TaxTMI 
TaxTMI 
2026 (2) TMI 529
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....ce involve common issues, are taken up together for hearing and disposal. 2. Briefly stated facts of the case common to all these appeals are that the appellant are engaged in providing service in relation to promotion or marketing of services i.e. marketing and distribution of various state lotteries. Alleging that the service rendered by the appellant i.e. marketing and distribution of lottery tickets fall under scope of 'Business Auxiliary Services', show-cause notice was issued to each of the appellant for recovery of the service tax not paid along with interest and penalty. On adjudication, the demands were confirmed with interest and penalty. Aggrieved by the said order, they filed appeals before the learned Commissioner (Appeals) ....
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....rpose of imposing service tax on the respondents-assessees herein as 'business auxiliary service' under sub-section 19 of Section 65 of the said Act effective from 01.07.2003 and by way of the insertion of the Explanation to Section 65(19)(ii) of the Finance Act, 1994 culminated in the judgment of this Court in K. Arumugam. In the said case, this Court held that the relationship between the Government of Sikkim and the assessees therein was not that of principal and agent but one of principal and principal. Therefore, up to the year 2010, the lis between the parties ended with the judgment in K. Arumugam. 18.1 For the period from 01.07.2010 till 30.06.2012, amendment was made to Section 65(105) by insertion of clause (zzzzn....
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....e transparency in the lottery business, which was a part of the revenue earning endeavours of the State of Sikkim through various lottery schemes. In the circumstances, the High Court set-aside the demands for payment of service tax made by the Central Government. 18.3 At the same time, the Finance Act, 2012, by an amendment of Finance Act, 1994, introduced the Negative List under Section 66D which comprised of various services on which no service tax could be levied or collected. The List included the activity of betting, gambling or lottery. Hence, no service tax on the conduct of the lottery could be levied by the Central Government. However, in 2015, another amendment was made to the Finance Act, 1994 by substituting Explanatio....
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....hink that such a meaning could be attributed to the activity of the distributor involved in the selling of lottery or facilitating or organizing of lottery in any manner. The expression "betting, gambling or lottery" in the Explanation to Section 66D(i) has to be given its true intent and meaning as conducting a lottery is nothing but an activity coming within the scope of betting and gambling. This is by the application of the principle of noscitur a sociis where the expression "lottery" takes its meaning from "betting and gambling". Although a lottery ticket is nothing but an actionable claim, the conduct of a lottery scheme is nothing but a betting and gambling activity. Therefore, it is only Entry 62 - List II which enables the impositi....
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....s (Regulation) Act, 1998 is only an innocuous amendment which is only cosmetic in nature. 18.7 In the circumstances, we find that at each stage, the amendments made to the Finance Act, 1994, in order to impose service tax on the sole distributor/purchaser of the lottery tickets (respondents-assessees herein) have been unsuccessful. We have reasoned that the amendment to the said definition would in no way detract from the substance of the relationship between the State Government and the sole distributor or purchaser of the lottery tickets which is one of principal to principal and not of principal-agent. There being no agency and no service rendered by the respondents-assessees herein as an agent to the Government of Sikkim, servi....