TaxTMI 
TaxTMI 
2013 (11) TMI 1003
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....ince they had been rendering service to the State Government in relation to promotion, marketing, organising and assisting in organising games of chance including lottery services. 2. The Petitioner is a Company registered under the Companies Act, 1956 and is engaged in the business of sale of lottery tickets organised by the Government of Sikkim, the Respondent No.4, under an agreement dated 10-08-2009 for a term of five years. By that agreement the Petitioner procures the lottery tickets in bulk from the Government of Sikkim and resells those to the public through various agents, stockists, resellers, etc. 3. The Writ Petition is founded on several grounds particularly the jurisdiction of the Respondents No.1 to 3 in demanding service tax and legality of their action in enforcing the provisions of the Finance Act, 1994, as amended by the Finance Act, 2012, upon the Petitioner with effect from 01-07-2012 since when the Finance Act, 1994 (as mended by the Finance Act, 2012) came into effect. The Petitioner asserts that by the amendment to the the Finance Act, 1994 in 2012, 'lottery' and 'transaction in actionable claim' have been kept outside the purview of the service tax. S....
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....ure under Entry 62 of List II of the Seventh Schedule to the Constitution of India, thereby rendering the levy of service tax ultra vires the Constitution of India. 8. The Respondents No.1 to 3 in their counteraffidavit have reiterated their stand taken in their impugned letter dated 06-07-2012 referred to earlier. As per them, under Notification No. No.36/2012-ST dated 20-06-2012 read with Rule 6(7C) of the Finance Act, 1994, as amended, distributors or the selling agents are liable to pay service tax at the rate specified for the taxable service of promoting, organising or in any other manner assisting in arranging sale of lottery tickets on receipt of commission calculated on the number/value of tickets. They have asserted that merely mentioning in the agreement that the Petitioner is the sole purchaser of lottery tickets for Government of Sikkim does not constitute a relationship of purchaser and buyer. It is asserted that clauses 10, 14, 15, 19 and 24 vest the State with some vital rights. We may reproduce below these clauses, also set out in their counter-affidavit, for better appreciation and convenience:- "10. Subject to the provisions of clause 4 of this agreement, t....
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....ax for the taxable service of the Petitioner of promoting, organising or in any other manner assisting in arranging sale of lottery tickets. 11. On the question of the change in law asserted on behalf of the Petitioner, the answering Respondents chose to deal only with the issue pertaining to the 'negative list' of services contained in Section 66D introduced by the Finance Act, 1994, as amended by the Finance Act, 2012 with effect from 01-07-2012. It is submitted that by the amendment, negative list based approach has been introduced for the tax on services under which rather than specifying the services that are taxable, those which would not be liable for service tax have been specified. Hence, as per the Respondents No.1 to 3, it is only the sale of lottery tickets per se that has been included in the 'negative list' for the sake of maintaining continuity and conformity with Entry 62 of List II of the Seventh Schedule to the Constitution. 12. While conceding that lottery is a State Subject under List II of Seventh Schedule to the Constitution, it is stated that this aspect has no relevance in a situation where a person/party/institution is providing services for promoting....
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....er that no service tax was payable on the activity undertaken by the Petitioner which, of course, was challenged before the Hon'ble Supreme Court in Civil Appeal No.3239 of 2009. However, during the pendency of this Appeal, the Finance Act, 1994, was further amended incorporating an 'Explanation' to Section 65(19)(ii) of the Finance Act whereby it was declared that "for the purpose of this Sub-Clause, 'service' in relation to promotion or marketing of service provided by the client would include any service provided in relation to promotion or marketing of games of chance, organised, conducted or promoted by the client, in whatever form or by whatever name called, etc." 15. The Hon'ble Supreme Court being apprised of the development took note of the Explanation and its impact on the judgment delivered by this Court and, in Union of India and Others vs. Martin Lottery Agencies Limited : (2009) 12 SCC 209, ultimately held the Explanation to be a substantive law and declared it to be enforceable prospectively leaving the issue as regards the validity of the Explanation open. The judgment of this Court, however, was not interfered with. In a later Writ Petition filed before this Cou....
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....gain by the Finance Act, 2012, whereby several provisions were introduced giving a new dimension to the meaning of 'taxable service' as services that would be taxable thereunder. We may reproduce the relevant provisions of the Finance Act, 1994, as amended, by the Finance Act, 2012, which is effective from 01-07-2012 as under:- "65B. In this Chapter, unless the context otherwise requires,- (1) "actionable claim" shall shave the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882); ............................................................................... (34) "negative list" means the services which are listed in section 66D; ............................................................................... (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- ................................................................... (iii) a transaction in money or actionable claim; (51) "taxable service" means any service on which service tax is leviable under section 66B; Charge of service t....
