2003 (1) TMI 663 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutionality and validity of G.O. Ms. No. 20 Home (Courts II) Department dated January 8, 2003.
2. Whether the G.O. acts prospectively or retrospectively.
3. Application of doctrines of legitimate expectation and promissory estoppel to the lotteries purchased up to January 8, 2003.

Issue-wise Detailed Analysis:

1. Constitutionality and Validity of G.O. Ms. No. 20 Home (Courts II) Department dated January 8, 2003:
The Lotteries (Regulation) Act, 1998, a Central legislation, allows both Central and State Governments to frame rules. The State of Tamil Nadu issued G.O. Ms. No. 20 on January 8, 2003, prohibiting the sale of all lottery tickets. Petitioners argued that the Government Order was unconstitutional and invalid. The Advocate-General defended the order, likening lotteries to pernicious trades like intoxicants, emphasizing the Government's power to ban such activities. The Court upheld the G.O., finding no legal or constitutional infirmity, noting that the decision was based on a valid Cabinet decision and in line with the Supreme Court's judgment in B.R. Enterprises [2000] 120 STC 302 (SC).

2. Prospective vs. Retrospective Operation of the G.O.:
The G.O. was challenged on the grounds that it should not affect lottery schemes announced up to January 8, 2003. Petitioners argued that once the lottery tickets were authorized and sales tax collected, the schemes should be allowed to conclude. The Court agreed, stating that the G.O. operates prospectively from January 9, 2003, and cannot nullify tickets already subjected to sales tax. The Court directed that all lottery tickets authenticated up to January 8, 2003, remain valid and draws must be conducted accordingly.

3. Application of Doctrines of Legitimate Expectation and Promissory Estoppel:
Petitioners invoked the doctrines of legitimate expectation and promissory estoppel, arguing that the sudden ban violated these principles. The Court noted that these doctrines are embedded in the Lotteries Act and did not need separate invocation. The Court emphasized that once the lottery tickets were subjected to sales tax and authenticated, they could be sold and draws conducted as per the announced schedules. The Court directed that future draw dates be maintained, and any draws scheduled between January 9, 2003, and the judgment date be rescheduled accordingly.

Conclusion:
The Court held that:
1. The G.O. Ms. No. 20 dated January 8, 2003, is valid.
2. The G.O. operates prospectively from January 9, 2003, and does not affect tickets authenticated up to January 8, 2003.
3. The doctrines of legitimate expectation and promissory estoppel are inherently considered within the Lotteries Act.
4. All tickets authenticated up to January 8, 2003, can be sold, and draws must be conducted as scheduled.

All writ appeals and petitions were disposed of, with no costs, and connected miscellaneous petitions were closed.

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