SKILL LOTTO SOLUTIONS PVT. LTD. Vs. UNION OF INDIA & OTHERS
LAWS(SC)-2020-12-11
SUPREME COURT OF INDIA
Decided on December 03,2020

Skill Lotto Solutions Pvt. Ltd. Appellant
VERSUS
UNION OF INDIA AND OTHERS Respondents


Referred Judgements :-

STATE OF MADRAS VS. GANNON DUNKERLEY AND CO.,(MADRAS) LTD. [REFERRED TO]
H. ANRAJ AND ORS. VS. GOVERNMENT OF TAMIL NADU AND ORS. [REFERRED TO]
SUNRISE ASSOCIATES VS. GOVT. OF NCT OF DELHI AND OTHERS [REFERRED TO]
STATE OFBIHAR VS. KAMESHWAR SINGH:STATE OF MADHYA PRADESH:GOVERNMENT OF THE STATE OF UTTAR PRADESH:KAMESHWAR SINGH [REFERRED TO]
NAVINCHANDRA MAFATLAL BOMBAY VS. COMMISSIONER OF INCOME TAX BOMBAY CITY [REFERRED TO]
STATE OF BOMBAY VS. R M D CHI MARBAUGWALA ADVOCATE GENERAL OF MYSORE INTERVENER [REFERRED TO]
STATE OF MADRAS VS. CANNON DUNKERLEY AND CO MADRAS LIMITED [REFERRED TO]
BHOPAL SUGAR INDUSTRIES LIMITED M P VS. D P DUBE SALES TAX OFFICER BHOPAL REGION BHOPAL [REFERRED TO]
NAVNIT LAL C JAVERI VS. K K SEN APPELLATE ASSISTANT COMMISSIONER OF INCOME TAX BOMBAY [REFERRED TO]
UNION OF INDIA VS. SARADA MILLS LIMITED [REFERRED TO]
H ANRAJ VS. STATE OF MAHARASHTRA [REFERRED TO]
H ANRAJ DIPAK DHAR VS. GOVERNMENT OF TAMIL NADU:STATE OF WEST BENGAL [REFERRED TO]
RESERVE BANK OF INDIA UNION OF INDIA PEERLESS GENERAL FINANCE AND INVEST MENT CO LIMITED STATE OF WEST BENGAL VS. MENT COMPANY LIMITED:PEERLESS GENERAL FINANCE AND INVEST MENT COMPANY LIMITED:RESERVE BANK OF INDIA:PEERLESS GENERAL FINANCE AND INVEST MENF COMPANY LIMITED [REFERRED TO]
MUNICIPAL CORPORATION OF DELHI VS. GURNAM KAUR [REFERRED TO]
AYURVEDA PHARMACY VS. STATE OF TAMIL NADU [REFERRED TO]
BUILDERS ASSOCIATION OF INDIA VS. UNION OF INDIA [REFERRED TO]
KRISHNA DAS VS. TOWN AREA COMMITTEE CHIRGAON [REFERRED TO]
GANNON DUNKERLEY AND CO LARSEN AND TOUBRO LIMITED VS. STATE OF RAJASTHAN [REFERRED TO]
VIKAS SALES CORPORATION VS. COMMISSIONER OF COMMERCIAL TAXES [REFERRED TO]
B R ENTERPRISES VS. STATE OF UTTAR PRADESH [REFERRED TO]
SUNRISE ASSOCIATES VS. GOVT OF NCT OF DELHI [REFERRED TO]
STATE OF U P VS. DEEPAK FERTILIZERS AND PETROCHEMICAL CORPORATION LTD [REFERRED TO]
UNION OF INDIA VS. MARTIN LOTTERY AGENCIES LTD [REFERRED TO]
OFFICIAL TRUSTEE VS. LCHIPPENDALE [REFERRED TO]
BHUPATI MOHAN DAS VS. PHANINDRA CHANDRA CHAKRAVARTY [REFERRED TO]


JUDGEMENT

ASHOK BHUSHAN, J. - (1.)The petitioner, an authorized agent, for sale and distribution of lotteries organized by State of Punjab has filed this writ petition impugning the definition of goods under Section 2(52) of Central Goods and Services Tax Act, 2017 and consequential notifications to the extent it levies tax on lotteries. The petitioner seeks declaration that the levy of tax on lottery is discriminatory and violative of Articles 14, 19(1)(g), 301 and 304 of the Constitution of India.
(2.)We need to notice certain background facts which has given rise to this writ petition.
2.1 The Parliament enacted the Lotteries (Regulation) Act, 1998 to regulate the lotteries and to provide for matters connected therewith and incidental thereto. Section 2(b) of the Act defines lottery which provides that "lottery" means a scheme, in whatever form and by whatever name called, for distribution of prizes by lot or chance to those persons participating in the chances of a prize by purchasing tickets. Section 4 provides that a State Government may organise, conduct or promote the lottery subject to conditions enumerate therein. Different States have been organizing and conducting lotteries in accordance with the aforesaid Act. It is to be noted that prior to parliamentary enactment for regulating the lotteries, different States have enacted legislation regulating the lotteries which were the legislations even prior to the enforcement of the Constitution, levying tax on the sale of lottery tickets. Reference is made to Bengal Finance Sales Tax Act, 1941 and Madras General Sales Tax Act, 1939. Another Statute to be noticed is Bombay Lotteries (Control and Tax) and Prize Competitions (Tax) Act, 1958.

