JIWANKUMAR SITARAM SONDHI Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) BY this writ petition, under Article 226 of the Constitution, the petitioner seeks to challenge the Amending Act No. LII of 2000, to Bombay Sales Tax Act, 1959 (hereinafter referred to, for the sake of brevity, as the Amending Act ).

(2.) PETITIONER is a citizen of India. Petitioner carries on business in the name and style of M/s. Sondhi and Company as a sole proprietor thereof and he trades as a first dealer of various State organized lotteries.

(3.) THE State of Maharashtra has been imposing sales tax on the sale of lottery tickets within the State of Maharashtra on the basis that lottery tickets are goods on which the State is empowered to levy sales tax. That, the Bombay Sales Tax Act, 1959 deals with levy of tax on sales and purchases within the State of Maharashtra. That, under section 3 of the Act it is, inter alia, laid down that every dealer whose sale or purchase turnover during the year ending 31st March exceeds a specified limit prescribed by the Act, shall be liable to pay sales tax under the Act on such turnover. According to the petitioners, lotteries were taxed initially at the rates prescribed in Item 152-A in Scheduled II of the Bombay Sales Tax Act, 1959. That, prior to the impugned amendment, lottery tickets were charged to tax at the rate of 13% by way of sales tax on the value of sales plus 10% surcharge. According to the petitioners, till date, the State of Maharashtra was collecting tax on the lottery tickets unit-wise at the above rates excluding the actionable claim part of the ticket. On 14th November, 2000, the State of Maharashtra issued on Ordinance Bearing No. XXVII of 2000 whereby section 8-D came to be introduced. Since then, the Ordinance has been replaced by the amending Act which is impugned in this case. Under the impugned amending Act, lottery ticket is proposed to be taxed on the basis of the draw at a fixed rate per draw. For weekly draw, the rate of sales tax is fixed at Rs. 20,000=00; for fortnightly, the rate of sales tax is fixed at Rs. 60,000=00 and for monthly draw, it is fixed at the rate of Rs. 1,00,000=00 and for special bumper draw or festival draw, it is fixed at Rs. 4,00,000=00. It is this amendment which is challenged in this petition. The petitioner has further stated in the petition that various States in India organize lotteries called as "state Organized Lotteries"; that normally the State organizing a lottery enters into an agreement with the sole distributor who takes the tickets from the Government and distributes the tickets throughout the country wherever the lottery tickets are being sold and that stockists are appointed in various States by the distributor for the sale of his lottery tickets in a particular State. Therefore, lotteries can be distributed into schemes, draws and units of tickets. That, each scheme has several draws and each draw has several tickets. That, a sub-distributor/stockist in a particular State would take the tickets in a draw in accordance with the scheme organized by the State for which he is appointed as a stockist. For example, if there are one lakh tickets in a draw under a scheme, the stockist may take ten thousand tickets for sale in Maharashtra whereas the remaining ninety thousand tickets may go to stockists/ distributors in other States as appointed by the sole distributor. That, out of one lakh tickets in a draw, only ten thousand tickets in a given case may be made available to a stockist in the State for sale and, therefore, the maximum available tickets for sale by the stockist in (sic to) the customer and/or actual purchaser in a State would be only ten thousand tickets. That, under the impugned enactment even if the stockist sells one ticket to a customer out of ten thousand tickets allocated to him, the stockist will have to pay Rs. 20,000=00 for a weekly draw, Rs. 60,000=00 for a fortnightly draw, Rs. 1,00,000=00 for a monthly draw and Rs. 4,00,000=00 for special bumper draw or festival bumper draw because under the impugned Act, the incidence of tax has been shifted from the value of the sales to the draw. This is the main ground of challenge in the petition. That, by charging tax for the entire draw, even tickets which remain unsold would be liable to tax. Hence the impugned Amending Act has been challenged.