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....iled by us with the Department from time to time. 4. In view of the aforesaid change in legal provisions relating to levy of service tax, we are writing this letter to inform your Goodself that we will not be paying service tax with effect from 1st July, 2012. This is for your information and records, please. ....................................................................." 20. In response to the above, the Respondent No. 3 issued the impugned letter letter C. No.V(3)7/ST/ FGSIPvtLtd/GTK/2009/295 dated 06-07-2012 stating inter alia as follows:- "In this matter, I have been directed by the Assistant Commissioner, Central Excise and Service Tax, Gangtok Division, Siliguri to inform you that as per the Not. No. 36/2012 ST dated 20.06.2012 read with Rule 6(7C) of the Finance Act 1994 (as amended), the distributor or selling agents are liable to pay service tax at the rate specified for the taxable service of promoting, organizing or in any other manner assisting in arranging lottery. Since you are rendering service to the State Govts. in relation to Promotion, Marketing, Organizing and assisting in organizing games of chance including lottery services, you are liable t....
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.... the Finance Act, 1994, where the expression 'actionable claim' has been given the same meaning assigned to it in Section 3 of the Transfer of Property Act, 1882. By taking us through the definition of 'actionable claim' as defined under Section 3 of the Transfer of Property Act Mr. Rao submits that taking into consideration this definition of 'actionable claim', a Constitution Bench of the Hon'ble Supreme Court in Sunrise Associates (supra) categorically held that tickets of lottery organised by the State Governments are 'actionable claims' and sale of lottery tickets by distributors is transfer of 'actionable claim' as defined under the Transfer of Property Act. Thus, by this decision a transaction in lottery tickets being 'actionable claim' stands clearly excluded from the ambit of 'service' itself. It is, therefore, submitted that the action of the Respondents No.1 to 3 in enforcing the provisions of the Finance Act, 2012, suffers from the lack of jurisdiction and is in conflict with the very provisions of the Finance Act. 24. It was then submitted that even if dealing in 'lottery tickets' is considered a 'service', it still stands excluded from the ambit of 'service tax' as....
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....th Schedule of the Constitution of India providing for taxes on services, has still not been notified thereby making it incompetent for the Parliament to levy service tax even under this Entry. That even under the residuary provision under Entry 97 of List I the Parliament would not be empowered to levy tax on service as it would apply only in a situation where a subject-matter of Legislation is not covered under any of the Entries under List II to the Seventh Schedule of the Constitution of India in the light of Article 248 thereof. 26. The next contention is that as per the agreement dated 10-08-2009 entered into between them the relationship between the Petitioner and the Government of Sikkim is that of a buyer and a seller and the entire transaction is on principal to principal basis where the Petitioner purchases the lottery tickets from the Government of Sikkim and resells them to agents, stockists, resellers, etc., during the process earns a profit being the difference between the sale and purchase price. 27. Relying upon (a) Bowstead & Reynolds on Agency; (b) Alwaye Agencies vs. Dy. Commissioner of Agricultural Income Tax and Sales Tax, Ernakulam : 1998 (Supp) SCC 394....
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....ive and that sale transaction does not fall within the ambit of the Service Tax Laws. On this, he placed reliance upon Bharat Sanchar Nigam Ltd. and Another vs. Union of India and Others : (2006) 3 SCC 1 and Imagic Creative (P) Ltd. vs. Commissioner of Commercial Taxes and Others : (2008) 2 SCC 614 as well as a decision of the Hon'ble Delhi High Court in Indian Railways C. & t. Corpn. Ltd. vs. Govt. of NCT of Delhi : 2010 (20) STR 437 (Delhi). Mr. Rao re-emphasises that by the organisation of lottery no services are being rendered in view of its pernicious character as held in State of Bombay vs. R.M.D. Chamarbaugwala and Another : 1957 SCR 974, B. R. Enterprises vs. State of U.P. and Another : (1999) 9 SCC 700 and also in view of the decision in Martin Lottery Agencies (supra) where it has been held most categorically that in organising lottery no service is being rendered. 29. It is then contended by referring to Association of Leasing & Financial Service Companies vs. Union of India and Others : (2011) 2 SCC 352 that service tax can be levied only on the amount received as consideration against the services provided by the service provider. In the present case, as no consider....
