TaxTMI 
TaxTMI 
2020 (5) TMI 128
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....lant is the Distributor of the paper lotteries organized by the 1st appellant in the State of Kerala. Constitutional validity of the Kerala Tax on Paper Lotteries Act, 2005 ('the Act' for short) is under challenge in the writ petition. The respondents herein are the respondents in the writ petition, the State of Kerala and its officials. 2. Brief history of the impugned legislation may be worth full to mention. By virtue of the Finance Act, 2001, introduced with effect from 23-07-2001, the State of Kerala has introduced Section 5BA to the Kerala General Sales Tax Act, 1963 ('KGST Act' for short) imposing licence fee on the draw of lotteries, in lieu of tax payable under Section 5 (1) of the KGST Act. Validity of Section 5BA was under challenge before this court. In the decision in Commercial Corporation of India Ltd. V. Additional Sales Tax Officer and others (2007 (2) KLT 397) = (2007 (2) KHC 427) this court held that Section 5BA of the KGST Act is ultra vires and unconstitutional. Eventhough the State of Kerala filed appeal before the Division Bench, it was dismissed by relying on the dictum laid by the Hon'ble Supreme Court in Sunrise Associates V. Govt. of NCT of New Delhi a....
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....lling lottery tickets in retail shall not be liable to get himself registered. (2) The registration may be renewed from year to year on payment of the prescribed fees and security, until it is cancelled; (3) Unless the registration is cancelled or renewed at the expiry of the period of registration, the security may be refunded or released to the promoter after adjusting any or all amount due from him, under this Act; 8. Returns and Assessment.- (1) Notwithstanding anything contained in section 10, every promoter liable to get himself registered under this Act shall submit a return to the Assistant Commissioner for such period, within such period and in such manner containing such particular as may be prescribed. (2) Before any promoter submits any return under sub- section (1), he shall in the prescribed manner, pay in advance as provided under section 10, the full amount of Tax payable by him under section 6 and shall furnish along with the return satisfactory proof of the payment of such tax, and after the final assessment is made the amount of tax so paid shall be deemed to have been paid towards the tax finally assessed. (3....
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....as been deferred on account of any stay order granted by any Court or other authority or by reason of the fact that an appeal or other proceeding is pending shall be excluded. Provided that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made, shall apply to an assessment or reassessment made on the promoter in consequence of or to give effect to, any finding direction or order made under Sections 14, 15, 16 and 18 or any judgment or order made by the Supreme Court, the High Court or any other Court. 10. Payment of tax in advance.-(1) Subject to such rules as may be prescribed, every promoter shall submit on the 1 st day of every month, if the first day being a holiday, on the immediate next working day, to the Assistant Commissioner a statement containing such particulars, as may be prescribed relating to the draws to be conducted during the month commencing from the next succeeding month and shall pay in advance the full amount of tax payable by him under this Act, in respect of the draws shown in the Statement and the amount so payable shall for the purpose of section 12, b....
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....ng more amount as prize than that is promised in usual draw of lotteries. "2. (i) "Lottery" means a scheme, in whatever form and by whatever name called for distribution of prizes by lot of chance to those persons participating in the chances of a prize by purchasing tickets organized by the Government of India or the Government of a State or any Union Territory or any country having bilateral agreement or treaty with the Government of India:-" "2. (l) "Promoter" means the Government of India or Government of a State or a Union Territory or any country who had entered into a bi-lateral agreement or a treaty with the Government of India for organizing, conducting or promoting a lottery and includes, any person appointed for selling lottery tickets by the Government in the State of Kerala on its behalf, where such Government is not directly selling lottery tickets in the State; 5. The main ground of attack against validity of the impugned Act is the lack of legislative competence of the state. It is pointed out that, the subject "lotteries organised by the Government of India or the Government of a State" (hereinafter referred to as 'state organised lotteries', f....
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....apex court in State of West Bengal V. Kesoram Industries Ltd. ((2004 ) 10 SCC 201) it was found that, the power to tax is different from the power to make legislation in the form of regulations. The power to tax is not incidental to the legislation by way of regulation. Therefore the Constitution does not bar making of law on tax in respect of the same subject which is reserved for the Parliament for the purpose of regulatory legislation. With respect to contention regarding extra territorial operation, the learned Single Judge, after referring to the 'charging section' as well as to Section 7 relating to 'registration of Promoters' read with the definition of 'Promoter', held that the activity which attract tax is the conduct of lotteries, which involves sale of lottery tickets prior to the draw. The Promoter is a person selling lottery tickets in the State of Kerala, who is liable to pay tax under Section 6 of the Act. It was held that the levy of tax is not merely on the draw of tickets, which of courses take place outside the state. But 'draw' is only a measure of levy of the tax and what attracts the tax is the activity of conduct of lotteries, in which one of the most importa....
