Judgment of Hon’ble Supreme Court of India in Civil Appeal Nos. 10466-10476 of 2011 in the case of State of Karnataka & Another v. State of Meghalaya & Another upholding the validity of Karnataka Tax on Lotteries Act, 2004 (Karnataka Act No. 4 of 2004) - Instructions for implementation of the said Act with regard to Assessment/ Reassessment/Recovery of taxes etc - GST - States - Circular No. 1/2022-23

Commissioner of Commercial Taxes Bengaluru, Karnataka Circular No. 1/2022-23, dated 13-4-2022 Subject : Judgment of Hon ble Supreme Court of India in Civil Appeal Nos. 10466-10476 of 2011 in the case of State of Karnataka Another v. State of Meghalaya Another upholding the validity of Karnataka Tax on Lotteries Act, 2004 (Karnataka Act No. 4 of 2004) - Instructions for implementation of the said Act with regard to Assessment/ Reassessment/Recovery of taxes etc. - Regarding The State of Karnataka enacted the Karnataka Tax on Lotteries Act, 2004 (Karnataka Act No. 4 of 2004), providing for levy and collection of tax under section 6 of the said Act, from the Promotors of lottery at the following rates namely :- (a) one lakh and fifty thousand rupees for every Bumper draw; and (b) one lakh rupees in respect of any other draw. This Act shall be deemed to have come into force with effect from the 10th day of December, 2003. 2. The Promotor under the said Act means the Government of India or a Government of State or an Union Territory or any Country organizing, conducting or promoting a lottery and included any person appointed for selling lottery tickets in the State on its behalf by such Government or Country where such Government or Country is not directly selling lottery tickets in the State. 3. A batch of Writ Petitions were filed by Promotors before the Hon ble High Court of Karnataka praying to declare the Karnataka Tax on Lotteries Act, 2004 as illegal and unconstitutional. The Hon ble High Court of Karnataka in its judgment dated 5-10-2007 dismissed the Writ Petition No. 13463/2006 Others and held that the said Act is within the legislative competence of the State. 4. Being aggrieved by the above judgment of the Learned Single Judge, the Promotors filed Appeals before the Hon ble High Court of Karnataka in W.A. Nos. 2251/2007 and others. The Division Bench of the Hon ble High Court of Karnataka, in its judgment dated 27-12-2010 came to the conclusion that the State has no legislative competence to make the impugned State Act and hence, the order of the Learned Single Judge was struck down. Accordingly, the Writ Appeals were allowed with direction to the State to refund the amount deposited by the Promotors within four months from the date of receipt of this order. 5. The State of Karnataka preferred Appeal before the Hon ble Supreme Court of India, being aggrieved by the judgment passed by the Division Bench of Hon ble High Court of Karnataka. The Hon ble Supreme Court of India, in its judgment dated 23-3-2022, in Civil Appeal Nos. 10466-10476 of 2011 Others [2022 (60) G.S.T.L. 161 (S.C.)] held that the State of Karnataka has legislative competence to pass the Karnataka Tax on Lotteries Act, 2004 imposing Tax on the Lotteries conducted by other States in the State of Karnataka. In the result, the Appeal filed by the State of Karnataka came to be allowed setting aside the impugned judgment passed by the Division Bench of Hon ble High Court of Karnataka. 