Skill Lotto Solutions Pvt. Ltd. v. Union of India and Others

Case snapshot

Sections / provisions: GST statutory provision - Section 2; GST statutory provision - Section 2(1); GST statutory provision - Section 2(52); GST statutory provision - Section 2(6A); GST statutory provision - Section 2(7); GST statutory provision - Section 3; GST statutory provision - Section 4; GST statutory provision - Section 9; GST statutory provision - Section 12; GST statutory provision - Section 12(1B); GST statutory provision - Section 15; GST statutory provision - Section 15(1); GST statutory provision - Section 15(5); GST statutory provision - Section 104; GST statutory provision - Section 311(12); GST statutory provision - Section 311(2)

Questions before the Court / Tribunal

• Issue and context: Shri Banerjee further submits that during pendency of the writ petition, Rule 31A has been amended vide notification dated 02.03.2020 merging earlier two separate rates, i.e., regarding value of supply of lottery run by the State Government, which was earlier 100/112 and value of supply of lottery authorised by the State Government, which was 100/128 has been made uniform and by virtue of Rule 31A sub- rule(2), value of supply of lottery is one and the same, i.e., 100/128 of the face value of the ticket or prize as notified by the organising State, whichever is higher. He submits that in view of the above amendment dated 02.03.2020, which is not challenged in the present writ petition, the argument on the ground of discrimination in the rate of tax is no longer available to the petitioner. Shri Banerjee further submits that judgment of this Court in State of Madras…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION WRIT PETITION (CIVIL) NO.961 OF 2018 SKILL LOTTO SOLUTIONS PVT. LTD. ...PETITIONER VERSUS UNION OF INDIA & ORS. ...RESPONDENTS J U D G M E N T ASHOK BHUSHAN, J. 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

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

claims are only obiter dicta and cannot be treated to be ratio of the judgment. 6. Shri Vikramjit Banerjee, learned Additional Solicitor General refuting the submissions of learned senior counsel for the petitioner at the very outset submits that the writ petition filed by the writ petitioner under Article 32 is not maintainable. It is submitted that lottery is “ res extra commercium ” and no right under Article 19(1)(g) and Article 301 can be claimed by the petitioner with regard to lottery. The transaction of lottery tickets cannot be raised to the status of trade, commerce or intercourse. There is no right with the petitioner which can be enforced by writ petition filed under article 32 of the Constitution, hence, the writ petition being not maintainable deserves to be dismissed. Mr. Banerjee further submits that the laws relating to economic activity need to be viewed with greater latitude than laws touching civil rights. He further submits that

Appellant / petitioner / assessee submissions

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. 4. Shri Shrivastava submits that lottery is not a goods and under the Central Goods and Services Tax Act, 2017, GST is levied only on goods, hence levy of GST on lottery is ultra vires to the Constitution. It is further submitted that the Constitution Article 366 sub-article (12) define goods to include all materials, commodities and articles. The definition in the Constitution exclude actionable claims since it only refers to materials, commodities and articles. The definition of goods given in Section

earlier 100/112 and value of supply of lottery authorised by the State Government, which was 100/128 has been made uniform and by virtue of Rule 31A subrule(2), value of supply of lottery is one and the same, i.e., 100/128 of the face value of the ticket or prize as notified by the organising State, whichever is higher. He submits that in view of the above amendment dated 02.03.2020, which is not challenged in the present writ petition, the argument on the ground of discrimination in the rate of tax is no longer available to the petitioner. Shri Banerjee further submits that judgment of this Court in State of Madras Vs. Gannon Dunkerley (supra) relied by learned senior counsel for the petitioner is not attracted in the facts of the present case. It is submitted that the above decision dealt with the definition of term “sale” and was not concerned with the interpretation of “goods”. 8. Shri Sundaram appearing for the intervenor submits that the Constitution permits tax on goods and

pernicious. Shri Ravindra Shrivastava, learned senior counsel appearing for the petitioner submits that he is not claiming any violation of right under Article 19(1)(g) in the writ petition. In view of this submission of the learned senior counsel for the petitioner, we need not consider the writ petition with reference to violation of Article 19(1)(g).

