K. Balakrishnan Nair, J.@mdashThe point that arises for decision in all these cases is whether the State Government can collect sales tax or licence fee from the dealers engaged in the sale of lottery tickets. So, they are heard together and disposed of by this common judgment. W.P. (C) No. 4002 of 2007 is treated as the main case for the purpose of referring to the exhibits.
W.P. (C) No. 4002 of 2007:
2. The brief facts of the case are the following. The petitioner, which is a partnership firm, was a dealer of on-line lotteries, run by M/s. Playwin, Lotus, Smartwin and Fortune. It has been served with exhibit P12 series notices u/s 17(3) of the Kerala General Sales Tax Act, 1963, proposing to collect licensing fee as contemplated u/s 5BA of the said Act. So, this writ petition is filed by it, seeking a declaration that Section 5BA is unconstitutional and also seeking to quash exhibit P12 series notices. The petitioner submits, in view of the Constitution Bench decision of the apex court in
3. A counter-affidavit has been filed on behalf of the respondents, supporting the impugned notices. According to them, the decision in
4. Heard the learned Counsel on both sides. "Goods" is defined in Section 2(xii) of the KGST Act, which reads as follows:
(xii) ''goods'' means all kinds of movable property (other than newspapers, actionable claims, electricity, stocks and shares and securities) and includes livestock, all materials, commodities and Articles (including those to be used in the construction, fitting out, improvement or repair of immovable property or used in the fitting out, improvement or repair of movable property) and every kind of property (whether as goods or in some other form) involved in the execution of a works contract, and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale.
5. Actionable claim has been expressly excluded from the above definition of "goods". "Sale" is defined in Section 2(xxi) as follows:
(xxi) ''sale'' with all its grammatical variations and cognate expressions means every transfer, whether in pursuance of a contract or not, of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge.
6. The legislative entry, which enables the State Legislature to legislate on sales tax is entry 54 of List II of the Seventh Schedule to the Constitution of India, which reads as follows:
Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I.
7. "Tax on sale or purchase of goods" has been defined in Clause (29A) of Article 366 of the Constitution of India. In
We have noted earlier that all the statutory definitions of the word ''goods'' in the State sales tax laws have uniformly excluded, inter alia, actionable claims from the definition for the purposes of the Act. Were actionable claims, etc., not otherwise includible in the definition of ''goods'' there was no need for excluding them. In other words, actionable claims are ''goods'' but not for the purposes of the Sales Tax Acts and but for this statutory exclusion, an actionable claim would be ''goods'' or the subject-matter of ownership. Consequently, an actionable claim is a movable property and ''goods'' in the wider sense of the term but a sale of an actionable claim would not be subject to the sales tax laws.
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A lottery ticket has no value in itself. It is a mere piece of paper. Its value lies in the fact that it represents a chance or a right to a conditional benefit of winning a prize of a greater value than the consideration paid for the transfer of that chance. It is nothing more than a token or evidence of this right. The court in
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The question is, what is this right which the ticket represents? There can be no doubt that on purchasing a lottery ticket, the purchaser would have a claim to a conditional interest in the prize money which is not in the purchaser''s possession. The right would fall squarely within the definition of an actionable claim and would, therefore, be excluded from the definition of goods'' under the Sale of Goods Act and the sales tax statutes.
8. In view of the above authoritative pronouncement of the apex court, no tax can be levied, collected or demanded in connection with the sale of lottery tickets. The apex court overruled the decision in
Neither the State will be liable to refund the tax already collected nor collect any further tax for the period prior to the date of the judgment.
9. In view of the above direction of the apex court, the petitioner is entitled to succeed. Accordingly, the writ petition is allowed. Section 5BA of the KGST Act is declared as ultra vires and unconstitutional. The State and its officers are interdicted from proceeding with exhibit P12 series notices. It cannot collect any sales tax or licence fee under the KGST Act from the petitioner.
O.P. Nos. 20701 and 29544 of 2002 and W.P. (C) Nos. 13011 of 2004, 4898, 4989, 4997, 5000, 5060, 5106, 5200, 5308, 5323, 5546, 5578, 5797, 6061, 6067, 6131, 6574, 6592, 6706f 6946, 6961, 7150, 7858, 7980, 8229, 8346, 8524, 8614 and 8631 of 2007:
In view of the judgment in W.P. (C) No. 4002 of 2007 and the judgments of the apex court, which are produced as exhibits P9 and P10 in the said writ petition, these writ petitions are also allowed. The respondents, the State and its officials, are restrained from collecting any tax or licence fee under the KGST Act from the petitioners/dealers of lottery tickets. No costs.
