TaxTMI 
TaxTMI 
1998 (7) TMI 711
X X X X Extracts X X X X
X X X X Extracts X X X X
....prize or nothing as may be determined predominantly by chance', so defines the Black's Law Dictionary (6th Edn, p.947). It goes on to say- "An unlawful gambling scheme in which (a) the players pay or agree to pay something of value for chances, represented and differentiated by numbers or by combinations of numbers or by some other media, one or more of which chances are to be designated the winning ones; and (b) the winning chances are to be determined by a drawing or by some other method based upon the element of chance; and (c) the holders of the winning chances are to receive something of value." 2. Lottery is a game of chance and hence like gambling it is a vice. Gambling is as old as the human ingenuity itself. So is the history of attempts at controlling if not preventing the evil. The expression 'Betting and gambling' included and has always been understood to have included the conduct of lotteries. That is Entry No.34 of List-II of Seventh Schedule. However, lotteries organized by the Govt of India or the Govt of a State have been included in Entry No.40 of List-I of the Seventh Schedule of the Constitution. 3. 'Gambling ( Dyuta) has been consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Manu on the ground that it destroys truth, honesty and wealth. But it has been permitted by other law givers when conducted ( with the permission of the King) subject to payment of tax to the King." Contents of para 3 borrowed from Legal & Constitutional History of India, M.Rama Jois, Vol I, Ch.13, para 1 at pp 207-209) 4. Before the Supreme Court the first dispute as to lotteries was agitated and decided in H. Anraj, Vs . State of Maharashtra [1984]2SCR440 (hereinafter H. Anraj-I, for reference ). It appears that the Govt of Maharashtra and various other State Govts were requesting Union Govt to authorise them to conduct lotteries for the purpose of finding funds for advancing their development plans. Such authorisation was strictly not necessary in the absence of law made by Parliament pursuant to Entry 40 List-I of Seventh Schedule. Article 298 extends the executive power of the Union and of each State to the carrying on of any trade or business and to the acquisition, holding and disposal of the property and making of contracts for any purpose with the stipulation that if trade business or purpose is not one with respect to which Union may make laws, the said executive po....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Govt. Their Lordships allowed the writ petitions and directed the State of Maharashtra to forbear from giving effect to the ban on the sale of tickets of lotteries organized by other States. 5. The effort of State of Maharashtra to prevent the evil of lotteries extended by other states into its territory thus failed ( though the State of Maharashtra intended to continue with its own evil of lottery, rather consistently, by monopolising its own lottery within its own State by excluding other States). The lottery trade by several Governments of States thus came to hold the field. 6. Then comes H. Anraj Vs . Government of Tamil Nadu AIR1986SC63 (referred to hereinafter as Anraj-II.) Tamil Nadu General Sales Tax Act 1959 and Bengal Finance ( Sales Tax ) Act, 1941 were amended respectively w.e.f. Jan 28,1984 and May 1,1984 so as to bring the lottery tickets within the purview of the charge of sales tax and to levy tax on the sale of such tickets @ 20% at the point of first sale in the State. Presumably this was done in exercise of its own independent taxing power under Entry 54 of List-II in the Seventh Schedule of the Constitution. Several writ petitions were filed challenging th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e amounts of sale price receivable , or, if a dealer so elects, actually received by the dealer, in respect of any sale of goods, made during any prescribed period in any year after deducting the amount of sale price, if any, refunded by the dealer to a purchaser in respect of any goods purchased and returned by the purchaser within the prescribed period : 4. Rate of tax_ (1) The tax payable by a dealer under this Act shall be levied (a) in the case of taxable turnover in respect of the goods specified in the First Schedule, at the rate of twelve paise in the rupee; (b) in the case of taxable turnover in respect of the goods specified in the Second Schedule at such rate not exceeding four paise in the rupee as the Central Govt may, from time to time by notification in the Official Gazette determine; (c) in the case of taxable turnover in respect of any food or drink served for consumption in a hotel or restaurant or part thereof with which a cabaret floor show or similar entertainment is provided therein, at the rate of forty paise in the rupee; (d) in the case of taxable turnover in respect of any other goo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the said Act on the turnover of the goods viz. lottery tickets at the first point. The Commissioner Sales Tax New Delhi issued a general notification which reads as under :- "GOVERNMENT OF THE NATIONAL