2017 (12) TMI 1285 - SC - VAT and Sales Tax

Supreme Court upholds High Court decision on 'promoter' status under Kerala Tax on Paper Lotteries Act

Assistant Commissioner Commercial Taxes And Ors. Versus LIS (Registered)

The Supreme Court dismissed the appeal filed by the State of Kerala and Assistant Commissioner, Commercial Taxes, affirming the High Court's decision in ... Payment of tax under the Kerala Tax on Paper Lotteries Act, 2005 - whether the respondent-assessee is a promoter within the meaning of Section 2(l) of the Act so as to make it exigible to payment of tax under Section 6 and amenable to the other provisions of the Act? - Held that: - The respondent who was appointed as an agent by M/s. MSIL was expressly barred by the terms of appointment from dealing with lottery tickets in the electronic form and for sale in the physical form outside the territories of the State of Karntaka. If that is so, we do not see how the respondent can be understood to be capable of being included in the definition of 'promoter'. The respondent certainly is not 'any person' appointed by the State of Karnataka to sell lottery tickets in the State of Kerala on behalf of the State of Karnataka - If the respondent is not a 'promoter' within the meaning of Section 2(l) of the Act, the charging Section i.e. Section 6 will have no application to make the respondent liable to payment of tax under the Act nor would be the respondent be liable for registration under Section 7 of the Act. In fact, the present appears to be a situation where the activities of the respondent including the terms of appointment as an agent of M/s. MSIL does not make it exigible to any of the provisions of the Act. Appeal dismissed - decided against Revenue. Issues:1. Liability of respondent-assessee under Kerala Tax on Paper Lotteries Act, 2005.2. Interpretation of the definition of 'promoter' under Section 2(l) of the Act.3. Applicability of charging sections, registration requirements, and other provisions to the respondent-assessee.4. Examination of the definition of 'promoter' in relation to the activities of the respondent.5. Analysis of the provisions related to filing returns, payment of penalties, and tax liability.6. Argument regarding expanding the definition of 'promoter' under different sections of the Act.7. Application of legal principles to taxing statutes and interpretation of the law.Analysis:1. The main issue in this case pertains to the liability of the respondent-assessee under the Kerala Tax on Paper Lotteries Act, 2005. The question arises regarding the payment of tax by the respondent-assessee as per the provisions of the Act.2. The interpretation of the definition of 'promoter' under Section 2(l) of the Act is crucial in determining the applicability of the charging sections, registration requirements, and other provisions to the respondent-assessee. The definition of 'promoter' includes the government or any appointed person for selling lottery tickets.3. The respondent-assessee, a partnership firm operating in Karnataka and Kerala, is alleged to have purchased lottery tickets in bulk for its members. The court examines whether the respondent qualifies as a 'promoter' under the Act and is liable to pay tax and adhere to registration requirements.4. By analyzing the respondent's role as an agent of M/s. Mysore Sales International Limited, the court concludes that the respondent does not meet the criteria to be considered a 'promoter' under the Act. The restrictions on ticket sales imposed on the respondent further support this finding.5. The provisions related to filing returns, payment of penalties, and tax liability are scrutinized in the context of the respondent's activities. The court determines that if the respondent is not a 'promoter,' the charging section and registration requirements do not apply to them.6. An argument is presented to expand the definition of 'promoter' by referencing other sections of the Act. However, the court rejects this argument, emphasizing that the definition must be interpreted strictly and cannot be extended beyond its explicit terms.7. The judgment underscores the principles governing taxing statutes, highlighting that equitable considerations are irrelevant in tax interpretation. Quoting various legal precedents, the court emphasizes the importance of adhering strictly to the language of the statute without implying or inferring additional provisions.In conclusion, the Supreme Court dismisses the appeal filed by the State of Kerala and Assistant Commissioner, Commercial Taxes, affirming the High Court's decision in favor of the respondent-assessee based on the interpretation of the 'promoter' definition and the application of taxing statutes.