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....he present appeal, correctness of that judgment is under challenge. 7. We heard; Sri. S.K. Bagaria, Senior Counsel appearing for the appellants, ably instructed and assisted by Sri. A. Kumar, learned counsel on record. On behalf of the respondents, Sri. Pallav Shishodia, Senior Counsel addressed arguments as instructed by Sri. C.E. Unnikrishnan, Special Government Pleader (Taxes), State of Kerala. 8. Addressing this court on the question of legislative competence, Senior Counsel for the appellants had drawn our attention to the following entries in the 7th Schedule of the Constitution. (a) Entry 40 of List-I (union list) - Lotteries organised by the Government of India or the Government of a State. (b) Entry 97 of List-I (union list) - Any other matter not enumerated in List-II or List- III including any tax not mentioned in either of those List. (c) Entry 34 of List-II (State List) - Betting and Gambling. (d) Entry 62 of List-II (State List) - Tax on Luxuries, including Taxes on entertainments, amusements, betting and gambling. It is pointed out that, by virtue of Entry 40 of List-I, the state organized lotteries are not covered under t....
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.... Act, 1958. It is an Act to control and tax lotteries and to tax prize competitions in the State of Maharashtra. Section 32 (b) expressly provides that nothing in the Act shall apply to "a lottery organised by the Central Government or a State Government". This, as we said, is but a recognition of the prevailing situation under the Constitution. The Constitutional position cannot be altered by an act of the State legislature. In J.K. Bharati V. State of Maharashtra and others ((1984) 3 SCC 704) the above principle has been reiterated by the apex court and held as follows; "While lotteries organised by the Government of India or the Government of the State have been taken out from Entry 34 of List II of Schedule VII by Entry 40 of List 1, therefore no question about the competence of the Legislature of Maharashtra to legislate in respect of the sale or distribution, in the State of Maharashtra, of tickets of all lotteries organized by any agency whatsoever other than the Government of India or the Government of a State. Evidently in J.K. Bharati (supra), the Hon'ble Supreme Court made a distinction between lotteries 'organised' by the Government and lotter....
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....however, exclusive power to make laws with respect to matters enumerated in List II (State List) in the Seventh Schedule, as per Article 246 (3) of the Constitution. Also, there being a specific entry dealing with lotteries, the power to legislate on lotteries would be in the exclusive domain of the Parliament, even though it is a form of gambling and would be generally covered under Item No. 34 of List II (State List)." 12. Contentions on behalf of the appellants based on the decisions cited above is that, the subject of legislation with respect to state organised lotteries is within the exclusive competence of the Parliament under Entry 40 of List-I. The subject of state organized lotteries, thus gets carved out of the legislative field comprised under the general expression of 'betting and gambling' under Entry 34 of List-II and no legislature of a State can make any law touching upon the state organised lotteries. 13. The learned Single Judge has negatived the above contention by holding that the power to taxation is different from the power to make legislation in the form of regulation. Reliance was placed on the decision of M/s. B .R. Enterprises (supra) that, lottery i....
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.... in a narrow pedantic sense. The words and expressions employed in drafting the entries must be given the widest possible interpretation. This is because, to quote V. Ramaswami, J., the allocation of the subjects to the lists is not by way of scientific or logical definition but by way of a mere simplex enumeratio of broad categories. A power to legislate as to the principal matter specifically mentioned in the entry shall also include within its expanse the legislations touching incidental and ancillary matters. (5) Where the legislative competence of a Legislature of any State is questioned on the ground that it encroaches upon the legislative competence of Parliament to enact a law, the question one has to ask is whether the legislation relates to any of the entries in Lists I or III. If it does, no further question need be asked and Parliament's legislative competence must be upheld. Where there are three Lists containing a large number of entries, there is bound to be some overlapping among them. In such a situation the doctrine of pith and substance has to be applied to determine as to which entry does a given piece of legislation relate. Once it is so determined, an....