CAPITAL TERRITORY OF DELHI. OFFICE OF THE COMMISSIONER OF SALES TAX BIKRIKAR BHAWAN, MSO-II NEW DELHI-110002 ATTN: ALL LOTTERY DEALERS It is notified for information of all concerned that lottery tickets are now taxable at 20 paise in a rupee at first point. For the convenience of the dealers engaged in the business of the sale of lottery tickets, a Lottery Cell has been created in the Department to give a centralised service and render assistance for the purpose of registration, levy and collection of tax and assessments of such cases. Please note that it is an offence to carry on the business of lotteries after incurring the liability under the Delhi Sales Tax Act without seeking registration from the Department. All concerned are, Therefore advised to immediately apply for registration as per the provision contained in the Delhi Sales Tax Act. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation and hence will need a separate mention. All the petitioners deal in lottery tickets. They have been served with notices under Section 23(6) of the Delhi Sales Tax Act 1975 calling upon them to show cause why penalty be not imposed for their failure to secure registration and why best judgment assessment be not made for the period 1990-91 and onwards for their failure to file returns. The notices have been issued some time in the year 1996 and 1997. All the petitioners seek a declaration that the provisions of Section 4(1)(cc) of Delhi Sales Tax Act 1975, as inserted by the Delhi Sales Tax (Second Amendment) Act, 1994 w.e.f. 2.1.1995 are unconstitutional and void. The relief of quashing of the notices is also sought for . 13. CWP 1254/97 is filed by Haryana State Lottery. During the pendency of the petition, an order of assessment (Annexure-P/10) has been passed on 26.3.1997 whereby a demand of Rs. 59,60,000/- under Delhi Sales Tax Act and a demand of Rs. 10 lakhs under Central Sales Tax Act relevant to the period 1990-91 has been raised. An application for amendment in the writ petition has been filed by the petitioner seeking the setting aside of the said order of assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t being repugnant to the provisions of the Central Act and the State amendment having not been reserved for the consideration and assent of the President, the State amendment must give way to the Central enactment and hence must fail; (v) That assuming the lottery tickets to be goods, for failure of the State ( through its Sales-tax Department) to enforce and implement the law as to levy of sales tax on the sale of lottery tickets for a period of about 8-9 years, the law should be deemed to have been repealed by doctrine of desuetude and Therefore levy and recovery of sales tax on sale of lottery tickets cannot be enforced; (vi) That until the year 1996-97 the authorities administering the sales tax law as also all those dealing in the lottery tickets believed that trading in lottery tickets did not attract the applicability of sales tax law. By applying principle of contemporanea expositio the sales tax law should be so interpreted as to hold that the lottery tickets were not 'goods' and were not liable to levy of tax; (vii) That the impugned amendment and the impugned notice under Section 23(6) of the DST Act are vitiated by ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uccessful in the draw. The latter is an actionable claim included in the lottery tickets and to the extent of the value of the actionable claim included in the price paid for the purchase of the lottery tickets, it cannot be taxed as 'goods', inasmuch as an actionable claim has been specifically excluded from the definition of 'goods'. On behalf of the State it has been submitted that the decision of the Supreme Court has left no manner of doubt that lottery tickets are goods and hence liable to sales tax; the controversy sought to be raised by the petitioners stands concluded by H.Anraj-II and cannot now be permitted to be revived. Thus each of the contending parties has tried to read the law laid down in H.Anraj-II as supporting its own plea. 24. Learned counsel for the petitioners have relied on the following passages from the judgment of the Supreme Court :- "Every participant is required to purchase a lottery ticket by paying a price Therefore (the face value of the ticket) and such purchase entitles him not merely to receive or claim a prize in the draw, if successful but before that also to participate in such draw. In other words, a sale of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing any of those components of the levy will be fatal to its validity." 26. It was submitted that as early as on 4.10.1985, law was settled by H. Anraj-II that one of the components of lottery tickets (and hence of the price paid for purchasing the same) was an actionable claim, specifically excluded from the definition of goods. Still the legislature has not provided for working out separately ( clearly and definitely) the value of those two components. In the absence of such provision having been made the value of 'goods' included in the value of lottery tickets cannot be separated from the value of actionable claim included in it and ascertained for computing the tax liability and Therefore the levy must fail. 27. To test the validity of these submissions made by either party, we shall have to examine the law laid down by their Lordships in H.Anraj-II (supra) in little more details. 