Wangdi, J.

By filing this Writ Petition, the Petitioner seeks to assail letter C. No.V(3)7/ST/FGSIPvtLtd/GTK/2009/ 295 dated 06-07-2012 issued by the Superintendent of Central Excise and Service Tax, Gangtok Range, Gangtok, Respondent No.3, informing the Petitioner that as per Notification No.36/2012-ST dated 20-06-2012 read with Rule 6(7C) of the Finance Act, 1994 (as amended) the Petitioner was liable to pay service tax as per the prevailing provisions since they had been rendering service to the State Government in relation to promotion, marketing, organising and assisting in organising games of chance including lottery services.

2. The Petitioner is a Company registered under the Companies Act, 1956 and is engaged in the business of sale of lottery tickets organised by the Government of Sikkim, the Respondent No.4, under an agreement dated 10-08-2009 for a term of five years. By that agreement the Petitioner procures the lottery tickets in bulk from the Government of Sikkim and resells those to the public through various agents, stockists, resellers, etc.

3. The Writ Petition is founded on several grounds particularly the jurisdiction of the Respondents No.1 to 3 in demanding service tax and legality of their action in enforcing the provisions of the Finance Act, 1994, as amended by the Finance Act, 2012, upon the Petitioner with effect from 01-07-2012 since when the Finance Act, 1994 (as mended by the Finance Act, 2012) came into effect. The Petitioner asserts that by the amendment to the Finance Act, 1994 in 2012, ‘lottery’ and ‘transaction in actionable claim’ have been kept outside the purview of the service tax. Specific reference was made to Sub-Sections (1), (34), (44) and (55) of Section 65B as well as Sections 66B and 66D of the Act to indicate the change in the law in clearly excluding ‘lotteries’.

4. The next ground of attack is that there is no element of service in the Petitioner’s relation with the Government of Sikkim, Respondent No.4, in respect of the Sikkim State Lotteries. As per the Petitioner, the Petitioner purchases lottery tickets in bulk and sells them to stockists, resellers, etc., by adding a profit margin. The stockists, resellers, etc., in turn sell these tickets to retailers who in turn sell them to the ultimate participants of the draw. As the tickets are sold to the Petitioner by the Government of Sikkim, the transaction is one of sale and purchase of lottery ticket and not one of rendering of any service. Thus, it is submitted that the Petitioner is not involved in rendering any ‘taxable service’.

5. It is further submitted that lottery tickets are outside the purview of service tax by name under the ‘negative list’ provided under Section 66D of the Finance Act, 1994 and also excluded from the ambit of the expression ‘service’ which excludes ‘transaction in actionable claim’. That ‘lottery’ is an ‘actionable claim’ has been settled by a decision of a Constitution Bench of the Supreme Court of India in Sunrise Associates vs. Govt. of NCT of Delhi and Others : (2006) 5 SCC 603.

6. The next plank of attack is on the question of legislative competence of the Parliament to pass a law on lottery tickets in view of List II to Seventh Schedule of the Constitution of India which under Entry 34 and Entry 62 vests the subject-matter of ‘Betting and gambling’ and ‘Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling’ respectively within the sole competence of the State Legislature.

7. The contention on behalf of the Petitioner is that in view of this Constitutional scheme, imposition of tax on lottery tickets by a Central Legislation is bad for lack of legislative competence of the Parliament and resultantly the action of the Respondents No.1 to 3 taken in pursuance of such law is without jurisdiction and unconstitutional. It is stated that the demand of service tax on the activity of the Petitioner is a tax on ‘betting and gambling’, a tax that can only be imposed un