K. BALAKRISHNAN NAIR J. –

The point that arises for decision in all these cases is whether the State Government can collect sales tax or licence fee from the dealers engaged in the sale of lottery tickets. So, they are heard together and disposed of by this common judgment. W.P. (C) No. 4002 of 2007 is treated as the main case for the purpose of referring to the exhibits.

W.P. (C) No. 4002 of 2007 :

The brief facts of the case are the following. The petitioner, which is a partnership firm, was a dealer of on-line lotteries, run by M/s. Playwin, Lotus, Smartwin and Fortune. It has been served with exhibit P12 series notices under section 17(3) of the Kerala General Sales Tax Act, 1963, proposing to collect licensing fee as contemplated under section 5BA of the said Act. So, this writ petition is filed by it, seeking a declaration that section 5BA is unconstitutional and also seeking to quash exhibit P12 series notices. The petitioner submits, in view of the Constitution Bench decision of the apex court in Sunrise Associates v. Government of NCT of Delhi [2006] 145 STC 576 (SC); [2006] 5 SCC 603, no tax can be collected in connection with the sale of lottery tickets. The said judgment dated April 28, 2006 is produced as exhibit P9 in this writ petition. Later, the apex court by exhibit P10 order dated July 27, 2006 ordered that the State will neither be liable to refund the tax already collected, nor collect any tax for the period prior to the date of exhibit P9 judgment. In view of the said position, the petitioner submits, no further tax can be collected from it. It is also submitted that since the apex court in Sunrise Associates [2006] 145 STC 576 (SC); [2006] 5 SCC 603 has held that lottery ticket is an actionable claim and therefore not "goods" for the purposes of the KGST Act, section 5BA is unconstitutional.

A counter-affidavit has been filed on behalf of the respondents, supporting the impugned notices. According to them, the decision in H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165 (SC); [1986] 1 SCC 414, treating lottery tickets as goods for the purpose of sales tax was holding the field up to April 28, 2006. So, the respondents relying on Somaiya Organics (India) Ltd. v. State of Uttar Pradesh [2001] 123 STC 623 (SC); [2001] 5 SCC 519, submitted that till the above said date, the levy of tax was not non est and therefore, the tax due up to the said date can be collected.

Heard the learned counsel on both sides. "Goods" is defined in section 2(xii) of the KGST Act, which reads as follows :

"(xii) 'goods' means all kinds of movable property (other than newspapers, actionable claims, electricity, stocks and shares and securities) and includes livestock, all materials, commodities and articles (including those to be used in the construction, fitting out, improvement or repair of immovable property or used in the fitting out, improvement or repair of movable property) and every kind of property (whether as goods or in some other form) involved in the execution of a works contract, and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale."

Actionable claim has been expressly excluded from the above definition of "goods". "Sale" is defined in section 2(xxi) as follows :

"(xxi) 'sale' with all its grammatical variations and cognate expressions means every transfer, whether in pursuance of a contract or not, of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge."

The legislative entry, which enables the State Legislature to legislate on sales tax is entry 54 of List II of the Seventh Schedule to the Constitution of India, which reads as follows :

"Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I