Back
2009 Supreme(Bom) 1018
High Court of Judicature at Bombay
THE HONOURABLE MR. JUSTICE D.K. DESHMUKH & THE HONOURABLE MR. JUSTICE R.S. MOHITE
N.V. Marketing Pvt.Ltd. & Others
Versus
State of Maharashtra & Others
WRIT PETITION NOS.432 OF 2007, 435 OF 2009, 533 OF 2007, 629 OF 2007, 1111 OF 2007, 1126 OF 2007, 1127 OF 2007, 425 OF 2009, 436 OF 2009 AND 444 OF 2009
Decided On : 14-08-2009
For the Appellants:Dr.V.V.Tulzapurkar with R.D. Soni @ V.R.Kasle i/b. Ram & Co., S.H. Doctor, Sr. Advocate i/b. B.B. Parikh, S. Bharucha i/b. Thakore Jariwala & Associate, Advocates. For the Respondents:Aspi Chinoy, Sr.Advocate with Ms. Gita Shastri, AGP, A.A. Kumbhakoni, Advocate.
The main legal point established in the judgment is the interpretation of the legislative competence of the State of Maharashtra under Entry 62 of List II of the Seventh Schedule of the Constitution of India, and the distinction between the levy of tax on betting and gambling as opposed to the sale of lottery tickets.
Headnote:
Lotteries - Constitutional Validity of Maharashtra Tax on Lotteries Act, 2006 - Entry 62 of List II of the Seventh Schedule - Summary of Acts and Sections: Entry 40 of List I, Entry 62 of List II, Article 14 of the Constitution of India - The court discussed the legislative competence of the State of Maharashtra to enact the Maharashtra Tax on Lotteries Act, 2006, and the interpretation of Entry 40 of List I and Entry 62 of List II of the Seventh Schedule of the Constitution of India. The court also analyzed the definition of 'lottery' and 'scheme' under the Act, and the measure of tax levied on betting and gambling.
Fact of the Case:
The petitioners challenged the constitutional validity of the Maharashtra Tax on Lotteries Act, 2006, claiming that the State of Maharashtra lacked legislative power to enact laws related to state lotteries and taxation. They argued that the Act was a colorable exercise of legislative power and sought to create a monopoly in lottery tickets.
Finding of the Court:
The court found that the State legislature had the competence to enact the Maharashtra Tax on Lotteries Act, 2006 under Entry 62 of List II of the Seventh Schedule. It held that the Act did not levy tax on the sale of lottery tickets but on betting and gambling, and there was no vagueness in the scheme of the Act. The court dismissed the petitions, ruling that there was no substance in the challenges.
Issues: The issues involved the legislative competence of the State of Maharashtra to enact the Maharashtra Tax on Lotteries Act, 2006, and the alleged colorable exercise of legislative power.
Ratio Decidendi: The court's decision was based on the interpretation of Entry 40 of List I and Entry 62 of List II of the Seventh Schedule of the Constitution of India, and the specific power conferred on the State legislature to impose tax on betting and gambling. The court also emphasized that the Act did not levy tax on the sale of lottery tickets but on betting and gambling.
Final Decision: The petitions challenging the constitutional validity of the Maharashtra Tax on Lotteries Act, 2006 were dismissed by the court.
D.K. Deshmukh, J.
1. In all theses petitions the constitutional validity of the Maharashtra Tax on Lotteries Act,2006 has been challenged and therefore, all these petitions can be conveniently disposed of by common order.
2. The petitioners are the distributors of lottery tickets for sale in State of Maharashtra, of various States organizing, conducting and promoting their own lotteries in India. The Respondent-State Government is also organizing, conducting and promoting its own lotteries. It is submitted that the State of Maharashtra firstly levied and imposed sales tax on lottery tickets of the lotteries organized by the other State Governments by treating the lottery tickets as goods. However, when it was held that lottery tickets are not goods, the sales tax imposed on lottery tickets was withdrawn by the State Government and the Maharashtra Tax on Lotteries Act, 2006 (hereinafter referred to as “the State Act”) was enacted.
3. It is the contention of the petitioners that the legislature of State of Maharashtra has no legislative power to enact Laws relating to State Lotteries including Laws relating to taxation, and therefore, according to the petitioners, the State Act is beyond the legislative competence of the legislature of State of Maharashtra. The second submission is that the enactment of the State Act is colourable exercise of the legislative power inasmuch as it is another method of levying tax on lottery tickets. The third submission is that the State Act seeks to levy tax on lottery schemes, tax is collected in advance in respect of each draw in the lottery scheme at the rate specified in Section 3 of the State Act. It is submitted that lottery scheme of all other State organizing and conducting lotteries save and except that of Maharashtra are formulated outside the State of Maharashtra and therefore, the Law has extra territorial application. The fourth submission is that the State Act levies tax on lottery schemes but the term “lottery scheme” is not defined anywhere and therefore, it is violative of guarantee under Article 14 of the Constitution of India. It was also contended that the State Act has been enacted to impose tax on sale of lottery tickets conducted by other States in State of Maharashtra so as to make selling of lottery tickets by the other States uneconomical, unviable and thereby creating monopoly in the lottery tickets of the lotteries conducted by the State of Maharashtra.
4. Elaborating the first submission, the learned Counsel appearing for petitioners submitted that the legislature of State of Maharashtra has no legislative competence to enact the impugned Act. By the impugned Act, tax is sought to be levied on the lottery schemes. The subject “Lotteries organised by the Government of India or the Government of a State” comes in Entry 40 of List-I in the Seventh Schedule of the Constitution of India, and therefore, only Parliament is empowered to enact Law relating to lotteries governed by Government of India or the Government of a State or any law relating to such tax on the lotteries. It is submitted that the State legislature does not have competence to levy tax on the lotteries under Entry 62 of List II of the Seventh Schedule of the Constitution of India. The learned Counsel relied on the judgments of the Supreme Court in the cases “H.Anraj & others Vs. State of Maharashtra, AIR 1984(2) Supreme Court 781” and “H.Anraj & others Vs. Government of Tamilnadu, AIR 1986 Supreme Court 63” and it was submitted that the lotteries organized by the State are necessarily excluded from “betting and gambling” mentioned in Entry 62 of List II of the Seventh schedule, and then it was contended that the State of Maharashtra has not shown any other source of power except Entry 62 of List II of the Seventh Schedule and therefore, the State Act is beyond its legislative competence.
5. Elaborating the second submission, it was submitted that prior to the decision of the Constitution Ben
