Taxing lottery promotion is a substantive expansion, so the amendment could not operate retrospectively before 16.05.2008.

An amendment that brings promotion or marketing of games of chance, including lottery, within business auxiliary service is substantive when it enlarges tax liability, even if described as an explanation for the removal of doubts. The Supreme Court held that lottery tickets are actionable claims, not goods, and that organising lottery did not itself amount to a service under the existing charging provision. Because the pre-amendment text did not clearly cover lottery-related activity, service tax could not be levied for periods before 16.05.2008. The amendment therefore operated prospectively and was not retrospective or clarificatory.

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Issues: Whether the Explanation inserted in Section 65(19)(ii) of the Finance Act, 1994, which brought promotion or marketing of games of chance including lottery within business auxiliary service, was clarificatory and retrospective, and whether service tax could be levied on lottery-related activities for the period prior to 16.05.2008.

Analysis: Section 65(19) of the Finance Act, 1994 defined business auxiliary service by reference to promotion or marketing of goods or services, while Section 65(50) linked "goods" to the Sale of Goods Act, 1930. Lottery tickets had already been treated as actionable claims and not goods, and the Court held that organizing lottery did not itself amount to rendition of service to the public. The Explanation introduced by the Finance Act, 2008 did more than remove a doubt: it expanded the tax net by deeming services connected with games of chance, including lottery, to fall within the provision. A provision that widens the scope of tax liability is substantive in nature, and the words "for the removal of doubts" are not conclusive. The Court also held that the existing charging provision did not clearly cover the activity before the amendment.

Conclusion: The Explanation was not clarificatory or retrospective, and service tax on promotion or marketing of lottery-related games of chance was not leviable for periods prior to its commencement on 16.05.2008.

Ratio Decidendi: An amendment that enlarges the charge of a taxing provision by introducing a new taxable concept is substantive, not clarificatory, and cannot be given retrospective effect merely because it is prefaced by "for the removal of doubts".

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