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....umstances, the question of rendering service does not arise. Thus, there being no element of service in the organisation of lottery the Petitioner stands excluded from the application of the Finance Act, 1994, as amended by the Finance Act, 2012. 33. It is then contended that the Respondents have failed to discharge the burden of proof that there is a taxable service chargeable on the Petitioner and pass the test laid down in M/s. Girdhari Lal Nannelal vs. The Sales Tax Commissioner, M.P. : (1976) 3 SCC 701, a decision that has consistently been followed some of which are B. Satyanarayana Murthy and Sons vs. State of Andhra Pradesh : 57 STC 274 (AP) and Jindal Dyechem Industries Pvt. Ltd. vs. Sales Tax Officer (Enforcement) : 142 STC 257 (Delhi). To emphasise on this, two more decisions of the Hon'ble Supreme Court were cited which are set out below:- (a) Union of India and Others vs. Garware Nylons Ltd. and Others : (1996) 10 SCC 413 where it has been held as under:- "15. ...................... The burden of proof is on the taxing authorities to show that the particular case or item in question is taxable in the manner claimed by them. Mere assertion in that regard is of ....
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....of cess is under sub-section (1) of Section 12 and not under sub-section (2). It is only with regard to the collection of the cess that an option is given to collect the same either from the producer or the manufacturer. A charge under a taxing statute can only be under the Act and not under the Rules. The Rules normally provide for the procedure to be followed for the realisation of the statutory dues. It is in this context that sub section (2) enables the framing of the rules whereby the duty instead of being realised from the producer is realised at a latter stage, namely, from the manufacturer. .................................... [emphasis supplied] (b) Cooperative Sugars (Chittur) Ltd. vs. State of T.N. : 1993 Supp (4) SCC 42 - "8. The stipulation in the G.O.Ms. No.2260 cannot also be relied upon by the State of Tamil Nadu for sustaining the levy. A tax can be levied only by a statutory provision. This is not a case where the State of Tamil Nadu is seeking to enforce any agreement between the parties. It was an assessment under the Madras Act. In such a case, the agreement, if any, incorporated in G.O.Ms. No. 2260 is not relevant. ...................." [emphasis supp....
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....of Customs, Mumbai : (2006) 12 SCC 583 it was submitted that the hierarchy of legal norms in India being (i) the Constitution of India; (ii) Statutory Law which may be either Law made by the Parliament or by the State Legislature; and (iii) Delegated Legislation, which may be in the form of Rules made under the Statute etc. and (iv) purely executive orders not made under any Statute and that "if a law (norms) in the higher layer in the above hierarchy clashes with the law with a lower layer, the former will prevail". It is, therefore, submitted that since the impugned letter dated 06-07-2012 is issued under the Service Tax Rules as against the provisions of Finance Act, 2012, it has to be held to the illegal and unsustainable. 38. It is further submitted that levy of tax cannot be inferred from Notification and Service Tax Rules, 1994. On this, Mr. Rao placed reliance upon the following decisions:- (a) The Sales Tax Officer, Navgaon and Another vs. Timber and Fuel Corporation : (1973) 2 SCC 292 - "5. Now we are left with the sales effected by the assessee in Madhya Pradesh, the turnover of which amounted to rupees one lakh. On this question, there is no dispute about facts....
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....dent placed in our hands the notification of the Central Government signed by the Deputy Secretary to the Government of India, dated 6-6-1979, which reads as follows:- "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government exempts Laminated Jute hags falling under Item No. 68 of the First Schedule to the Central Excise and Salt Act, 1944 (1 of 1944) from the whole of the duty of excise leviable thereon. The object of the learned Central Government Pleader in placing this notification in our hands was to contend that it was under that notification the Central Government exempted laminated jute bags from the whole of the duty of excise leviable thereon; and in the very notification laminated jute bags having been described as goods falling under item No. 68 of the First Schedule, it must be presumed that it fall under Item No. 68, not under Item No. 22A. If on a true interpretation of the expressions used in Item No. 22A, we find that laminated jute bags fall within that item and merely for the reason that the Government in the notification granting exemption of excise duty, described it as one falling under Item....