to or forming part of the land which are agreed to be severed before supply or under a contract of supply;” 23. Section 2(1) defines actionable claim in following words: “Section 2(1) “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882;” 24. The definition of goods as contained in the Sale of Goods Act, 1930 in Section 2(7) : “goods” means every kind of movable property other than actionable claims and money; whereas definition of goods in Section 2(52) in the Act, 2017 while defining goods as every kind of movable property other than money and securities “but includes actionable claim”. We have noted above the various grounds of attack on the inclusion of actionable claim in the definition of goods under Section 2(52) as raised by the learned counsel for the petitioner. The first ground of

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

legislature must be taken to have intended that they should be understood in that sense. In interpreting an expression used in a legal sense, therefore, we have only to ascertain the precise connotation which it possesses in law. ...” 29. Summing up its conclusion this Court at page 425 held: "To sum up, the expression “sale of goods” in Entry 48 is a nomen juris,its essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that agreement. In a building contract which is, as in the present case, one,entire and indivisibleand that is its norm, there is no sale of goods, and it is not within the competence of the Provincial Legislature under Entry 48 to impose tax on the supply of the materials used in such a contract treating it as a sale.” 30. We may also notice the following pertinent observation made by this Court in the above case at page 426: “....It is also a fact that acting on the view that Entry 48 authorises it, the States have enacted laws imposing a tax on the supply of materials in works contracts, and have been realising it, and their validity has been affirmed by

several High Courts. All these laws were in the statute book when the Constitution came into force, and it is to be regretted that there is nothing in it which offers a solution to the present question. We have, no doubt, Art. 248 and Entry 97 in List I conferring residual power of legislation on Parliament, but clearly it could not have been intended that the center should have the power to tax with respect to works constructed in the States. In view of the fact that the State Legislatures had given to the expression "sale of goods" in Entry 48 a wider meaning than what it has in the Indian Sale of Goods Act, that States with sovereign powers have in recent times been enacting laws imposing tax on the use of materials in the construction of buildings, and that such a power should more properly be lodged with the States rather than the center, the Constitution might have given an inclusive definition of "sale" in Entry 54 so as to cover the extended sense. But our duty is to interpret the law as we find it, and having anxiously considered the question, we are of opinion that there is no sale as such of materials used in a building contract, and that the Provincial Legislatures had no competence to impose a tax thereon under Entry 48. ” 31. The ratio of the above judgment which is heavily relied by Shri Srivastava is that this Court laid down that legal meaning of expression “sale of goods”

Court in Gannon Dunkerley & Co.(Madras) Ltd. case (supra) is no longer applicable any more and work contracts were also taxed. We may also notice subsequent Constitution Bench judgment in the case of M/s Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and others, 1993 (1) SCC 364 , where this Court had occasion to examine Article 366(29A) subclause (b) of the Constitution. This Court referring to its earlier judgment in Builders' Association of India vs. Union of India, (1989) 2 SCC 645, made following observations in paragraphs 25 and 30: “25. We find it difficult to accept this contention. The question whether as a result of the Forty Sixth Amendment an independent taxing power has been conferred on the States had arisen for consideration before this Court in Builders' Association case (supra) since it was specifically raised in the contentions urged on behalf of the States. While summarising the said contentions this Court has thus mentioned this contention Sub-clause (b) of Clause 29-A of Article 366 of the Constitution has conferred on the Legislatures of States the power to levy tax on works contract which is independent of the power conferred on the Legislatures of the States under Entry 54 of the State List,

(p.346). The said contention was rejected with these observations. The object of the new definition introduced in Clause (29-A) of Article 366 of the Constitution is, therefore, to enlarge the scope of tax on sale or purchase of goods wherever it occurs in the Constitution so that it may include within its scope the transfer, delivery or supply of goods that may take place under any of the transactions referred to in Sub-Clauses (a) to (f) thereof wherever such transfer, delivery of supply becomes subject to levy. of sales tax. So construed the expression tax on the sale or purchase of goods in Entry 54 of the State List, therefore, includes a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract also.