27.1 Question posed before their Lordships was: whether sales tax can be levied by a State legislature on the sale of lottery tickets in the same State ? 27.2 Tamil Nadu General Sales Tax Act, 1959 was amended w.e.f. 28.1.1984. A similar amendment was made in Bengal Finance ( Sale....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght till the draw takes place and it is for this reason that licenced agents or wholesalers or dealers of such tickets are enabled to effect sales thereof till the draw actually takes place and as such till then the lottery tickets constitute their stock in trade and Therefore a merchandise. In other words, lottery tickets, not as physical articles but as slips of paper or memoranda evidencing the right to participate in the draw must in a sense be regarded as the dealer's merchandise and Therefore goods capable of being bought or sold in the market. They can also change from hand to hand as goods. Even in united States v. Mueller (178 2nd Series) Federal Reports 593) ( supra) on which counsel for dealers relied the court while emphasising the aspect that lottery tickets are more in the nature of choses in action (because of the right to claim a prize by chance) has observed that these are merchandise in the limited sense. The aforesaid aspect of the matter really clinches in my view the position that for the purpose of imposing the levy of sales tax lottery tickets comprising the entitlement to participate in a draw will have to be regarded as `goods' properly so called" (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g authority. The transferee became the due and lawful holder of the license and could either import the goods permitted therein or sell it to another in turn. With effect from July 3, 1991, the name of the license was changed to exim scrip ( export and import licence). These licences were being traded freely in the market and all stock exchanges. 28.3 Their Lordships took into consideration the definition of goods enshrined in Clause (12) of Article 366 of the Constitution and in the Sales Tax enactments as also in Clause (7) of Section 2 of the Sale of Goods Act. Vide para 18 their Lordships have held that all the definitions of the expression 'goods' say that it includes all kinds of 'movable property' and Therefore, it becomes necessary to notice the meaning of the expression 'movable property' which was not defined in the Sales Tax enactments. The definition in the respective State General Clauses Acts was not very helpful as all that they said was that the movable property means property of every kind except immovable property. Accordingly, their Lordships proceeded to refer to Black's Law Dictionary, Jowitt's Dictionary of English Law, Dicti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....price of a lottery ticket is a cohate or perfected right to enforce the holding of the draw and to participate therein. The right which may materialise in future as and when the draw takes place depending upon his being successful in such draw is an inchoate right or a right in futuro. The right to claim a prize may materialise on the chance of a ticket turning out to be a lucky ticket earning a prize on the draw taking place. This line of distinction between the sale of a lottery ticket before the draw has taken place and the sale of a lottery ticket on a date when the draw has already taken place and the ticket having or having not earned a prize should be kept in view. Once the draw takes place a ticket which has failed to earn any prize becomes a useless piece of paper or a waste merely. Such of the tickets which have earned a prize, become actionable claims entitling the purchaser to claim the prize. Therefore, so long as the draw has not taken place the lottery ticket remains goods. 31. We are constrained to observe that the controversy sought to be raised by the petitioners on the issue whether the lottery tickets are 'goods' is wholly unwarranted in view of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w on the subject." ( para 26) "We are of the opinion that the ratio of the said decision fully supports the contention of the States herein.........If lottery tickets are goods, there is no reason why these licenses/scrips are not goods." (para 32) 31.2 The characteristics of a REP licence/exim scrip noticed vide para 24 of Vikas Sales Corporation's case are to be found existing in lottery tickets as well. The law laid down in Vikas Sales Corporation's case fortifies the holding in H.Anraj-II that lottery tickets are goods. 