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....nder the 1936 Act prior to the issuance of the Notification dated 5-5- 2008 as fairly stated by Mr Dave, we fail to see how duty can be levied under the 1936 Act after the issuance of the notification." [emphasis supplied] 40. For the aforesaid reasons, it is the submission of Mr. Rao that the demand of service tax by the Respondents based on the provisions of the Service Tax Rules, 1994, and Notification No.36/2012-ST being in conflict with provision of Finance Act, 1994, as amended by Finance Act, 2012, would be unsustainable and, therefore, liable to be quashed. 41. Mr. Rao sought to summarise his submissions as under:- (a) That the activities undertaken by the Petitioner do not fall under the definition of 'taxable services' defined under the Finance Act, 1994, as amended. (b) As the definition of the expression 'service' under Section 65B(44) of the Finance Act, 1994 excludes 'transaction in actionable claim', no service tax can be levied on sale and purchase of lottery tickets which have been declared by the Hon'ble Supreme Court to be actionable claim. Therefore, in terms of the amended provisions of the Finance Act, 1994 (with effect from 01-07-2012) lottery ....
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....; (ii) change in the paper cost printing, freight; and (iii) change in the market condition. Clause 15 mandates that the Government shall realise the full payment of the tickets resold by the Petitioner at the wholesale rate prescribed under Clause 14 of the agreement. Clause 19 of the agreement prescribes that the lottery draw shall be held by the Government of Sikkim and Clause 24 of the agreement provides that the taxable prizes shall be disbursed by the Government directly to the winners/claimants to the tickets. It is stated that for the aforesaid reason in reality the Petitioner is not the purchaser but is only facilitating the Government in sale of lottery tickets thereby bringing him within the provisions of the Service Tax Laws as amended. (iii) The sale of lottery tickets may be outside the purview of the sales tax but the Petitioner's activities being promoting, organising and assisting in arranging sale of lottery tickets, it is leviable to service taxable for such activities as service tax is leviable on the service provider engaged in assisting in arranging sale of lottery for the Government of Sikkim. (iv) Inclusion of lottery in the 'negative list' under Se....
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....following paragraphs of the letter:- "3. Hon'ble High Court of Kerala in P. Muraleedharan, Managing Partner v. Union of India held that "Discount or commission received by the petitioners as well as the retailers for marketing the lottery tickets is nothing but consideration for service rendered to the promoter or organiser of the lottery. Obviously without the service rendered by the distributors namely, the petitioners and down line dealers, the lottery tickets will not reach the ultimate customers who are the participants in the draw. So much so, in our view, the whole scheme of the lottery, printing and distribution of tickets and the conduct of draw involve service from various agencies and the most important service rendered by petitioners is as distributors. So much so, we are unable to accept the contention of the petitioners that they are not rendering any service in relation to marketing of lottery". Hence, the activity which was subjected to service tax was the auxiliary services involved in the lottery not the sale of lottery tickets per se. 4. From 1st day of July, 2012, negative list based approach is being introduced for the taxation of services. In this approa....
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.... of lottery." (ix) Mr. B. K. Gupta also brought to our notice Section 66F of the Act providing for principles of interpretation of specified description of services called 'bundled services'. For convenience, we may reproduce below the provision of Section 66F:- "66F. Principles of interpretation of specified descriptions of services or bundled services.-(1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service. (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. (3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:- (a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character; (b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as pr....
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.... Office at Gangtok addressed to the registered Office of the Petitioner at Gangtok within the jurisdiction of this Court. In view of this, the objection does not appear to have any merit and is accordingly rejected. 45. On behalf of the Petitioner, the challenge to the amendment of 2012 to the Finance Act, 1994, is multipronged but, in our view, the question that would clinch the issue would be as to whether or not the Petitioner is an agent of the Government of Sikkim in pursuance to the agreement dated 10-08-2009 in respect of the sale of lottery tickets. However, we find that this question which was also directly in issue stands fully answered in the judgment of this Court dated 29-11-2012 in WP(C) No.36 of 2011 in the matter of M/s. Future Gaming Solutions Pvt. Ltd. (supra) and, therefore, it need not delay us much except to recapitulate hereafter on some of the essential aspect of the finding. 46. We find that the pleadings and oral submissions placed before us on the question are identical and repeat of those placed in WP(C) No.36 of 2011. The decisions as well as other precedents cited before us and the commentaries referred to apart from the various terms and conditio....
