Judgment :-

S.B. Sinha, J.

1. Leave granted.

2. Whether sale, promotion and marketing of lottery tickets would be exigible to `Service Tax within the meaning of the provisions of Section 65(105) of the Finance Act, 1994 (hereinafter called and referred to for the sake of brevity as `the Act) is the question involved in this appeal which arises from a judgment and order dated 18.9.2007 passed by the High Court of Sikkim in Writ Petition (C) No. 19 of 2007.

3. Respondents are agents of the State of Sikkim. The State Government floated "schemes" whereby the total number of tickets therefor was prescribed. In terms of the said schemes, the respondent purchases all lottery tickets in bulk form on "all sold basis". It pays Rs.70 per ticket for the face value of Rs.100/-. In turn, it sells the ticket to its principal stockists on "outright" and "all sold basis": It makes a profit out of the margin out of the difference between the amounts received from the principal stockists and the amounts paid to the State Government. The principal stockists in turn sell the tickets to the sub-stockist and who in turn sell to the agents. The retailers purchase tickets from the agents and in turn sell t