The tax leviable by virtue of Sub-clause (b) of Clause (29-A) of Article 366 of the Constitution thus becomes subject to the same discipline to which any levy under Entry 54 of the State List is made subject to under the Constitution.” 30. Having regard to the observations referred to above and the stand of the parties during the course of arguments before us, we do not consider it appropriate to reopen the issues which ; are covered by the decision in Builders' Association case (supra) and we will, therefore, deal with the matter in accordance with the law as laid down in that case that the expression tax on the sale or purchase of goods in Entry 54 of the State List includes a tax

reliance. The above Constitution Bench was constituted to reconsider the earlier judgment of this Court in H. Anraj and Ors. Vs. Government of Tamil Nadu and Ors. , (1986) 1 SCC 424. Paragraphs 4 and 5 of the referring order ( Sunrise Associates vs. Govt. of NCT of Delhi and others, 2010 (10) SCC 420 ) reads: “4. We are inclined to agree that the judgment in H. Anraj requires reconsideration for the reason that, prima facie, the only right of the purchaser of a lottery ticket is to take the chance of winning the prize. There seems to us to be no good reason to split the transaction of the sale of a lottery ticket into the acquisition of (I) the right to participate in the lottery draw, and (ii) the right to win the prize, dependent on chance. 5. In the case of Vikas Sales Corpn. v. Commr. Of Commercial Taxes (1996 (4) SCC 433), a Bench of three learned Judges agreed with the decision in H. Anraj. It is, therefore, necessary that these appeals should be heard by a Constitution Bench.”

Operative decision and relief

[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

Tax Rules, 1952. The writ petition was allowed by the High Court, against which State of Bombay had filed an appeal. The Constitution Bench held the activity of respondent as activity of gambling nature. This Court laid down following in paragraphs 41 and 46:- “41. It will be abundantly clear from the foregoing observations that the activities which have been condemned in this country from ancient times appear to have been equally discouraged and looked upon with disfavour in England, Scotland, the United States of America and in Australia in the cases referred to above. We find it difficult to accept the contention that those activities which encourage a spirit of reckless propensity for making easy gain by lot or chance, which lead to the loss of the hard earned money of the undiscerning and improvident common man and thereby lower his standard of living and drive him into a chronic state of indebtedness and eventually disrupt the peace and happiness of his humble home could possibly have been intended by our Constitution makers to be raised to the status of trade, commerce or intercourse and to be made the subject-matter of a fundamental right guaranteed by Article 19(1)(g). We find it difficult to persuade ourselves that gambling was ever intended

newspaper printed and published outside the State of Bombay. The prize competitions being of a gambling nature, they cannot be regarded as trade or commerce and as such the petitioners cannot claim any fundamental right under Article 19(1)( g) in respect of such competitions, nor are they entitled to the protection of Article 301. The result, therefore, is that this appeal must be allowed and the orders of the lower courts set aside and the petitions dismissed and we do so with costs throughout. The state will get only one set of costs of hearing of this and Appeals Nos. 135, 136, & 187 of 1956 throughout.” 69. In a later decision, Union of India and Ors. Vs. Martin Lottery Agencies Limited, (2009) 12 SCC 209 , this Court had occasion to consider levy of service tax on the lottery tickets. This Court had held that law as it stands today recognises lottery to be gambling, which is res extra commercium. In paragraph 17, following has been laid down:- “17. We fail to persuade ourselves to agree with the aforementioned submission. The law, as it stands today (although it is possible that this Court in future may take a different view), recognises lottery

notifications were issued during the pendency of writ petition. Petitioner has prayed that the said issue be left open, the notification having not been challenged in the writ petition liberty be given to the petitioner to challenge the same in appropriate proceedings. We accept the above prayer of the petitioner. The petitioner shall be at liberty to challenge the notifications dated 21.02.2020/02.03.2020 (challenging the rate of levy tax uniformally at 28%) separately in appropriate proceedings. Subject to liberty as above, the writ petition is dismissed. ....................J. (Ashok Bhushan)