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.... Gordon Woodroffe (supra); Bharat Sanchar Nigam Ltd. (supra); Imagic Creative (P) Ltd. (supra) and Indian Railways C. & T. Corpn. Ltd. (supra) were also analysed for determination of the very question. Upon consideration of all these it was ultimately concluded that where the transaction is purely that of sale and purchase from which the component of service cannot be clearly segregated and is undiscernible, no service tax is payable and that where the two components of 'sale' and 'service' are capable of compartmentalisation service tax may be leviable on the service component in a transaction. 48. On the related question regarding the discount of 30% provided on the MRP of the lottery ticket which as per the Respondents was a commission provided to the Petitioner in lieu of the service rendered by them, we had taken note of Mahindra and Mahindra Ltd. (supra); Pioneer Tolls and Appliances (P) Ltd. (supra); Philips India Ltd. vs. Collector of Central Excise, Pune : (1997) 6 SCC 31; Collector of Central Excise, Boroda vs. Besta Cosmetics Ltd. : 2005 (183) ELT 122 (SC); a Division Bench judgment of the Kerala High Court dated 07-04- 2004 in the matter of The Commissioner of Income....
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....ther it is further sold to their sub agents or they directly sell to to the public is not the Government's look out. Even if bulk tickets purchased by the petitioners remains unsold, Government is not bound to pay anything to them. It is the loss of the petitioners. Sold tickets will not be taken back by the Government. As per the terms in Ext.P1, Government is not responsible for paying anything to the petitioners. Section 194G authorises only the deduction at source if Government is liable to pay any commission or any remuneration to the lottery agents. Unlike Section 206C, Section 194G is not giving any permission to collect tax from the buyer. If Government pays remuneration or commission or any amount (by whatever name it is called) to the lottery agents, Section 194G will apply. Here, Government is selling the tickets to the petitioners at a reduced price considering the bulk quantity they are purchasing, in order to boost up the sale of lottery tickets on commercial consideration. But that is outright sale. ....................................... It is a well-settled principle that in a taxing Statute, one has to look merely at what is clearly said. There is no room for any ....
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.... the submission of Mr. Rao that Rule 6(7C) of the Service Tax (Second Amendment) Rules, 2012, only provides an optional composite scheme for payment of service tax that by itself it does not create a charge of service tax. There is no doubt of the fact that this Rule, i.e., Rule 6(7C) of the Service Tax Rules, 1994 (as amended), is only a piece of subordinate legislation framed under the Rule making powers provided in the Finance Act, 1994. In view of the settled position of law that subordinate legislation cannot override the statutory provisions, Rule 6(7C) cannot go beyond the provision of the Finance Act, 1994. This proposition of law has been laid down in a plethora of decisions some of which as cited by Mr. Rao are Tahir Hussain (supra); Hukam Chand (supra); Jagat Talkies Distributors (supra) and S. Srinivasan (supra). When there is no liability to pay tax under the statutory provisions, i.e., under the provisions of the Finance Act, 1994, as amended by the Finance Act, 2012, with effect from 01-07-2012, it is not open to the Respondents to demand such tax under an optional scheme of payment of service tax notified under subordinate legislation vide the impugned letter. As su....
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....oduced by the Finance Act, 2012, i.e., Sub-Section (1) of Section 65B read with Sub-Section (44), lottery stand excluded by implication from the purview of service tax. 57. The submission on behalf of the Respondents that the levy under the new provision only deals with the activity of the Petitioner of promoting, organising or in any other manner assisting in arranging sale of lottery tickets and not on lottery per se, does not appear to be convincing. This, in our view, appears to be an erroneous interpretation of the meaning of the word 'service' appearing in Sub-Section (44) of Section 65B which clearly includes transaction in money or actionable claim. 58. In Sunrise Associates (supra) the Hon'ble Supreme Court while holding that lottery is transfer of an actionable claim observed as under:- "43. ........................................... It is sufficient for our purposes to note that tickets are themselves, normally evidence of and in some cases the contract between the buyer of the ticket and its seller. Therefore a lottery ticket can be held to be goods if at all only because it evidences the transfer of a right. 44. The question is, what is this right which th....
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....f of the Respondents as to how the activity of the Petitioner can be said to fall within the meaning of 'bundled services'. 60. From a bare perusal of Section 66F reproduced earlier while alluding to the submissions on behalf of the Respondents No.1 to 3, we find that the essential requirement of the activities to fall within the meaning of bundled services is the element of 'service'. This becomes quite apparent from the very heading to the Section which reads as 'Principles of interpretation of specified descriptions of services or bundled services'. As we have found that the activities of the Petitioner in promoting, organising and selling the lottery tickets of the Government of Sikkim does not contain an element of rendering service the question of such activity falling within the premises of Section 66F would not arise at all. Since as already indicated nothing was placed before us as to how the activity of the Petitioner falls within the provisions to Section 66F as bundled services, we have made efforts on our own to seek out the basis of the submission from the pleadings in the counter-affidavit and we have reasonably inferred that a distinction is being sought to be dr....
