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2009 (3) TMI 965 - HC - VAT and Sales TaxSales tax on the face value of the lottery tickets - Held that - Set aside the orders of assessment made by the Assessing Authority the appellate authority as also the Tribunal and to remand the case back to the Assessing Authority with the direction that it shall make a fresh assessment of the liability of the petitioner-dealers having regard to the observations made by the Supreme Court in H. Anraj s case 1985 (10) TMI 258 - SUPREME COURT OF INDIA implying thereby that the face value of the lottery tickets shall no longer constitute the basis of assessment of the tax liability. While doing so the Assessing Authority shall be free to examine whether the petitioners are entitled to any refund subject to their producing evidence to the satisfaction of the Assessing Authority to the effect that they had not passed on the tax to the purchasers of the lottery tickets. The needful shall be done by the Assessing Authority expeditiously but not later than six months from the date a copy of the order is received by it.
Issues:
Constitutional validity of tax on lottery tickets under Haryana VAT Act, assessment based on face value, retrospective application of legal position, entitlement to refund, interpretation of Supreme Court judgments. Analysis: The judgment delivered by the Punjab and Haryana High Court addressed the constitutional validity of levying tax on lottery tickets under the Haryana Value Added Tax Act, 2003, specifically focusing on the face value exceeding Rs. 7. The petitioners challenged the assessment orders based on the face value of lottery tickets, arguing that the sale of lottery tickets does not constitute a sale of goods as per the Supreme Court ruling in Sunrise Associates' case. They contended that the law declared in the Sunrise Associates' case applied prospectively from April 28, 2006, and before that, the position of law was as held in H. Anraj's case. They emphasized the need for a split valuation of lottery tickets into taxable and non-taxable components for assessments pre-Sunrise Associates' case. Additionally, they sought the possibility of claiming a refund if they could prove that the tax was not passed on to the purchasers, citing precedents regarding rebutting the presumption of passing on tax to consumers. The respondents, represented by the Additional Advocate-General of Haryana, argued that the ban on lottery ticket sales in Haryana predated the legal settlement by the Supreme Court. They maintained that the law as declared in H. Anraj's case was applicable for the period before the Sunrise Associates' case, implying that a part of the sale price of lottery tickets was taxable as it involved both the sale of an actionable claim and goods. Reference was made to the decision of the High Court of Karnataka to support the levy of sales tax on the part of the lottery ticket sale related to goods transfer. Upon careful consideration, the High Court found that the assessment orders based on the face value of lottery tickets were not in line with the legal position post the Sunrise Associates' case. However, considering the prospective application of the Sunrise Associates' case, the court held that the law as declared in H. Anraj's case continued to be applicable. Consequently, the court set aside the assessment orders and remanded the cases to the Assessing Authority for a fresh assessment in accordance with the principles laid down in H. Anraj's case. The Assessing Authority was directed to determine the taxable components of the sale transaction and assess the dealers accordingly, while also considering the possibility of refund if the tax was not passed on to purchasers. The court emphasized interpreting the VAT Act provisions in line with the observations of the Supreme Court in H. Anraj's case, thereby changing the basis of tax liability assessment from face value to the components of the sale transaction. The Assessing Authority was given a timeline of six months to conduct the fresh assessments. All other issues raised in the petitions were left open, and no costs were awarded.
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