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1992 (3) TMI 326 - HC - VAT and Sales Tax
Issues:
Challenge to assessment order and clarification regarding levy of tax on sale of lottery tickets. Analysis: The appeal was filed to challenge the assessment order dismissing the writ petition by a partnership firm acting as an agent for the Bhutan Government State Lottery. The firm sought clarification from the Commissioner of Commercial Taxes on whether lottery tickets qualify as "goods" for commercial tax purposes. The clarification stated that tax is leviable on the total amount received from the sale of lottery tickets. The assessment was made based on this clarification, and the appellant contested the assessment order and the clarification itself. The court emphasized the relevance of the Supreme Court judgment in Anraj's case, which discussed the taxation of lottery tickets by State Legislatures. The key issue was whether lottery tickets constitute "goods" or are merely slips of paper evidencing the right to claim a prize by chance. The court analyzed the definition of "goods" under the Sale of Goods Act, which includes movable property excluding actionable claims and money. It considered whether lottery tickets confer two beneficial interests on the purchaser: the right to participate in the draw and the right to claim a prize. The court concluded that lottery tickets, to the extent they involve the entitlement to participate in the draw, qualify as "goods" and are not actionable claims. The judgment highlighted that the sale of a lottery ticket involves the transfer of goods and an assignment of an actionable claim, necessitating a split in the sale price for tax purposes. The court set aside the assessment order and the clarification, directing a fresh assessment considering the splitting of the sale price of lottery tickets. It emphasized that the assessing authority must determine the taxable portion of the sale price based on the specifics of each lottery scheme. The matter was remanded for a fresh assessment in line with the court's interpretation of the taxation of lottery tickets. The appeal was partly allowed, with no order as to costs.
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