2009 (6) TMI 945 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Whether the Sales Tax Appellate Tribunal was justified in confirming the levy of tax on sales of lottery tickets?
2. Whether the sale of lottery tickets can be considered as goods for the purpose of taxation under the Sales Tax Act?

Analysis:
Issue 1: The first issue pertains to the justification of the Sales Tax Appellate Tribunal in confirming the levy of tax on sales of lottery tickets. The assessee, a dealer in lottery tickets, challenged this levy, citing previous legal precedents. The Supreme Court had previously ruled in the case of H. Anraj v. Government of Tamil Nadu that the sale of lottery tickets constitutes a sale of goods. However, this decision was revisited by a Constitution Bench in the case of Sunrise Associates v. Government of NCT of Delhi. The Constitution Bench concluded that the sale of lottery tickets does not involve the sale of goods but rather a transfer of an actionable claim. Consequently, the tribunal's decision to levy tax on lottery ticket sales was deemed unjustified based on the revised legal interpretation.

Issue 2: The second issue revolves around whether lottery tickets can be classified as goods for taxation purposes under the Sales Tax Act. The Supreme Court's ruling in Sunrise Associates v. Government of NCT of Delhi clarified that lottery tickets do not fall under the definition of goods as per the Sales Tax Acts of different states. The Court explicitly stated that there is no sale of goods in the context of lottery tickets but rather a transfer of an actionable claim. As a result, the assessment related to the sale of lottery tickets for the year 1989-90, which was based on the assumption that lottery tickets are goods, was deemed incorrect in light of the revised legal position. The judgment favored the assessee, confirming that the sale of lottery tickets should not be considered as a sale of goods attracting provisions of the TNGST Act for future years.

In conclusion, the High Court's judgment in this case addressed the issues of taxation on lottery ticket sales and the classification of lottery tickets as goods. The revision was allowed in favor of the assessee based on the Supreme Court's clarification that lottery tickets do not constitute goods but rather involve a transfer of an actionable claim. This decision has significant implications for the taxation of lottery ticket sales under the Sales Tax Act, aligning the legal interpretation with the revised understanding provided by the Supreme Court.