The Union-Parliament is competent to impose and levy service tax on other related activities, and the amendments carried out by the Finance Act, 2016, are not capable of being implemented for imposition and levy of the service tax on the services allegedly provided by the petitioners.

JUDGMENT :

Satish K. Agnihotri, J.

Assailing the legality and validity of the amendments made in the Finance Act, 1994 (Service Tax) by the Finance Act, 2016, whereunder the Section 65B was amended, as being ultra vires the Constitution of India under Entry 34 and Entry 62 of List II of the Seventh Schedule of the Constitution of India; also seeking a declaration that the transactions in buying and selling lottery tickets are not liable to Service tax under the provisions of the Finance Act, 1994 as amended by the Finance Act, 2016 and further seeking for quashing of Notifications No.18/2016-ST dated 01.03.2016, these Writ Petitions are filed by the petitioners, with prayer of incidental and consequential relief.

2. Both the Writ Petitions raise the one and the same questions of law arising from the identical cause of action and, as such, are being considered and disposed of by this common Judgment.

3. The petitioners’ firms, incorporated under the Companies Act, 1956, are engaged in business of buying and selling of lottery tickets organized by the Government of Sikkim. An Agreement between the petitioners and the Government of Sikkim was arrived at on 06.06.2016 and 09.11.2012 respectively, enabling the petitioners’ firms to purchase lottery tickets in bulk from the Government and re-sell the same to the public at large, through authorized agents, stockists, resellers etc. The validity of the said Agreements is five years. Certain amendments were made time and again in the Finance Act, 1994, which came to be challenged in several cases before this Court and consistent decisions were rendered holding that the Parliament lacks competence to frame the law for imposing service tax on lottery dealers. The issue asto whether the lottery distributors, as the petitioners herein, are agents of the State Government, was also considered and decided in favour of the petitioners holding that they were the outright purchasers and not the agents of the State Government, when the State Government alone is competent to organize a paper lottery or online lottery or both under the provisions of the Lotteries (Regulation) Rules, 2010 and the Lotteries (Regulation) Act, 1998. In the meantime, in the teeth of several decisions as discussed in the following paragraphs, the Parliament came out with an amendment by the Finance Act, 2016 to the following effects: -

“The relevant provisions of the Finance Act, 1994 (as amended by Finance Act, 2016) state as under :”

In Section 65B-

(b) in clause (44), in Explanation, 2, in sub clause (ii), for item (a), the following item shall be substituted, namely-

(a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organizing, selling of lottery or facilitating in organizing lottery or any kind, in any other manner, in accordance with the provisions of the Lottery (Regulation) Act, 1998.”

4. In furtherance thereof, the petitioners were served an intimation regarding changes vide communication dated 10.06.2016, calling upon the petitioners to make payment of service tax. It is also sought to be questioned in the instant writ petitions.

5. Mr. A.R. Madhavrao, learned Counsel appearing for the petitioners, would contend that there is no change in the legal position even after the amendments made vide the Finance (Amendment) Act, 2016, as laid down by this Court on several decisions. To garner support for his contention, he refers to and relies on a decision of the Supreme Court in Sunrise Associates v. Government of NCT Delhi, (2006) 5 SCC 603 and decisions of this Court in Future Gaming Solution Pvt. Ltd. v. Union of India, 2015 (37) STR 65 (Sikkim), Future Gaming Solution India Pvt. Ltd. v. Union of India, 2014 (36) STR 733 (Sikkim) and Future Gaming & Hotel Services Pvt. Ltd. v. Union of India, 2015 VAT Infoline 449 (Sikkim). It is then contended that the