32. Whether in spite of the law laid down in H. Anraj-II, lottery tickets would not be livable to tax in the absence of the Constitutional amendment analogous to Clause (29A) of Article 366 as inserted by 46th Amendment? It was submitted by the counsel for the petitioners that if only a part of the property involved in the transaction passes as goods, and such two components be indivisible or not separable, the transaction in its entirety would not be susceptible to sales tax. Attention of the court was invited to a series of decisions beginning with First Gannon Dunkerley's case (1958) 9 STC 3531 and various cases thereafter suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it the sale price of lottery tickets into two, to determine the extent of sale price which may be referable to transfer of goods and tax it as per law. We express our respectful dissent with the view so taken, not only in the light of the law laid down in H.Anraj-II as stated hereinabove but also as per the law laid down subsequently by the Supreme Court in Vikas Sales Corporation's case (supra). (III) & (IV) Whether the impugned amendment is hit by Art. 239AA of the Constitution (i) for want of Legislative power, and (ii) on account of repugnancy ? :- 35. Article 239AA was inserted in the Constitution by the 69th Amendment Act, 1991 w.e.f. 1.2.1992. Clause (3) of this Article which is relevant for our purpose, is extracted and reproduced hereunder :- 3(a) Subject to the provisions of this Constitution, the Legislative Assembly shall have power to make laws for the whole or any part of the National Capital Territory with respect to any of the matters enumerated in the State List or in the Concurrent List in so far as any such matter is applicable to Union territories except matters with respect to Entries 1,2 and 18 of the State List and Entries 64,65....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Delhi proposes to tax the lottery tickets @ 20%. Thus, the two provisions are repugnant to each other and hence the amendment made by the Legislative Assembly must give way to the main provision as contained in the principal enactment which is by the Parliament. 37. The two submissions, though attractive on their face have to be discarded on deeper scrutiny as would be demonstrated presently. 38. By the Constitution (69th Amendment) Act, 1991, Article 239AA was introduced in Part VIII of the Constitution. This Article renamed Union Territory of Delhi as the National Capital Territory of Delhi and provided that there shall be a Legislative Assembly for such National Capital Territory. The Legislative Assembly so created was empowered by Clause (3) of the said Article to make laws for the whole or any part of the National Capital Territory with respect to any of the matters enumerated in the State List or in the Concurrent List in so far as any such matter is applicable to Union territories except matters with respect to Entries 1,2 and 18 of the State List and Entries 64,65,66 of that List in so far as they relate to the said entries 1,2, and 18. Clause (3) further provides....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ii) though there is no direct conflict yet it is evident that the central enactment was intended to be a complete and exhaustive code relating to the subject eliminating permissibility of any state legislation relating to the subject; or (iii) when the two enactments occupy the same field. These are well settled propositions of Constitutional law. 42. The test of repugnancy between the laws made by the State and the Parliament has been laid down by the Constitution Bench in the case of M.Karunanidhi Vs. UOI, 1979CriLJ773 . Vide para 24, their Lordships have held : "It is well settled that the presumption is always in favor of the constitutionality of a statute and the onus lies on the person assailing the Act to prove that it is unconstitutional. Prima facie, there does not appear to us to be any inconsistency between the State Act and the Central Act. Before any repugnancy can arise, the following conditions must be satisfied 1. That there is a clear and direct in -consistency between the Central Act and the State Act. 2. That such an inconsistency is absolutely irreconcilable. 3. That the inconsistency between the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on in favor of its validity, and every effort should be made to reconcile them and construe both so as to avoid their being repugnant to each other; and care should be taken to see whether the two do not actually operate in different fields without encouragement. 44. We may now test the two provisions on the touchstone of the tests so laid down. It is clear that clause (d) of sub section (1) of Section (4) of the principal enactment is a residuary provision which covers only such goods as are not covered by any of the preceding clauses. Clause (cc) as inserted by the Delhi Legislative Assembly makes a specific provision for taxable turnover in respect of the lottery tickets which amendment has the effect of automatically excepting the same from within the ken of clause (d). With effect from the date of amendment, the lottery tickets have ceased to be 'any other goods' within the meaning of clause (d). The two provisions can Therefore stand together: while clause (cc) would apply to lottery tickets, clause (d) would apply to 'any other goods'- not covered by clauses (a)(b)(c) until 2.1.95 and not covered by clauses (a)(b)(c) and (cc) w e.f.2.1.95. 45. In Canton....