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....rpose of legislation. However, the power to tax may be exercised for the purpose of regulating an industry, commerce or any other activity. But, the power to regulate, develop or control would not include within its ken a power to levy a tax or fee, except when it is only regulatory. 15. According to learned Senior Counsel for the respondent, Entry-62 of List-II remains intact even after the power to regulation with respect to the state organised lotteries stands vested in Entry 40 of List-I. This is because, by virtue of Entry 62 of List-II the taxing power of the state on 'gambling' remains within the legislative competence of the state and since lottery is covered under 'gambling', taxation imposed on lottery is valid and is within the legislative competence of the state. In reply to the above contention, Sri. S.K. Bagaria, learned Senior Counsel for the appellants submitted that, under the scheme of distribution of powers between the union and the states, under Lists I and II, when the subject of state organized lotteries has been specifically assigned to the exclusive domain of the Parliament, and consequently gets carved out of the general expression of "betting and gambli....
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....gislative competence do not intent to make any taxation legislation upon any subject which is not included in both the Lists or upon any of the main subjects with respect to which an extended construction can be recorded as included. In other words, the contention is that, the Entries pertaining to taxation laws need to be restricted to the subjects included in the first group in the respective Lists of Union Government and State Governments. Therefore the State legislature is not competent to make any legislation imposing tax with respect to a subject which is not included in the first group, contained in Entries 1 to 44. It is pointed out that, the above distinction in the division of legislative powers is also manifest from Article 248 of the Constitution of India and the residual Entry 97 in List I of the 7th Schedule. As long as state organized lotteries remains carved out of the subject of "betting and gambling" included under Entry 34 of List II and the subject of state organized lotteries is exclusively included within the domain of the Parliament under Entry 40 of List I, there is no power vested with the state to legislate on taxation of the state organized lotteries, is ....
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....he different use of words in the two Articles is for a purpose, if the field of two Articles are to be the same, the same words would have been used. It is true, as submitted, that since `trade' is used both in Article 298 and 301, the same meaning should be given. To this extent, we accept it to so but when the two Articles use different words, in a different set of words conversely, the different words used could only be to convey different meaning. If different meaning is given then the field of the two Articles would be different. So, when instead of the words `trade and commerce' in Article 301, the words `trade or business' is used it necessarily has different and wider connotation than merely `trade and commerce'". Learned Senior Counsel Sri.S.K. Bagaria also placed reliance on a decision of the Hon'ble Supreme Court in Jindal Stainless Ltd. & Anr v State of Haryana [(2017) 12 SCC 1] to support the principle that, when the same words or phrases are used in different parts of the Constitution, the same meaning should be ascribed to such words, unless the context demand otherwise. In para 976.3 of the said judgment it is held as under; "It is well known principle o....
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....List III, the power to levy tax on state organized lotteries falls exclusively within the domain of the legislative competence of the Parliament under Entry 97 of List I. In this regard, learned Senior Counsel for appellants also placed reliance on a decision of the Hon'ble Supreme Court in Union of India v. Shri Harbhajan Singh Dhillon [(1971) 2 SCC 779]. The issue decided therein was regarding validity of Section 24 of the Finance Act, 1969, through which Wealth Tax on capital value of agricultural land was introduced. Entry 86 of List I enumerates the subject, "Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies". Entry 49 of List II deal with "Taxes on lands and buildings'. The decision of the High Court in that case was that, when by virtue of Entry 86 of List I, the power to impose Wealth Tax on agricultural land remains withdrawn from the competency of the Parliament, it was not open to enact such a law in exercise of the legislative competence vested under Entry 97 of List I. The High Court held that the impugned Act in its pith and substance was intended to impose tax on capital value of ....
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....stion has to be asked about List I. If the answer is in the negative, then it follows that Parliament has power to make laws with respect to that matter or tax. 24. We are compelled to give full effect to Article 248 because we know of no principle of construction by which we can cut down the wide words of a substantive article like Article 248 by the wording of an entry in Schedule VII. 82. In our view the High Court was right in holding that the impugned Act was not a law with respect to entry 49, List II, or did not impose a tax mentioned in entry 49, List II. If that is so, then the legislation is valid either under entry 86 List I, read with entry 97, List I, or entry 97 List I, standing by itself. 86. Therefore, it seems to us that the whole of the impugned Act clearly falls within entry 97 List I. We may mention that this Court has never held that the original Wealth Tax Act fell under entry 86 List I. It was only assumed that the original Wealth Tax Act fell within entry 86 List I and on that assumption this entry was analysed and contrasted with entry 49 List II. Be that as it may, we are dearly of the opinion that no part of the impugne....
