2009 (4) TMI 191 - AT - Service Tax

Tribunal's View on Retrospective Tax Provision Amendment

The Tribunal, after considering arguments from both parties and examining relevant provisions, noted the amendment to Section 65(19) of the Finance Act, ... Sale of lottery tickets – appellant our attention to the provision of law contained in Section 65(19) of Finance Act, 1994 and submits that if at all lottery service is brought to the service tax in view of addition of explanation to sub-clause (ii) of Section 65(19), the appellant may be liable after w.e.f. 16-5-08 but not for the impugned period which is in the case 1-7-03 to 15-11-04 - Prima facie, we are of the view that such a provision may not be retrospective. - we waive requirement of pre-deposit Issues: Applicability of service tax on lottery activity as Business Auxiliary Service under Section 65(19) of the Finance Act, 1994.Analysis:1. Argument by Appellant's Counsel: The appellant's Chartered Accountant argued that the lottery activity conducted for the State of Arunachal Pradesh should not be considered Business Auxiliary Service under Section 65(19) of the Finance Act, 1994. He contended that the appellant acted as an auctioneer according to the agreement, not as a service provider. The payment modality indicated that the appellant functioned as a trader, not a service provider.2. Submission by Authorized Representative: The Authorized Representative for the appellant highlighted that the lottery operation involved risks for the appellant, who could face losses. He emphasized that the appellant did not support the State's business and, therefore, should not be classified under business auxiliary service. Referring to legal provisions and a Supreme Court case, he argued that the sale of lottery tickets had transitioned to auctionable claims after a specific judgment date.3. Interpretation of Law: The appellant's counsel referred to Section 65(19) of the Finance Act, 1994, stating that if lottery services were to be taxed, it should apply post the amendment in 2008, not for the period in question. He stressed that since the authorities had previously ruled that the appellant did not market goods for the State, they should not be subjected to service tax. He requested a waiver of pre-deposit during the appeal.4. Revenue's Argument: The Departmental Representative argued that the appellant provided a service by organizing the lottery for the State of Arunachal Pradesh, benefiting the State's business. He supported the authorities' decision and requested pre-deposit based on pending Supreme Court decisions.5. Tribunal's Decision: After hearing both sides and examining relevant provisions, the Tribunal noted the amendment to Section 65(19) of the Finance Act, 1994 in 2008. They indicated a prima facie view that the provision may not be retrospective. While refraining from expressing a final opinion on the appellant's business model, the Tribunal waived the pre-deposit requirement during the appeal process.This detailed analysis outlines the arguments presented by both parties, the legal interpretations made by the Tribunal, and the final decision regarding the applicability of service tax on the lottery activity under consideration.