6. In view of the aforesaid judgment of the Hon ble Supreme Court of India, the following instruction are issued to the Assistant Commissioner of Commercial Taxes concerned who are the assessing authorities under the Act : (a) To complete all the pending assessments of cases involving levy of tax on lotteries in respect of every Promotor under the provisions of the Karnataka Tax on Lotteries Act, 2004 (Karnataka Act No. 4 of 2004) which shall be deemed to have come into force with effect from 10th day of December, 2003. (b) To rectify/reassess the cases where assessment orders have already been passed granting the benefit of exemption in terms of the judgment dated 27-12-2010 of the Division Bench of the Hon ble High Court of Karnataka, which had struck down the Act itself and had directed the State to refund the amount deposited by the Promotors within four months from the date of receipt of the said order. (c) To recover the assessed tax, penalty or any other amount due in respect of cases where assessments have already been concluded. All the Joint Commissioners of Commercial Taxes (Admn.), DGSTO in the State are directed to personally monitor these cases and submit a report of compliance within 3 months from the date of issuance of this Circular, giving case wise and year wise details of tax assessed/reassessed, amounts due and also ensure appropriate action is taken to recover the assessed taxes and other dues outstanding by the officers in their respective Divisions. A copy of the Karnataka Tax on Lotteries Act, 2004 and also the list of Promotors, Assessing Authorities gathered from the connected case file available in this office are uploaded to the Departmental Website for ready reference. However, this information should not be construed as complete and exhaustive information of the entire State and the respective Divisional Officers shall take necessary action to identify all the cases connected with the Karnataka Tax on Lotteries Act, 2004. ANNEXURE TO CCT S CIRCULAR NO. 01/2022-23, Dated : 13-4-2022 (I). List of the then Assessing Authorities : (II). List of Promoters and/or Appointed Persons on their behalf : (1) State of Sikkim, Represented by Asstt. Director of Lotteries, Finance Department, Govt. of Sikkim, Gangtok. (2) Government of Kingdom of Bhuthan, Directorate of Lotteries Revenue and Customs Division, Ministry of Finance, Phuntsholing, Bhuthan. (3) State of Arunachala Pradesh, State Lottery, Civic Secretariate, ITA Nagar - 79111, Represented by Section Officer cum Authorised Signatory. (4) State of Meghalaya, Director of lotteries Government of Meghalaya, Shillong. (5) M/s. Manjunatha Agency (Represented by C Ganesh, S/o. Chembulinga) No. 36, Ground floor, 14th cross 9lh Main, 6* sector, HSR Layout Bangalore-560034. (6) State of Nagaland represented by Asstt. Director of Lotteries, Nagaland State Lotteries, LFS, New Minister Hill, Kohima, Nagaland. (7) M/s. Kannaiah Agencies, No. 147-D, 10th main, 3rd Block, Koramangala, Bangalore. (8) M/s. Shamadhan Trading Pvt. Ltd. Manisha , 42/7, Bull Temple Road, Basavanagudi, Bangalore. (9) M/s. Tashi Delek Gaming solutions Pvt. Ltd., No. 135, Continental Building, Dr. Annie Besant road, worli Mumbai. (10) M/s. The smart Agencies Rep, by Sampath kumar, Proprietor, No. 416-B, 100 feet road, 1st floor, Koramangala Extension, Bangalore-34. (11) M/s. Antony Agency (sole proprietor : Mr. Balaji S), No. 416-C, 100 feet Road, Ground floor, Koramangala Extension, Bangalore-560034. (12) M/s. S.R. Marketing, Jai Plaza-II, No. 10, 3rd floor, 90 Feet Road, Koramangala Bangalore-03. (13) M/s. Kenlott Gaming Solutions Pvt. Ltd., No. 204, 2nd floor, HM Geneva House Cunningham road, Bangalore-560052. (14) M/s. Sri Lakshmi Agency, No. 94, Old No. 101/1, 6th Main Road, Malleshwaram, Bangalore-560003. (15) M/s. Shree Lakshmi Enterprises, No-21, Mariyappanpalya, Prakash Nagar, 9th main Road, Bangalore-560021. (16) M/s. SGB Distributors. No. 14, 9th Cross, H. Siddaiah Road, Bangalore (Director: K. Kaleel Rehman). (17) M/s. Pavana Agency (Rep. by Prakash Shetty, Managing Partner S/o. Narayana Shetty), R/O Suprabha , Saralebettin, Manipal, Udupi. (18) M/s. C.C.I. Limited. TILE Factory, Manipal. (19) M/s. Rohith Enterprises, No. 722, 5th Main Road, 10th cross, MC Layout, Vijayanagara, Bangalore-560040