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....nd Article 248 of the Constitution. Such legislative competence cannot be negated by construing Entry 62 of List II to include therein the subject of state organized lotteries with in it. The expression "betting and gambling" contained in Entry 62 of List II, which does not specifically mention about state organized lotteries, has to be read in the clear Constitutional scheme of distribution of powers. The subject of legislation with respect to the state organized lotteries, being exclusively assigned to the domain of Parliament under Entry 40 of List I, and being not covered under Entry 34 of List II, cannot be construed as to be included in the taxation Entry of 62 of List II, under the general subject of "betting and gambling". In view of the Constitutional scheme, the subject of state organized lotteries, not having been enumerated in List II, the legislative competence to levy tax on the said subject is exclusively within the domain of the Parliament under Entry 97 of List I. Therefore it is contended that the state legislature is lacking competence to impose tax on state organized lotteries under entry 62 of List II. 20. Sri. Shishodia, learned Senior Counsel for the respo....
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....tion contained in Harbhajan Singh Dhillon(supra) that the residuary field of legislation no longer lies barren or unproductive. It has already yielded fruitful sources of taxation like the Gift Tax, Expenditure Tax etc. 21. During course of the argument it was pointed out that, validity of a similar enactment, as that of the one impugned herein, was considered by the High Court of Judicature at Bombay in the judgment rendered by a Division Bench of that court in a batch of writ petitions decided on 14th August 2009 (N.V. Marketing Pvt. Ltd V. State of Maharashtra and others - writ petition No.432/2007 and connected cases). Validity of the Maharashtra Tax on Lotteries Act, 2006 was under challenge in those cases based on the ground of lack of legislative competence. The charging section in the said enactment was specific to the effect that the tax is intended to be levied and collected on the 'lottery schemes' specified under provisions of the charging section itself. The High Court of Bombay found that, definition of the term "lottery" contained in the Act describe the meaning of lottery as a scheme. It was held that it is the scheme of lottery which is being taxed. With respect....
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....egislative competence on the Parliament to impose tax on betting and gambling. Therefore the state organiseed lotteries will not stand excluded from the meaning of the term betting and gambling occurring in Entry 62 of List-II and therefore the state legislature is conferred with power to impose tax in relation to state organized lotteries. Referring to Kesoram Industries Ltd. (supra), observation made by the Division Bench of the High Court of Bombay is that, the Parliament cannot be said to have power to impose tax in relation to lotteries by virtue of the residuary Entry 97 of List-I of the 7th Schedule of the Constitution. Hence the challenge based on the legislative competence was negatived. 22. From the findings rendered by the High Court of Bombay as enumerated above, it is evident that the issue was not analysed based on the contention that, whether the term 'betting and gambling' contained in Entry 34 and Entry 62 of List II need be construed as carrying different meanings. Since the issue has not been considered in that perspective, we are not persuaded to follow the analysis adopted by the High Court of Bombay. We are on respectful disagreement with the findings rende....
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....a V. State of Karnataka ((2010 SCC Online Kar. 4528 - judgment dated 27-12-2010) decided the issue. It was held that, since the state organized lotteries has been made a subject within the exclusive legislative competence of the Parliament, the state has no legislative competence to make any law touching the subject of state organized lotteries. It was observed, when we look at Entry 62 of List II, though it refers tax on 'betting and gambling', it does not specifically include lotteries organized by the state. Referring to Entry 97 of List I, it was observed that, it refers to any other matters not enumerated in List-II or List III, including any tax not mentioned in either of those list. Since the Hon'ble Supreme Court in the decision in B.R. Enterprises (supra) held that, eventhough the state organized lotteries will fall within the realm of 'gambling', there is no change in the character between lotteries under Entry 34 of List II and under Entry 40 of List II. But, when the state organized lotteries are covered under Entry 40 of List I, such lotteries cannot be read into the state list by taking assistance of any entry. Therefore it was held that, state has no legislative comp....
