State GST rules cannot let tax officials decide lottery-law violations or stop ticket sales before competent statutory .

State GST authorities cannot, under delegated tax rules, assume power to determine alleged violations of the Lotteries (Regulation) Act, 1998 or impose a prior restraint on lottery sales on that basis. Rule 56(20A)(iii)(d) of the Kerala State GST Rules was held beyond State legislative competence because it purported to empower tax officials to trigger action on a matter falling within the parliamentary field. A notice restraining sale of lottery tickets was quashed to that extent, while GST record-keeping and return defaults under the relevant rules could be examined only in assessment or other authorised statutory proceedings, not used as a basis to stop business.

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Issues: (i) Whether Rule 56(20A)(iii)(d) of the Kerala State Goods and Services Tax Rules, 2017, and the impugned action based on it, were within the State's legislative competence; (ii) whether the tax authorities could require proof of compliance with the Lotteries (Regulation) Act, 1998, and restrain sale of the lottery tickets under Ext.P26; (iii) whether non-compliance with the record and return requirements in Rules 56(19) and 56(20A) could justify preventing the petitioners from carrying on lottery sales.

Issue (i): Whether Rule 56(20A)(iii)(d) of the Kerala State Goods and Services Tax Rules, 2017, and the impugned action based on it, were within the State's legislative competence.

Analysis: The Rule empowered the State tax authority to record satisfaction regarding alleged violations of the Lotteries (Regulation) Act, 1998 and to trigger police action. That function was held to be outside the State's competence because the subject of lotteries is within the parliamentary field. The reasoning proceeded on the basis that police power is not an independent constitutional head and cannot be created by the State GST Rules to decide violations under the Central lottery law.

Conclusion: Rule 56(20A)(iii)(d) was struck down as ultra vires for want of legislative competence, in favour of the petitioner.

Issue (ii): Whether the tax authorities could require proof of compliance with the Lotteries (Regulation) Act, 1998, and restrain sale of the lottery tickets under Ext.P26.

Analysis: The notice demanded that the petitioners prove compliance with the lottery law before proceeding further. The Court held that the State GST authorities were not the proper forum to determine whether the lottery scheme complied with the Lotteries (Regulation) Act, 1998. Any such question had to be examined in the statutory manner by the competent authority, and the State could not, through tax administration, assume the role of deciding the legality of another State's lottery scheme.

Conclusion: Ext.P26 was quashed to the extent it restrained the petitioners from proceeding with the sale of lottery tickets, in favour of the petitioner.

Issue (iii): Whether non-compliance with the record and return requirements in Rules 56(19) and 56(20A) could justify preventing the petitioners from carrying on lottery sales.

Analysis: The remaining record-keeping and return requirements were treated as provisions meant for assessment and verification under the GST regime. Practical difficulty or inability to furnish some particulars did not, by itself, authorise the authorities to stop the business. Such non-compliance could be examined in assessment or other appropriate proceedings, but it was not a valid basis for a prior restraint on sale.

Conclusion: The challenge to the other Rules was rejected, but their non-compliance could not be used to prevent the petitioners from selling lottery tickets, in favour of the petitioner.

Final Conclusion: The writ petition succeeded in part: the impugned rule conferring authority to determine lottery-law violations was invalidated, the restraining portion of the notice was set aside, and the remaining GST record requirements were left open to be examined only in the appropriate statutory proceedings.

Ratio Decidendi: State GST authorities cannot, under delegated tax rules, assume power to determine violations of the Lotteries (Regulation) Act, 1998 or impose a prior restraint on lottery sales on that basis; such matters must be left to the competent statutory process, while tax-record defaults may be addressed only in assessment or other authorized proceedings.

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