TMI Blog2011 (8) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... ice rendered to the promoter or organiser of the lottery. Moreover without the service rendered by the distributors namely, the lottery tickets will not reach the ultimate customers who are the participants in the draw. Thus liable to Service Tax. - WP(C) Nos. 19625, 20638, 20650, 20764, 23216, 25131, 28511, 26,123, 28018, 29612, 31715 of 2009, 6263, 7618, 9634, 9638, 9648, 9682, 9692, 9693, 11585, 13443, 14419, 14590, 15067, 15928, 18024, 19154, 21590, 28071 & 29499 of 2010 - - - Dated:- 19-8-2011 - C.N. Ramachandran Nair, Shri P.S. Gopinathan, JJ Represented by: Sri George Poonthottam for Appellant Sri Thomas Mathew Nellimoottil, SC., C.B. Excise (R1 to R3) Sri Muhammed Rafeeq, Govt Pleader (R4 R5) for Respondent JUDGEMENT Per: Ramachandran Nair: In all the 30 cases the question raised is one and the same i.e. whether the explanation introduced to Section 65(19)(ii) read with Section 65(105)(zzb) of the Finance Act 1994 providing for levy of tax on service rendered in relation to lotteries promoted or marketed by the clients is unconstitutional as claimed by the petitioners. All the petitioners are distributors or agents of lotteries organ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision, which is extracted hereunder. 65, In this Chapter, unless the context otherwise requires, - Xxxxx xxxxx (19) business auxiliary service means any service in relation to- xxxxx xxxxx (ii) promotion or marketing of service provided by the client; or (Explanation,- For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, service in relation to promotion or marketing or service provided by the client includes any service provided inrelation to promotion or marketing of games of chance, organised, conducted or promoted by the client, In whatever form or by whatever name called, whether or not conducted online, including lottery, lotto, bingo;) Subsequent to the incorporation of the above explanation to Section 65(19), the Honourable Supreme Court vide judgment in Union of India v. Martin Lottery Agencies Ltd., reported in 2009(12) SCC 209) upheld the decision of the Sikkim High Court. Even though the amendment was brought to the notice of the Supreme Court, it's validity not being the subject matter of the appeal pending before it, the Honourable Supreme Court did not consider it. However, the Supreme Court observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners is that there is no element of service in the marketing of lottery tickets because the petitioners are purchasing tickets from the promoters/organisers of lottery at discounted price and are reselling the same. Therefore, no service is rendered in relation to the clients which in this case are organisers or promoters of lottery to attract levy of tax under the explanation. Learned counsel also contended that even after the introduction of the explanation, the decision of the Supreme Court in Martin Lottery Agencies case stated above squarely applies. 6. Standing Counsel appearing for the respondents submitted that the very purpose of the amendment which is by way of introduction to Explanation to Section 65(19)(ii) by Finance Act, 2008, with effect from 16.5.2008 is to get over the judgment of the Supreme Court in MARTIN LOTTERY AGENCIES case and so much so, the contention of the petitioners that MARTIN LOTTERY AGENCIES case still governs the law on the subject is thoroughly unacceptable. According to them, the Sikkim High Court upheld the validity of notices issued proposing levy and collection of service tax on service rendered in relation to lottery based on the amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be upheld. After hearing the arguments of counsel for the petitioners and the Standing Counsel and ongoing through the later judgment rendered by the Chief Justice of the Sikkim High Court in Writ Petition (C) No.21/2009, we are unable to accept the challenge against the constitutional validity of the amendment. It may be noticed that the Hon ble Supreme Court, though took note of the above amendment while disposing of the appeal filed against the first judgment of the Sikkim High Court in MARTIN LOTTERY AGENCIES' case, did not go into the constitutional validity of the amendment. On the other hand, the Honourable Supreme Court observed that if the amendment is valid, it is a substantive provision which will have only prospective effect. The contention that service rendered in relation to lottery tickets is always covered by sub-clause (i) of Section 65(19) cannot be accepted because the said sub-section deals with only service rendered for promotion or marketing or sale of goods. Since Section 65(50) of the Finance Act, 1994 read with Section 2(7) of the Sale of Goods Act excludes lottery i.e. actionable claim, from the scope of goods , sub-section (i) obviously has no a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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