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....erala. Therefore there is complete uncertainty with respect to the taxing event. Sub-clause (a) and (b) of Sub-Section (1) of Section 6 provides about the amount payable with respect to 'Bumper Draw' and ordinary 'Draw'. Those are only measure of the taxation, but does not indicate about any taxing event or chargability. The measure by itself cannot create the liability, is the argument. The definition of the term "Bumper Draw" and "Draw" contained in Section 2, have nothing to do with chargability of the taxing event. Further, if it is assumed that the chargability is on the 'draw', the same is held only in the State of Sikkim and not in the State of Kerala, making the event totally extra territorial. It is pointed out that, definition of the term 'lottery' contained in the impugned enactment only define the expression "lottery". It has nothing to do with the chargability or the taxing event. Sub-Section (2) of Section 6 provides that, the tax levied under Sub-Section (1) shall be paid by the Promoter. Sub-clause (3) therein provides that if the organizing state appoints more than one Promoter in the State of Kerala, one such Promoter duly authorised by the respective state shall ....
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....SCC 205), in which it is held as follows; "The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness ill the legislative scheme defining any of those components of the levy will be fatal to its validity." The learned Senior Counsel further placed reliance on a decision of the Hon'ble Supreme Court in Madhuram Agarwal V. State of Madhya pradesh ((1999) 8 SCC 667). A Constitution Bench of the Hon'ble apex court while dealing with vires of the provisions in Madhya pradesh Municipality Act, 1961, held as follows; "In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than wha....
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..... A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of Legislature's failure to express itself clearly". The learned Senior Counsel for the appellants also placed for consideration some of the observations made of the Hon'ble Supreme Court in Kesoram Industries Ltd. (supra), which are as follows; "It is well- settled that power to tax cannot be inferred by implication; there must be a charging section specifically empowering the State to levy tax." (para 98) "There is nothing like an implied power to tax. The source of power which does not specifically speak of taxation cannot be so interpreted by expanding its width as to inclu....
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.... would only be of service contracts simpliciter and not composite indivisible works contracts." Learned Senior Counsel also placed reliance on the ruling, Godfrey Philips India Ltd. and another V. State of Uttarpradesh and others ((2005) 2 SCC 515). In paragraph 57 of the judgment it is held; "The submission of the assessees proceeds on two premises : the first that taxation of an object can only be with reference to a taxable event and second that all taxable events have been covered by the legislative entries. As far as the first premise is concerned, it may be that a tax on a thing or goods can only be with reference to a taxable event, but there is a distinction between such a tax and a tax on the taxable event. In the first case the subject matter of tax is the goods and the taxable event is within the incidence of the tax on the goods. In the second the taxable event is the subject matter of tax itself." Summing up the contentions on the point, Sri. S.K. Bagaria argued that, simply by mentioning as "tax on paper lotteries" no charge is created in the charging section, because no taxing event at all is mentioned in the said provision. The taxing event or the tax....
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....mbiguity with respect to the charging section, is the contention. The activity of conduct of the lottery is the taxable event upon which the charge and the levy is based and the draw is only a measure to fix the rate of tax. The word used in the preamble of the impugned Act that the legislation is to provide for levy and collection of tax on the conduct of paper lotteries in the State of Kerala, cannot be construed in a narrow campus. It would cover all the gamut of activities including organizing the scheme, printing of tickets, distribution and sale of tickets, draw of lots, payment of prize money etc. The word 'conduct of paper lotteries' contained in the preamble would indicate the whole lot of activity, either in its entirety or in part thereof. Therefore the language of the charging section is totally unambiguous and the taxable event attracting the levy of tax is certain and clearly spelled out, is the argument. 29. Per contra, Sri. Bagaria pointed out that, history of the legislation would reveal that the impugned Act was introduced when the validity of Section 5(BA) of the KGST Act was challenged. The impugned Act came into force on 08.04.2005, at a point of time prior ....
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....right to a conditional benefit of winning a prize, and that the right to participate in the draw is part of the composite right of the chance to win, and that right is an actionable claim. The sale of lottery tickets does not involve any sale of goods. Inspite the lottery tickets representing a chance or a right to a conditional benefit of winning the prize, it was held that, it is nothing else but an actionable claim and no sale of goods is involved, within the meaning of the sales tax laws. Contention on behalf of the respondent is that the predominant element of taxation is the 'chance to win' and the state is not taxing any actionable claim. In so far as the 'chance to win' is concerned, as contended by the appellants, that itself is neither taxable nor it is taxed under the impugned legislation. According to the appellants, there is no question of taxing any 'chance to win' or any so-called 'predominant element' or any 'attribute' of the transaction. It is pointed out that there is no legislative history of any tax being levied only with reference to an 'attribute', as held in Godfrey Phillips (India) Ltd. (supra). Hence it is reiterated that, apart from wording of the chargin....
