only a right to claim a conditional prize and therefore falls within the category of an actionable claim. An actionable claim is excluded from the definition of goods for sales tax purposes. The earlier view treating lottery tickets as goods was expressly overruled prospectively.

Conclusion: Lottery tickets are not goods for sales tax purposes, and no sales tax liability could be fastened on their sale on that footing.

Issue (ii): Whether the criminal proceeding and cognizance could be sustained when the prosecution was launched without prior sanction and the police investigated a special statute

Analysis: The Bihar Finance Act is a special enactment containing its own scheme for prosecution. Where a special statute regulates investigation and prosecution, police investigation and cognizance on a police report are not maintainable unless the statute so permits. The prosecution was also initiated without the prior sanction required under the Act, rendering the proceeding procedurally unsustainable.

Conclusion: The investigation, cognizance, and prosecution were without jurisdiction and could not be sustained.

Final Conclusion: The criminal proceeding was an abuse of process and was quashed in its entirety.

Ratio Decidendi: A prosecution founded on alleged sales tax liability for lottery tickets cannot survive once lottery tickets are held to be actionable claims and, in a special statute, prosecution initiated without the statutorily required sanction and outside the prescribed mode of enforcement is without jurisdiction.

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