X X X X Extracts X X X X
X X X X Extracts X X X X
....goods other than lottery tickets were mentioned in their certificates of registration but prayer for inclusion of lottery tickets as one of the items in the registration certificate was not entertained. Two consequences follow, forcefully submitted the learned senior counsel. Firstly, the sales tax law was not treated as applicable to lottery tickets even by those on whom laid the responsibility of administering and enforcing the law. The law of sales tax was thus suffering an implied repeal by practical obsolescence in so far as lottery tickets are concerned. This deep slumber of the statute qua the lottery tickets would attract the applicability of doctrine of desuetude. The subject or the citizens cannot now be subjected to the law and made liable to levy of tax and/or called upon to explain non-compliance for such period for which the law itself was slumbering. Secondly, the principle of contemporanea expositio will be attracted, as every one dealing with the sales tax law in the State was not only under an impression but also believed that lottery tickets were not goods. Those who have dealt in lottery tickets cannot now be made to suffer by interpreting the law in such a way ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uetude is a legal process by which, through disobedience and lack of enforcement over a long period, a statute may in some legal systems lose its force without express or implied repeal or expiry. This doctrine does not apply to United Kingdom Acts. This is salutary, since otherwise an inquiry would be needed before the subject could know whether or not an apparent Act was binding. The idea that an Act need not be applied if it had never been enforced was put forward in England in the fourteenth century, but was later rejected. Practical obsolescence. Although there is no doctrine of desuetude in English law, an Act may in practice be a dead letter. This may even apply to a relatively modern Act if it falls into disuse, or is not applied as intended. Where the court has a discretion as to the application of an Act, for example in relation to the sentence to be imposed for a statutory offence, it is likely to take account of practical obsolescence where it exists. So recently as 1979 Omrod J cited approvingly Bacon's dictum: 'Therefore let penal laws, if they have been sleepers of long or if they be grown unfit for the present time be by wise ju....
X X X X Extracts X X X X
X X X X Extracts X X X X
....abrogation of a statute by the conduct of the people from whom the statute originally owes its life." 52. Maxwell on Interpretation of Statutes (12th Edn, 1976/1993 at page 16) under the chapter of Repeal opines 'a law is not replaced by becoming obsolete. There is no doctrine of desuetude in English law'. 53. Doctrine of desuetude has been exhaustively dealt with in Sutherland's Statutory Construction, (5th Edn), Vol-2, in two chapters entitled "Abrogation of Penal Statutes by Non-enforcement" and "Desuetude as the defense" (pp 558-660). We will briefly sum up the statement on the doctrine there from, extracting a few excerpts wherever necessary. 53.1 According to Sutherland the doctrine appears to be relevant in the field of penal law only wherein penal statutes may be treated as having been rendered ineffective without resort to any legislative or judicial action. The community at large does not obey such provisions, and the administrators of such penal laws do not apply them. Long unenforced, these acts are in fact a dead letter. (p. 558 supra) 53.2 Despite the legislature's failure to repeal such acts two points can be prelimina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iolation of the statute, (ii) a period of absolute non-enforcement of such duration and feasibility as to clearly and fairly establish well settled and reliable nature of the administrative policy congruent with the relevant body politic. ( p.585) 53.9 Sutherland opines ( at page 609) that after Fourteenth Amendment there ought to be some express recognition of desuetude's abrogative effect on penal statutes. 53.10 At page 647 summing up the conclusion, Sutherland states :- "The cases rejecting the notion of desuetude are correctly decided. The effect of doctrine is not to obviate the necessity for debate upon the wisdom of foolish statutes, but rather to transfer that debate from the legislature to the courts. The judiciary, however, is inherently limited as a creative agent. Judges simply "can't" weigh the evidence and judicially determine that a statute has been abrogated by a contrary custom, the facts involved are legislative in nature. The unsettling effect of an assumption of power by the judiciary to declare a statute inoperative for nonuser would be widespread, the price would be too high to pay, particularly in view of the fact ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... How can a citizen arrange his affairs and catalogue his do's and don'ts by resorting to desuetude? According to Francis Bennion it is the penal laws whose rigour a subject may escape on the court arriving at a finding that though a penal law was enacted it had fallen into such practical obsolescence as to be held to have become a dead letter. 