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....f lottery, and among others approved that found in Webster's Dictionary, in which it is defined to be 'game of hazard in which small sums are ventured with the chance of obtaining a large value, either in money or other articles'." At p. 491: "The term 'tickets' when speaking of the sale of lottery tickets, in equivalent to 'chances'." At the same page: "In a general sense, 'lottery tickets' are more in the nature of choses in action than merchandise, being in some respects memoranda of conditional promises to pay." State v. Mabrey [60 NW 2d 889, 893] NW 2d at p.893: "Generally, to constitute 'lottery' there must be a prize awarded by chance for a consideration with no infusion of skill." Common Wealth v. Laud [15 A 2d 839, 840, 843, 845] A 2d at pp. 840, 841, 843, 845: "An artifice, no matter how new, is within the condemnation of the law against lotteries if it, in effect, embodies the principle of a 'lottery' and operates as such." In Law Lexicon, P. Ramanatha Aiyar, 1997 Edn., at p.1151: "Scheme for the disposal or distribution of property by chance. The term 'lottery' has no technical meaning in the law distinct from its popular significatio....
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....ection 66B which is the charging Section, excludes all services specified in the 'negative list' from the purview of service tax, Section 66D enumerates those activities which are in the negative list. We find that under Clause (i) of Section 66D 'betting, gambling or lottery' have been specifically mentioned. From the various statutory provisions that we have discussed and from the interpretations of the Hon'ble Supreme Court on the question of what is 'goods' and 'actionable claims', it is difficult for us to accept the contention made on behalf of the Respondents that it is only the activity of the Petitioner, that is being taxed and not the sale of lottery ticket by the State of Sikkim. This argument obviously is flawed also considering the ratio laid down in M. S. Hameed (supra) and WP(C) No.36 of 2011 in M/s. Future Gaming Solutions Pvt. Ltd. (supra). No doubt, these decisions are subject to what the Hon'ble Supreme Court will finally hold on the question but until then the law as laid down in those decision shall continue to hold sway. 63. We have already noticed that lottery is not a tangible thing but in a sense chance for a prize and, that sale of a lottery ticket is o....
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....7; Godfrey Phillips India Ltd. and Another vs. State of U.P. and Others : (2005) 2 SCC 515; Express Hotels Private Ltd. vs. State of Gujarat and Another : (1989) 3 SCC 677 and RMD Chamarbaugwala (supra) etc., arrived at the following findings:- (a) There is no Entry in any of the List to the Seventh Schedule that specifically provides for levy of tax on lottery; (b) The power to enact law for imposition of tax on lotteries have to be construed as inherent in the expression of 'betting and gambling', lottery being one such activity; and (c) Though the power of regulation of lotteries vests in the Parliament in terms of Entry 40 of List I, power to tax is not an incidental power. 66. We may also refer to the following portions of the judgment in WP(C) No.36 of 2011 in the matter of M/s. Future Gaming Solutions Pvt. Ltd. (supra):- "(t) It is also settled legal position that where the entries under different Lists empower the respective legislatures to enact law on any subject matter and the question arises regarding the legislative competence of the legislative bodies, the doctrine of pith and substance is to be applied to find out the real intention of the legislative ....
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....titution stand excluded. There is another important aspect; entry 92C - 'Taxes on services' was also incorporated in List I Seventh Schedule by Eighty-eighth Constitutional Amendment Act, 2003. However, this entry has not been notified till date." 67. On the next question as set out in (iv) above, it was held that where the transaction or contract comprises of twin elements of sale and service, both the State Legislature under Entry 54 of List II and the Parliament in exercise of its residuary powers under Entry 97 of List I, are competent to levy 'sales tax' and 'service tax' respectively at the same time provided the components of 'sale' and 'service' are visible and are capable of compartmentalisation. 68. In the case at hand, we do not find any change in the circumstance as regards the position found in questions no.(ii) to (v) set out above except that Clause (zzzzn) of Sub-Section (105) of Section 65 of the Finance Act, 2010, has now been replaced by a new service tax law regime under the Finance Act, 2012, in the form of Section 65B and Sub-Sections thereunder, Sections 66B and 66D with which we have already dealt with in detail earlier. The question of the Constitutio....