2.2 There has been a series of litigation regarding taxability of lottery tickets and this Court had occasion to deliver several judgments on the subject which we shall notice hereinafter. Service tax was levied on lottery tickets by Finance Act, 1994. A Circular dated 14/21.2.2017 was also issued providing for mode of determination of the amount of service tax. Rules were also framed namely Lotteries (Regulation) Rules, 2010 by the Central Government containing a set of rules for regulation of the lotteries organized by the States.

2.3 By Constitution (One Hundred and First Amendment) Act, 2016, Article 246A was inserted in the Constitution containing special provisions with respect to Goods and Services Tax. Article 269A and Article 279A were also inserted by same constitutional amendment. Article 279A provided for constitution of Goods and Services Tax Council. The Parliament enacted the Central Goods and Services Tax Act, 2017 (Act No. 12 of 2017) to make provisions for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. The Act came into force w.e.f. 12.04.2017. The Parliament also enacted the Integrated Goods and Services Tax Act, 2017 (Act No. 13 of 2017), the Union Territory Goods and Services Tax Act, 2017 (Act No. 14 of 2017) and the Goods and Services Tax (compensation to States) Act, 2017 (Act No.15 of 2017).

2.4 Under Section 2(52) of Central Goods and Services Tax Act, 2017, the term "goods" has been defined which provides that "goods" means every kind of movable property other than money and securities but includes actionable claim................ Chapter III of the Act provides for levy and collection of tax. Section 15 deals with value of taxable supply. After the enactment of Act No.12 of 2017, Notification was issued by Government of India dated 28.06.2017 in exercise of power conferred by sub-section (1) of Section 9 notifying the rate of the integrated tax. By the notification dated 28.06.2017 with regard to lottery run by the State Government, value of supply of lottery was deemed to be 100/112 of the face value of the ticket or the prize as notified in the official gazette of the organising State, whichever is higher. With regard to lotteries authorised by the State Government value of supply of lottery was deemed to be 100/128.

2.5 The writ petitioner, an authorised agent for the state of Punjab for sale and distribution of lotteries organised by State of Punjab aggrieved by the provisions of Act No. 12 of 2017 as well as notifications issued therein filed the present writ petition praying for following reliefs:-

"a) By appropriate writ, order or direction, quash and set aside the definition of 'Goods' under Section 2(52) of the Central Goods and Services Tax Act, 2017 [Annexure P-18 (Pg.141 to 143)], Impugned Notifications 01/2017 Central Tax (Rate), 01/2017[Annexure P-19 (Pg.144 to 148)], Integrated Tax (Rate), 01/201 [Annexure P-20 (Pg. 149 to 154)], and the State rate Notifications of the Respondent State of Punjab [Annexure P-21(Pg.155 to 157)] to the extent it levies tax on Lottery by declaring the same to be discriminatory and violative of Article 49, (19)(1)(g), 301, 304 of the Constitution of India and of the CGST, SGST and IGST Act.

b) In the Alternative, by appropriate writ, order or direction quash and set aside the impugned Notifications 01/2017 Central Tax (Rate), 01/2017 Integrated Tax (Rate) 01/2017 and the State rate Notification of the Respondent State of Punjab to the extent it levies tax on the face value of the lottery ticket without abating the prize money Component of the lottery ticket when the said amount never forms part of the income of the Petitioner or the lottery trade.

c) In the Alternative, by appropriate writ, order or direction quash and set aside the Impugned Notifications 01/2017 Central Tax (Rate), 01/2017 Integrated Tax (Rate) 01/2017 and the State rate Notification of the Respondent State of Punjab to the extent it levies two different rates on tax on the face value of the lottery ticket and declare that the Respondents can levy an uniform rate of 12% Tax on Lottery irrespective of place where it is being sold, and after adjusting the prize money component from the face value of lottery tickets."

(3.)We have heard Shri Ravindra Shrivastava, learned senior counsel for the petitioner and Shri Vikramjit Banerjee, learned Additional Solicitor General for the Union of India. We have also heard Shri C.A. Sundaram, learned senior counsel for the intervenor.
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