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2007 Supreme(Kar) 669
Karnataka High Court
Judges : Mohan Shantanagoudar
SHAMADHAN TRADING (P) LIMITED - Appellant
Versus
STATE OF KARNATAKA - Respondent
Writ Petition 2224 Of 2004
Decided On : 10/05/2007
Advocates Appeared :
Aparanji Dinakar, Aravind Kumar, HARANAHALLI, K.Shashikiran Shetty, KRISHNA S.DIXIT, NILOUFER AKBAR, P.Y.Solisorabji, Ravindranath Kamath, S.VIJAYASHANKAR, SATISH M.DODDAMANI, T.Rajaram
Headnote:Interpretation of Statutes - Words and expressions - Same word or expression used in different parts of same provision or statute - There is a presumption that the word or expression is used in same sense throughtout.
Cases Referred: (1984) 2 SCC 292; (1994) 4 SCC 217; W.P. No. 129/2001; (2006) 5 SCC 603; AIR 1957 SC 699; AIR 1962 SC 594; (1999) 9 SCC 700; (2004) 4 SCC 489; (2007) 9 VST 126 (SC) ; 2007 AIR SCW 5436; (2002) 1 SCC 367.
Constitution of India - Seventh Schedule - Tax on betting, gambling and lotteries - Relevant entries - Legislative competence. [Mohan Shanthanagoudar, J]: Looking to the scheme of entries found in Lists I & II of Seventh Schedule, more particularly the purport of Entry 40 of List I, Entry 34 of List II and Entry 62 of List II and is not controlled by Entry 40 of List I or by Entry 34 of List II. The state Legislature has excludive legilative competence to make the law to levy tax on the aspect of betting and gambling though the same is part and parcel of lotteries, whether organised by te State Government or others. Entry 62 of List II deals with tax on lotteries including the tax on entertainment, amusement, betting the gambling. Entry 62 of List II is the subject of the individual state. There is no entry on the subject relating to tax on betting, gambling, entertai-nment and amusements either in List I or in List III. Thus, the Centre has not enacted any law covering the subject of tax on entertainment, amusements, betting and gambling as the siad subject falls under Entry 62 of List II.
Karnataka Tax on Lotteries Act, 2004 - Preamble - Nature and scope of the Act - Stated. [Mohan Shanthanagoudar, J]: By the impugned enactment, the tax is levied for he purpose of generation of revenue and is not levied for the purpose of control or regulation of lotteries. The impugned Act which imposes tax on lotteries no way interferes with or regulates right of another State to carry on business of lottery. The petitioner also have not contended that ehy are subjected to any regualtion or control. The impugned Act is applicable equally to all lotteries of the States including the lottery run by Departmet of Lotteries of Karnataka State. The Court construing and interpreting the Constiuttion or provisions of an enactment, has to ascertain the meaning and intention of legislature from the languages used in the statue itself. Merely because the lotteries are cotnrolled and regulated by the Centre under Entry 40 of List i, the State is not deprived from its legitimate power to legislate within its own sphere by imposing tax on lotteries within the scope of Entry 62 of List II. the ambit of Entry 40 of List I is limited and ocnfined only to the regulation and control of the lotteries organised by the Government of India, and the Government of State. As there is no Entry i List I, which deals with tax on lotteries as found in Etnry 62 of List II, the State is not prohibited to enact laws relating to taxation on lotteries. The impugned legislation does not fall within the purview of general entry relating to Regulatin and Control of lotteries and therefore the contention of the petitoners is liable to be rejected.
Cases Referred: (1984) 2 SCC 292; (1994) 4 SCC 217; W.P. No. 129/2001; (2006) 5 SCC 603; AIR 1957 SC 699; AIR 1962 SC 594; (1999) 9 SCC 700; (2004) 4 SCC 489; (2007) 9 VST 126 (SC) ; 2007 AIR SCW 5436; (2002) 1 SCC 367.
Statute Law - Validity of a statute - When a law is impugned as ultra vires, what has to be ascertained is its true character - If it is found that in substance it is one on a matter assigned to Legislature, then it must be held to be valid in its entirety.
Cases Referred: (1984) 2 SCC 292; (1994) 4 SCC 217; W.P. No. 129/2001; (2006) 5 SCC 603; AIR 1957 SC 699; AIR 1962 SC 594; (1999) 9 SCC 700; (2004) 4 SCC 489; (2007) 9 VST 126 (SC) ; 2007 AIR SCW 5436; (2002) 1 SCC 367.