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....ing or promoting it in any manner, contravening provisions of Section 4 of the said Act. In the case at hand, it cannot be disputed that, organising and conduct of the lottery by the 1st respondent / State of Sikkim is what is sought to be taxed. In this context, question arose as to whether the activity in organisation and conduct of the lottery is in any manner done within the territorial limits of the State of Kerala. The only part of the activity which takes place within the State of Kerala is the distribution and marketing of tickets, probably through advertisements, enumerating the prize money as well as the price of the ticket and the date of draw etc. In the above context, even assuming that the expression "tax on paper lotteries" contained in the charging section indicates the whole lot of activity of the conduct of lotteries, whether the taxable event falls within the territorial limits of the State of Kerala, is the question posed. Can a part of the activity of distribution and sale of tickets within the State of Kerala alone can be taxed under the guise of the term "tax on paper lotteries", contained in the charging Section? In other words, whether any taxable event is ....
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....ickets on which are not intended to be sold within the State of Kerala. It is submitted on behalf of the respondents that the apprehension expressed as above is ill-founded and misconceived and is based on artifice of ambiguities to the charging section. It is submitted that in the matter of actual levy and collection of tax under the Act, from the date of inception of the legislation till the time when the 1st appellant was banned from carrying on lottery business within the State of Kerala, no such dispute has arisen. In other words, it is assured that the levy and collection of tax will be made only with respect to the draws of the schemes for which tickets are marketed within the State of Kerala. The above aspect would again persuade this court to draw an inference that, what is sought to be taxed indirectly is the sale of the lottery tickets within the State of Kerala, which is prohibited by virtue of the law settled by the Hon'ble apex court. Sri. Pallav Shishodiya submitted that, even assuming that such a contention can be considered, it only relates to assessibility of the tax with respect to any particular draw, and is not one concerned with validity of the legislation. Bu....
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....lidity of the legislation. Keeping these principles in mind we have to ascertain if in the case before us there was sufficient territorial nexus to entitle the Bombay. Legislature to make the impugned law. The question whether in a given case there is sufficient territorial nexus is essentially one of fact. The trial court took the' view that the territorial nexus was not sufficient to uphold the validity of the law under debate. The Court of Appeal took a different view of the facts and upheld the law. We find ourselves in agreement with the Court of Appeal. The newspaper "Sporting Star" printed and published in Bangalore is widely circulated in the State of Bombay. The petitioners have set up collection depots within the State to receive entry forms and the fees. They have appointed local collectors. Besides the circulation of the copies of the "Sporting Star", the petitioners print over 40,000 extra coupons for distribution which no doubt are available from their local collectors. The most important circumstance in these competitions is the alluring invitation to participate in the competition where very large prizes amounting to thousands of rupees and sometim....
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....bove cited decision, when analyzed on the facts of the case at hand, it cannot be said that, because of the mere marketing of tickets within the State of Kerala, it cannot be held that a territorial nexus is established in order to impose tax on the lottery organized and conducted in a different state. Further, as already observed, the charge is created or rather said to have been created, on the activity of lottery and the levy is attempted on a lottery organised and conducted in a state which is outside the territory of the State of Kerala, by assigning the reason that the tickets are marketed also in the State of Kerala, which is an activity permitted by virtue of the regulatory law made by the Union Government. Conclusion of the discussions is that, the charging section or any other provision of the Act is not at all clear as to what is the charge and which is the instance of taxation. If the tax is imposed on the sale of lottery tickets conducted in the State of Kerala, then it will offend the law remaining settled in Sunrise Associates(supra). If it is accepted that the taxation is on the entire activity of organisation and conduct of the lottery, it becomes extra territorial....
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....om filing any fresh writ petition challenging the constitutional vires of the impugned legislation. Hence it is contended that the writ petition is hit by the doctrine of 'constructive res judicata'. According to the learned Senior Counsel, the appellants ought to have taken all the grounds in the earlier writ petition itself. He placed reliance on a decision of the Hon'ble Supreme Court in Devilal Modi V. The Sales Tax Officer (AIR 1965 SC 1150), in support of the above proposition. First of all, we may take note that the earlier writ petition was filed only by the 2nd appellant. The State of Sikkim (1st appellant herein) was not a party in the said writ petition. Further, there cannot be 'res judicata' in matters relating to challenge against a statute on the grounds of constitutional vires. In Devilal Modi (supra) the factual circumstance was completely different. The assessee in that case challenged validity of the tax imposed with respect to a particular year, in a writ petition filed. The court declinied the challenges and an appeal against the said order was also dismissed by the Hon'ble Supreme Court, on merits. The assessee attempted to raise two more additional grounds be....