55. Two pronouncements of the Supreme Court other than the case of Municipal Corporation of City of Pune ( supra) have come to our notice and they may be referred. 56. In the State of Maharashtra Vs. Narayan Shamrao Puranik [1983]1SCR655 , a plea of statute having fallen into desuetude or become inoperative through obsolescence or by lapse of time came up for consideration. Their Lordships quoted with approval the following passage from R. Vs. London County Council, (1931) 2 KB 215, wherein Scrutton L.J. put the matter thus: "The doctrine that, because a certain number of people do not like an Act and because a good many people disobey it, the Act is Therefore "obsolescent" and no one need pay any attention to it, is very dangerous proposition to hold in any constitutional country. So long as an Act is on the stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... may well be said to be an encroachment on the legislative field., in an extreme and clear case, no doubt an antiquated law may b said to have become obsolete the more so if it is a penal law and has become incapable of user by a drastic change in the circumstances. But the Judge of the change should be the Legislature and courts are not expected to undertake that duty unless that becomes unavoidable and the circumstances are so apparent as to lead to one and only one conclusion. This is equally so in regard to the delegated or subordinate legislation. (para 65-66) 58. It is unfortunate that the two decisions of the Supreme Court referred to hereinabove, namely State of Maharashtra vs. Narayan Shyamrao Puranik which is by a three Judges Bench and the State of U.P. Vs. Hindustan Aluminium Corporation which is by two Judges Bench were not placed before their Lordships deciding Municipal Corporation for City of Pune (supra). This decision is again by three Judges Bench. Being the latest law laid down by the Supreme Court would be the law of the land and binding on this court. Therein the dispute related to imposition of octroi duty by reference to certain notifications. Material wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Municipal Corporation for City of Pune's case, that being the later case, under Article 141 of the Constitution the law laid down therein is binding on us. However, we are of the opinion that it does not have applicability to the facts of the case at hand and the effort of Shri Raja Ram Aggarwal, learned Sr Counsel for the petitioner to take assistance there from is misplaced. The authorities referred to by their Lordships in the course of their judgment themselves point out that to attract the applicability of the principle of desuetude, not only disuse of the statute but a contrary practice for long is essential. Their Lordships in the case before them found on the material on record that the 1918 notifications were not only not implemented till date ( at least up to the year 1963) but ,in fact, what was done was to the contrary and that too for a long period (see para 36). Therefore 1918 notifications were held to have stood repealed quasily. In the case before us, there are a few distinguishing features. Firstly, as we have already stated, the sales tax legislation under consideration is of the year 1975 i.e. of a recent origin and not an ancient one. Secondly, except in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not decisive or controlling of the question of construction; it has only persuasive value. If occasion arises, such interpretation may be even disregarded and in a case of error court would without hesitation refuse to follow such construction. Secondly, as already stated reliance is being placed on the nothings in the file, not to interpret the notifications in question, but to declare them as dead. This is not permissible." 66. Re: the principle of Contemporanea expositio, the features relevant for our purpose and deducible from the above said authorities are - (i) the principle is applicable to ancient statutes; (ii) there must have been an ambiguity in the language or expression used, (iii) not a mere passive tolerance of a view of the law but a positive exposition should have remained prevalent; (iii) even if attracted, the principle is not decisive but has only a persuasive value. In the case at hand, assuming that everybody was under an impression that application of Delhi Sales Tax Act was not attracted to transactions of sale of lottery tickets, the principle of contemporanea expositio would not be attracted. The present one is not a case where the question was consc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h was in view of the Government. It was submitted that this being the colourable exercise of legislative power, the impugned amendment deserves to be struck down on this ground. The learned counsel for the petitioner in CWP 530/97 in particular, made not only the above submission but also went on to contend that the impugned notice under section 23(6) of the Delhi Sales Tax Act too was vitiated by malafides as the real motive behind issuing the notice was to harass the lottery dealers so as to dissuade them from dealing in lottery tickets. The factual material on which the above said submission is based and the manner in which the submissions have been couched are briefly noticed in the succeeding paragraphs. 