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Informist, Thursday, Aug 8, 2024

 

NEW DELHI – The Supreme Court today held that service tax cannot be levied on the sale of lottery tickets as these are actionable claims and not goods. The court asked the concerned departments to refund the service tax collected from the companies engaged in the business of lottery tickets. The appeals by the companies pertain to the period before 2010.

 

"No doubt the explanation was omitted with effect from Jul 1, 2010, however these cases pertain to the period prior to Jul 1, 2010. Therefore, either under the sub-clause (i) of section 65(19) (of Finance Act, 1994) or under the explanation after it was introduced with effect from May 16, 2008 and until it was omitted, the service tax could not have been levied on the promotion of marketing of sales of goods on the premise that it was a business auxiliary service," a bench of Justice B.V. Nagarathna and Justice N. Kotiswar Singh said.

 

The bench said Kerala and Sikkim and High Courts had lost sight of the definition of goods in Section 65(50) of Finance Act, 1994, while interpreting the expression lottery. "As already noted, the definition of goods in Section 2(7) of Sale of Goods Act, which is expressly incorporated in Section 65(50) of Finance Act, expressly excludes actionable claims and this court has by the Constitution Bench in Sunrise case opined that lottery tickets are actionable claims," the bench said.

 

The petitioner, Future Gaming Hotel Services Pvt Ltd and others had moved the top court against the Centre's move to make service tax applicable to them. With effect from Jul 1, 2010, a separate entry was inserted in the Finance Act, 1994 to bring promotion and marketing of lottery in the tax net.

 

Prior to this, the Centre had made an attempt to levy service tax on the sale of lottery tickets by inserting an explanation in Section 65(19)((ii) of Finance Act, in the definition of Business Auxiliary Service. This explanation was scrapped in the 2010 Budget.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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