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....State cited the rulings in National & Grindlays Bank Ltd. V. Municipal Corporation ((1969) 1 SCC 541), Deshbandhu Gupta & Co. V. Delhi Stock Exchange Association ((1979) 44 SCC 565) and Indian Metals & Ferro Alloys Ltd. V. CEE ((1991) Suppl. (1) SCC 125). In all these decisions the mistaken construction of the statute was from the side of the implementing authorities, which are the Municipal Corporation, Government or the Department concerned. Such is not the position in the present case. Simply because the appellants were paying tax for the previous periods, there can be no scope to apply the doctrine of contemporanea exposito or constructive res judicata, The appellants cannot also be non-suited on the doctrine of estoppal. 37. Incidentally, learned Senior Counsel for the respondents / State argued that, even if this court finds that the impugned legislation is invalid due to its constitutional vires, there can only be a prospective overruling. In other words, even if the impugned Act is held as illegal and ultra vires, such decision should be applied only prospectively, from the date of the judgment. The above argument is resisted by Sri. Bagaria by pointing out that, the doc....
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....urther, the special features necessary for application of the said doctrine, as held in the case cited is not existing in present case. The doctrine of prospective overruling is an exception to the normal principle of law and it apply in cases relating to labour welfare, service matters etc where the retrospectivity about the change of law can cause disruptive and unfair consequences. Such is not the position in the case of a fiscal statute, wherein the constitutional validity is decided. In the judgment in Babu Ram V. C.C. Jacob ((1999) 3 SCC 362) it is held by the Hon'ble Supreme Court as follows; "The prospective declaration of law is a devise innovated by the apex court to avoid reopening of settled issues and to prevent multiplicity of proceedings. It is also a devise adopted to avoid uncertainty and avoidable litigation. By the very object of prospective declaration of law, it is deemed that all actions taken contrary to the declaration of law prior to its date of declaration are validated. This is done in the larger public interest. (Emphasis supplied) The situation as contemplated cannot be said to be present in the case at hand. Therefore the doctrine of ....
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.... both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview. (iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the exten....
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....ility of the tax paid to the State of Kerala has never been passed on to the end consumer or to any selling agents, because the price of the lottery tickets is fixed when the scheme is notified and is uniformly applicable to all the states where the tickets are sold. Going by provisions contained in the Lottery (Regulation) Act, 1998 and the Lottery (Regulation) Rules, 2010 it is evident that, the proceeds of sale of the lottery tickets has to be credited to the public account of the organising state. It also provides that, the unclaimed prize money shall also become property of the Government. Rule 3 (10) of the Lotteries (Regulation) Rules provides that, the organising state shall charge a minimum amount of Rs. 5,00,000/- per draw for Bumper Draw of the lotteries and for all other forms of lotteries a minimum of Rs. 10,000/- per draw. Rule 3 (17) of the above said Rules provides that, the organizing State shall ensure that proceeds of the sale of the lottery tickets, as received from the Distributor or Selling Agents or any other source, are to be deposited in the public ledger account or in the consolidated fund of the organising state. Rule 4 of the said Rules deals with appoin....
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....d to be gaining any unwanted or unmerited monetary benefit, if the refund if effected. When the money in question belongs to a State and the dispute is in between two States, the doctrine of 'unjust enrichment' cannot be applied. 40. From the factual scenario evaluated and found as above, it is clear that the Distributor has not passed on the liability to the consumers. But, as pointed out by the respondents, the writ petitioners have not furnished any materials to prove that the liability has been ultimately borne by the 1st appellant State. Nor it is proved through any convincing materials that such liability has been paid by the 2nd appellant - Distributor, out of the commission he had received from the State of Sikkim. At any rate, as contended, if the State of Sikkim is the ultimate person who borne the liability, there cannot be contended that the doctrine of unjust enrichment will apply. On the other hand, if it is of Distributor who had borne the liability, proof is required to the effect that the same has not been recouped from the State of Sikkim. In both the case, we are of the considered opinion that the refund cannot be denied by applying the doctrine of 'unjust enr....