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2007 Supreme(Ker) 23
Judges : K.BALAKRISHNAN NAIR
T.John Rose - Appellant
Versus
State of Kerala Rep by its Secretary (Taxes) - Respondent
Case No : WP(C).No.30176 of 2006 (P)
Decided On : 01/10/2007
Advocates Appeared :
For the Petitioner: Anil Sivaraman, Advocate. For the Respondents: R1 to 3, V.V. Asokan Government Pleader (Taxes), R4, P. Ravindran, R5, P. Muraleedharan, C.G.C., Soli J. Sorabjee (SR.), M. Pathrose Mathai (SR.), Advocates.
The State Government has no power to prohibit the sale of lottery tickets of other States unless it is a lottery-free zone. However, the State can regulate lotteries run by other States, including foreign lotteries, under Entry 34 of List II of the Seventh Schedule of the Constitution.
Headnote:
The Kerala Tax on Paper Lotteries Act, 2005 (Kerala Act) and the Lotteries (Regulation) Act, 1998 (Central Act) were examined in the context of a challenge to the cancellation of registration of lottery promoters and the prohibition of sale of lottery tickets in the State of Kerala. The Court held that the State Government has no power to prohibit the sale of lottery tickets of other States unless it is a lottery-free zone. However, the State can regulate lotteries run by other States, including foreign lotteries, under Entry 34 of List II of the Seventh Schedule of the Constitution. The Court directed the Central Government to examine complaints regarding violations of Section 4 of the Central Act by the State of Sikkim and take appropriate action.
Fact of the Case:
The petitioners, engaged in the sale of lottery tickets of the State of Sikkim and the Royal Government of Bhutan, challenged the cancellation of their registration and the prohibition of sale of their lottery tickets in the State of Kerala. They contended that the State Government has no jurisdiction to take such action and that the impugned notices were issued without jurisdiction.
Finding of the Court:
The Court held that the State Government has no power to prohibit the sale of lottery tickets of other States unless it is a lottery-free zone. However, the State can regulate lotteries run by other States, including foreign lotteries, under Entry 34 of List II of the Seventh Schedule of the Constitution. The Court directed the Central Government to examine complaints regarding violations of Section 4 of the Central Act by the State of Sikkim and take appropriate action.
Issues: 1. Whether the State Government has the power to prohibit the sale of lottery tickets of other States. 2. Whether the State Government can regulate lotteries run by other States, including foreign lotteries. 3. Whether the impugned notices were issued without jurisdiction.
Ratio Decidendi: 1. The State Government has no power to prohibit the sale of lottery tickets of other States unless it is a lottery-free zone. 2. The State can regulate lotteries run by other States, including foreign lotteries, under Entry 34 of List II of the Seventh Schedule of the Constitution. 3. The impugned notices were issued without jurisdiction.
Final Decision: The Court quashed the impugned notices and directed the State Government to receive tax from the petitioners and allow them to run their business as long as their registration remains in force. The Court also directed the Central Government to examine complaints regarding violations of Section 4 of the Central Act by the State of Sikkim and take appropriate action.
Some of the points that arise for decision in these cases are common and therefore, they are heard and disposed of together, by this common Judgment. These case arise under the Kerala Tax on Paper Lotteries Act, 2005 (Act No.20 of 2005). The writ petitioners are engaged in the sale of tickets of paper lotteries, conducted by the State of Sikkim and the Royal Government of Bhutan respectively. They are having registration as promoters under the above Act. The said registration is sought to be cancelled, on the ground that their lotteries are run in violation of section 4 of the cancelled, on the ground that their lotteries are run in violation of Section 4 of the Lotteries Regulation Act, 1998 (Central Act 17 of 1998). The cancellation of the registration will result in prohibition of sale of their lottery tickets in the Kerala State. Hence these Writ Petitins, seeking appropriate reliefs. The pleadings in them are summarized below:
Writ Petition (C) No.30355/06
2. The petitioner is engaged in the distribution and marketing of the tickets of lotteries, organized by the State of Sikkim, in the State of Kerala, M/s. Martin Lottery Agencies Limited, is the sole distributor of the lotteries of the Stae of Sikkim. The said agency has appointed M/s. Best & Co., as the main stockist of the said Lotteries, which, in turn, has appointed the petitioner as the Marketing Agent of those lotteries in Kerala. Ext.P1 would show that the petitioner is the stockist for selling the Sikkim State Lotteries in the State of Kerala. It is a certificate, issued by the Director of Lotteries, Government of Sikkim. The petitioner, the lottery run by the State of Sikkim is conducted, strictly in accordance with the provisions of the Lotteries (Regulation) Act, 1998. The State of Kerala is competitor in the field of sale of tickets of lotteries. The State is running its own lotteries. So, it has been trying to stop the sales of the tickets of lotteries of other States in Kerala. The Kerala Government, in exercise of its power under Regulation 12 of the Lotteries (Regulation) Act 1998, framed Kerala State Lotteries and On-line Lotteries (Regulation) Rules, 2003. Sub-rules (3) and (10) of Rule 24 of the Rules enabled the Kerala Government to interfere with and suspend the sale of tickets of lotteries, run by other State Governments. The affected parties challenged the said provisions run by other State Governments. The affected parties challenged the said provisions in the Rules, before this Court. Though, the Writ Petition was dismissed, a Division Bench of this Court, in WA No.2044/03, passed Ext.P2 interim order dated 19-12-2003, staying the operation of the above said sub-rules. Later, the Writ Appeal itself was dismissed. On appeal, the Apex court admitted the appeal and resorted Ext.P2 interim order, as the interim order of the Apex Court. When the Police Officials of the State tried to prosecute the agents, selling the tickets of the lotteries of Sikkim and Bhutan Government, the Supreme Court intervened and restrained the State of Kerala from prosecuting them.
3. Later, the Kerala Government banned all the lotteries and made the State a lottery-free-zone. Still later, it decided to start paper lotteries by Ext.P8 notification and also allowed other States to sell their paper lottery tickets in the State of Kerala. In the meantime, the Kerala Tax on Paper Lotteries Act, 2005 was enforced in the State of Kerala. On 20.04.2005, it also promulgated the Kerala Paper Lotteries (Regulation) Rules 2005, which is produced as Ext.P8. The petitioner narrates the above facts to show that the Kerala Government was trying everything within its powers, to prevent the sale of lotteries of other States in Kerala.
4. Now, for the sale of lotteries in Kerala, it is mandatory to get registration under the Kerala Tax on Paper Lotteries Act, 2005 (hereinafter referred to as the Kerala Act). The petitioner applied for registration under Section 7 of the Kerala Act.