Lotteries (Regulation) Act, 1998 - Preamble - Object of the Act - Stated. [Mohan Shanthanagoudar, J]: Looking to the preamble of the Central Act, is clar that the same is enacted to regulate the lotteries and to provide for matters connected therewith and incidental thereto. The said enactment nowhere deals with taxes on lotteries. It merely regulates the conduct of the lotteries in the country. Even the Entry 40 of List I does not deal with the aspect of tax on lotteries. Neither List I nor List III does contain any entry relating to tax on lotteries. Even if the Entry 40 of List I overlaps or includes Entry 34 of List II, i.e., betting and gambling, the same is in any way not connected with Entry 62 of List II. The legislation in question is traceable to Entry 62 of List II which is independent of Entry 40 of List I or Entry 34 of List II.
Cases Referred: (1984) 2 SCC 292; (1994) 4 SCC 217; W.P. No. 129/2001; (2006) 5 SCC 603; AIR 1957 SC 699; AIR 1962 SC 594; (1999) 9 SCC 700; (2004) 4 SCC 489; (2007) 9 VST 126 (SC) ; 2007 AIR SCW 5436; (2002) 1 SCC 367.
Constitution of India - Seventh Schedule - Interpretation of entries in - An entry in one list cannot be interpreted so as to cancel or obliterate another entry.
Cases Referred: (1984) 2 SCC 292; (1994) 4 SCC 217; W.P. No. 129/2001; (2006) 5 SCC 603; AIR 1957 SC 699; AIR 1962 SC 594; (1999) 9 SCC 700; (2004) 4 SCC 489; (2007) 9 VST 126 (SC) ; 2007 AIR SCW 5436; (2002) 1 SCC 367.
( 1 ) AS the common questions of fact and law arise for consideration in these writ petitions, they are taken up together for hearing and are decided by this order.
( 2 ) THE petitioners herein are the State of Meghalaya, Sikkim, arunachala Pradesh, Nagaland and promoters of the lotteries. The petitioners are organising, promoting and conducting lottery under Entry 40 of List I of the Seventh Schedule of the Constitution of India and under the Lotteries (Regulation) Act, 1998 (for short hereinafter referred to asthe 'central Act' ).
( 3 ) THE petitioners are challenging the validity and vires of the karnataka Tax on Lotteries Act, 2004 (for short hereinafter referred to asthe 'state Act')promulgated by the respondent-State which imposes tax on lotteries, of the petitioners-States. According to the petitioners, the legislation has been passed without any jurisdiction or legislative competence in respect of taxes and thus deserves to be set aside as such.
( 4 ) IT is contended by Sri Soli Sorabjee, learned senior Advocate appearing for petitioners that Entry 40 of List I of Seventh Schedule to the Constitution of India, deals with lotteries organised by the Government of India or Government of State and that therefore any legislation pertaining to lottery has to be made only by the centre. He relied upon the judgments of the Apex Court in the case of H. Anraj and Others Vs. State of Maharashtra, reported in (1984) 2 SCC 292 and in the case of State of haryana Vs. M/s. Suman Enterprises, reported in (1994) 4 SCC 217, to contend that the subject "lotteries organised by the Government of India or the Government of a State" has been taken out from the legislative field comprised by the expression "betting and gambling" of the individual state and is reserved to be dealt with by Parliament; that the subject covered under Entry 34 of List II relating to betting and gambling involved in State run lotteries is taken out from the legislative field of the State government in view of the observations made by the Apex Court in the cases mentioned supra; that since the "lotteries organised by the government of India and Government of State" has been made a subject within the exclusive legislative competence of Parliament, it must follow, in view of Articles 246 (1) and (3), that no Legislature of a State can make a law touching lotteries organised by the Government of India or the government of State. He further submitted that Section 6 of the State Act imposes tax on draws and the draws invariably take place outside karnataka State and as nothing relating to lotteries is done in Karnataka state, except selling of lottery tickets, Karnataka State has no competence to levy tax on other State Governments within whose jurisdiction the draws take place. In this connection, he relied upon the judgment of the Bombay high Court in the case of Jiwankumar Sitaram Sondhi Vs. The commissioner of Sales Tax Maharashtra State and Others, in W. P. No. 129 of 2001, disposed of on 30-3-2001. He further contended that tax cannot also be imposed on lottery tickets as they are not the goods but are actionable claims as held by the Supreme Court in the case of Sunrise associates Vs. Government of NCT of Delhi and Others, reported in (2006)5 SCC 603. Kumari Aparanji Dinakar, learned Advocate also argued in support of the aforementioned contentions. Per contra, it is contended by Sri Vijayashankar, learned Senior advocate appearing on behalf of the respondent-State that the State has got legislative competence to enact the Act in question, inasmuch as by virtue of the said enactment the State has imposed tax on betting and gambling; Entry 40 of List I does not prohibit the respondent-State to tax on betting and gambling; that the legislation in question is traceable to entry No. 62 of List-II; that the Central Act (Lotteries (Regulation) Act)deals only with Regulation of Lotteries and not taxes; that the Central Act merely regulates th