Ratio and legal principle

The narrow proposition associated with Skill Lotto Solutions Pvt. Ltd. v. Union of India and Others concerns issue and context: shri banerjee further submits that during pendency of the writ petition, rule 31a has been amended vide notification dated 02.03.2020 merging earlier two separate rates, i.e., regarding value of supply of lottery run by the state government, which was earlier 100/112 and value of supply of lottery authorised by the state government, which was 100/128 has been made uniform and by virtue of rule 31a sub- rule(2), value of supply of lottery is one and the same, i.e., 100/128 of the face value of the ticket or prize as notified by the organising state, whichever is higher. he submits that in view of the above amendment dated 02.03.2020, which is not challenged in the present writ petition, the argument on the ground of discrimination in the rate of tax is no longer available to the petitioner. shri banerjee further submits that judgment of this court in state of madras… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in Writ Petition (Civil) No. 961 of 2018.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Dismissed” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: Issue and context: Shri Banerjee further submits that during pendency of the writ petition, Rule 31A has been amended vide notification dated 02.03.2020 merging earlier two separate rates, i.e., regarding value of supply of lottery run by the State Government, which was earlier 100/112 and value of supply of lottery authorised by the State Government, which was 100/128 has been made uniform and by virtue of Rule 31A sub- rule(2), value of supply of lottery is one and the same, i.e., 100/128 of the face value of the ticket or prize as notified by the organising State, whichever is higher. He submits that in view of the above amendment dated 02.03.2020, which is not challenged in the present writ petition, the argument on the ground of discrimination in the rate of tax is no longer available to the petitioner. Shri Banerjee further submits that judgment of this Court in State of Madras… Its practical value lies in the way the Supreme Court of India connected the governing provisions—GST statutory provision - Section 2; GST statutory provision - Section 2(1); GST statutory provision - Section 2(52); GST statutory provision - Section 2(6A); GST statutory provision - Section 2(7); GST statutory provision - Section 3; GST statutory provision - Section 4; GST statutory provision - Section 9; GST statutory provision - Section 12; GST statutory provision - Section 12(1B); GST statutory provision - Section 15; GST statutory provision - Section 15(1); GST statutory provision - Section 15(5); GST statutory provision - Section 104; GST statutory provision - Section 311(12); GST statutory provision - Section 311(2)—to the procedural posture and evidence before it.

The authority level is Supreme Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of GST statutory provision - Section 2; GST statutory provision - Section 2(1); GST statutory provision - Section 2(52); GST statutory provision - Section 2(6A); GST statutory provision - Section 2(7); GST statutory provision - Section 3; GST statutory provision - Section 4; GST statutory provision - Section 9; GST statutory provision - Section 12; GST statutory provision - Section 12(1B); GST statutory provision - Section 15; GST statutory provision - Section 15(1); GST statutory provision - Section 15(5); GST statutory provision - Section 104; GST statutory provision - Section 311(12); GST statutory provision - Section 311(2) and the decision date 2020-12-03; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Skill Lotto Solutions Pvt. Ltd. v. Union of India and Others, the proceeding is Writ Petition (Civil) No. 961 of 2018, and the decision is dated 2020-12-03. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as Hon'ble Mr. Justice Ashok Bhushan; Hon'ble Mr. Justice R. Subhash Reddy; Hon'ble Mr. Justice M.R. Shah. A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with GST statutory provision - Section 2; GST statutory provision - Section 2(1); GST statutory provision - Section 2(52); GST statutory provision - Section 2(6A); GST statutory provision - Section 2(7); GST statutory provision - Section 3; GST statutory provision - Section 4; GST statutory provision - Section 9; GST statutory provision - Section 12; GST statutory provision - Section 12(1B); GST statutory provision - Section 15; GST statutory provision - Section 15(1); GST statutory provision - Section 15(5); GST statutory provision - Section 104; GST statutory provision - Section 311(12); GST statutory provision - Section 311(2). The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Dismissed. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is SUPREME_COURT_FINAL_REVIEW_CURATIVE_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• GST statutory provision - Section 2 — apply the exact version considered in the judgment.
• GST statutory provision - Section 2(1) — apply the exact version considered in the judgment.
• GST statutory provision - Section 2(52) — apply the exact version considered in the judgment.
• GST statutory provision - Section 2(6A) — apply the exact version considered in the judgment.
• GST statutory provision - Section 2(7) — apply the exact version considered in the judgment.
• GST statutory provision - Section 3 — apply the exact version considered in the judgment.
• GST statutory provision - Section 4 — apply the exact version considered in the judgment.
• GST statutory provision - Section 9 — apply the exact version considered in the judgment.
• GST statutory provision - Section 12 — apply the exact version considered in the judgment.
• GST statutory provision - Section 12(1B) — apply the exact version considered in the judgment.
• GST statutory provision - Section 15 — apply the exact version considered in the judgment.
• GST statutory provision - Section 15(1) — apply the exact version considered in the judgment.
• GST statutory provision - Section 15(5) — apply the exact version considered in the judgment.
• GST statutory provision - Section 104 — apply the exact version considered in the judgment.
• GST statutory provision - Section 311(12) — apply the exact version considered in the judgment.
• GST statutory provision - Section 311(2) — apply the exact version considered in the judgment.

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