68. The statement of Objects and Reasons of Delhi Sales Tax (Second Amendment) Bill, 1994 reads as under : "STATEMENT OF OBJECTS & REASONS. Lotteries as an instrument of speculative investment have become a social evil. The Government is eager to ban Delhi Lotteries to curb this evil. Unless accompanied by a similar ban on all lotteries by the Central Govt such a measure by the Govt of Delhi may not achieve the desired objective. However, impositi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r under Section 144 Cr.P.C. prohibiting " any person or persons from selling of lottery tickets, both of State and private and all activities connected to it." By way of preface it was stated in the prohibitory order : "Whereas it appears to me that the lotteries both State and Private have found a favourite haven for massive sale of such tickets in the National Capital Territory of Delhi. 2. And Whereas an unhealthy competition between the lottery ticket sellers has developed. 3. And whereas such lotteries allure thousands of people of different walks of life particularly young, poor wage earners and working masses who engage themselves in such reckless gambling till they are finally exhausted. 4. And Whereas the addiction to lotteries does, seriously affect the living of the persons so addicted and thus, endangers human life and safety. 5. Whereas such lotteries encourage a spirit of propensity for making easy gain by lot of chance which lead to the loss of the hardened money of the undiscerning and improvident common man and thereby lower the standard of living and drive him into a chronic stage of indebt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....if the legislature is competent to pass the particular law the motives which impel it to pass the law are really irrelevant. Malice or motive is besides the point and it is not permissible to suggest parliamentary incompetence on the score of malafides. So is the view taken by the Constitution Bench in B.R. Shankarnarayana and Others Vs State of Mysore & Ors, (1967)IILLJ751SC and also in Lalit Narain Mishra Institute of Economic Development and Social Change Patna Vs. State of Bihar, [1988]3SCR311 . Thirdly, there is nothing wrong in subjecting the lottery trade to heavy taxation with a view to achieving the object of curbing the same. In M/S Sat Pal & Co Vs. LT Governor, Delhi: [1979]3SCR651 , special duty on import of country liquor in the Union Territory of Delhi was imposed which was challenged. Evidence was available to show that the bill was piloted by the Minister not only as a fiscal measure but also with a view to achieving the object of prohibition. Their Lordships held (vide para 18) that there was nothing wrong if the Act was intended to be a fiscal measure earning revenue to the State and also safeguarding the public health and public morality because of the liquor tra....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... UOI: 1978(2)ELT304(SC) , ITO Shillong Vs. NTR Rymbai AIR 1976 SC 670, M/S Hoechst Pharmaceutical Vs. State of Bihar [1985]154ITR64(SC) , Malwa Bus Service Pvt Ltd Vs. State of Punjab, [1983]2SCR1009 . The impugned amendment cannot be termed either arbitrary or unreasonable. (IX) Whether this court's judgment should be given prospective operation merely ? 80. It was submitted on behalf of the petitions and especially by Dr A.M.Singhvi, the learned Sr Adv that if this Court be inclined to hold that the lottery tickets are goods and hence liable to sales tax then the operation of the judgment be made prospective, otherwise it will be ruinous to the traders. Reference was made by Dr. Singhvi to Federation of Mining Assns of Rajasthan Vs. State of Rajasthan AIR1992SC103 , Orissa Cement Ltd Vs. State of Orissa, [1991]2SCR105 . NDMC Vs. State of Punjab, AIR1997SC2847 . It was submitted that the rate of tax is very high- 7% prior to 2.1.1996 and 20% w.e.f. 2.1.1996. If only the dealers were taxed pari passu they would have passed on the burden of tax to the purchasers of lottery tickets which they have not done till date. This contention has again to be rejected for several rea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se (d) until 2.1.1995 and under clause (cc) of sub section (1) of S. 4 of the Delhi Sales Tax Act w.e.f. 2.1.1995. ii) The levy of sales tax on sale of lottery tickets does not suffer from any infirmity for want of constitutional amendment akin to insertion of Clause 29(A) in Art 366 of the Constitution; also the levy cannot fail for want of any principle or machinery laid down either by the Act or rules framed there under enabling separate valuation of two components of the lottery tickets; no such separate valuation is called for. iii) Under Art.239(AA) of the Constitution, the Legislative Assembly of NCT of Delhi is competent to insert by amendment Clause (cc) in DST Act, 1975. The amendment is intra virus the legislative authority of Delhi Legislative Assembly. iv) There is no repugnancy between the provisions of Delhi Sales Tax (Second Amendment) Act, 1994 and the provisions of Delhi Sales Tax Act, 1975. v) Levy of Sales Tax on lottery tickets cannot be defeated by reference to the doctrine of desuetude. vi) 'Contemporanea expositio' rule of interpretation of statutes does not assist the petitio....