Delegated fiscal levies need express statutory authority, and charges cannot be imposed on events beyond a State's territory.

Delegated legislation under the Lotteries (Regulation) Act, 1998 cannot impose a fiscal charge unless the parent statute expressly authorises such an exaction; a rule that creates a per-draw levy without that foundation is ultra vires. A State notification that burdens draws conducted outside its territory is likewise beyond jurisdiction because it gives the levy impermissible extra-territorial effect and operates as a colourable exercise of power. The challenged rule and notification were therefore treated as invalid and incapable of enforcement, with refund consequences noted for amounts collected under them.

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Issues: (i) Whether Rule 3(11) of the Lotteries (Regulation) Rules, 2010, which authorises a charge of Rs. 2000 per draw, is beyond the rule-making power under the Lotteries (Regulation) Act, 1998. (ii) Whether the impugned notification issued by the State of Sikkim, levying the charge on draws conducted outside its territory, is without jurisdiction and extra-territorial in effect.

Issue (i): Whether Rule 3(11) of the Lotteries (Regulation) Rules, 2010, which authorises a charge of Rs. 2000 per draw, is beyond the rule-making power under the Lotteries (Regulation) Act, 1998.

Analysis: The enabling statute was enacted under Entry 40 of List I, which is regulatory in character. The charging provision in Rule 3(11) was not traceable to any express provision in the parent Act authorising the imposition of tax, fee or other compulsory exaction. A delegated instrument cannot create a fiscal impost unless the parent statute specifically permits it. The Court held that the impugned rule travelled beyond the scope of the Act and could not be sustained as a valid exercise of delegated power.

Conclusion: Rule 3(11) was held to be ultra vires the Lotteries (Regulation) Act, 1998 and was struck down.

Issue (ii): Whether the impugned notification issued by the State of Sikkim, levying the charge on draws conducted outside its territory, is without jurisdiction and extra-territorial in effect.

Analysis: The levy was imposed by the State of Sikkim on draws admittedly conducted in Mizoram, while the only activity within Sikkim was sale of lottery tickets. The Court found that the notification effectively sought to regulate and burden an event taking place outside the State, thereby attributing to Sikkim an impermissible extra-territorial reach. The levy was also treated as a colourable exercise of power because it indirectly achieved what could not be imposed directly under the Act.

Conclusion: The notification was quashed as ultra vires and without jurisdiction.

Final Conclusion: The writ petition succeeded, the impugned rule and notification were invalidated, prohibition was issued against their enforcement, and the respondent State was directed to refund the amounts collected under them.

Ratio Decidendi: A subordinate fiscal levy cannot be sustained unless the parent statute expressly authorises it, and a State cannot impose a charge on an event occurring beyond its territorial jurisdiction by means of delegated legislation.

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