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TMI Blog1992 (8) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the competent authorities under the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the Act") and for directing the respondents herein not to take any coercive steps to collect the said demand pursuant to the orders of assessment. 2.. The appellants in these writ appeals are dealers of raffle tickets of Tamil Nadu as well as the raffle tickets of other States. Pursuant to the Presidential Order dated 27th October, 1971, permitting the Tamil Nadu Government to conduct a State lottery, the Government of Tamil Nadu organised a State lottery, by sponsoring a raffle scheme and framing appropriate Rules in that behalf. The State Government was also then desirous of levying sales tax on the sale of lottery tickets by placing the incidence thereof on every dealer selling such tickets within the State. In order to achieve the above object, the Government of Tamil Nadu, in exercise of the powers conferred by section 59 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act") notified in G.O.P. No. 77 dated 28th January, 1984, inserting an entry 163 in the First Schedule to the Act, whereby lottery tickets were brought within the purview of lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d tax in so far as the purchasers of the lottery tickets of other States are concerned. In the circumstances, the dealers of raffle tickets in Tamil Nadu including some of the appellants filed the batch of writ petitions in W.P. No. 2346 of 1986, etc. before this Court seeking the issue of a writ of mandamus directing the State of Tamil Nadu represented by the Commissioner and Secretary to Government, Commercial Taxes and Religious Endowment Department, Fort St. George, Madras-9, the first respondent herein, from levying, demanding or collecting and recovering the sales tax, surcharge on sales tax, additional surcharge and levying penalties and interest whatsoever from the petitioners therein in respect of the raffle tickets of other States sold by them in Tamil Nadu and also to direct the Government to refund the amount of tax collected for the years 1984 to 1987. 4.. The petitioners in W.P. No. 2346 of 1986 batch contended that, in spite of the judgment of the Supreme Court, the Government have been continuing to collect taxes from the petitioners herein in respect of the sale of raffle tickets of other States, which in law, the Government is not entitled to and that the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of lottery tickets, the respondent shall be entitled to collect tax according to law. However, the relief of mandamus which was sought for by the petitioners cannot be granted for the reason that the State Government shall be entitled to collect tax at the rate prescribed under the provisions of the Tamil Nadu General Sales Tax Act, 1959, on the sales of lottery tickets of Tamil Nadu as well as of other States." 6.. After G.O. Ms. No.219 dated 31st March, 1984 was struck down by the Supreme Court in H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165; AIR 1986 SC 63 and G.O. Ms. No. 224 dated 31st March, 1984 and G.O. Ms. No. 1017 dated 17th December, 1987 were declared as invalid by the Division Bench of this Court by the order dated 20th December, 1990, made in W.P. No. 2346 1986 batch, the respondents are apparently proceeding to levy sales tax on the raffle tickets in accordance with the provisions of the Act. Though the Division Bench by the order dated 20th December, 1990, made in W.P. No. 2346 of 1986 batch, refused to issue a writ of mandamus directing the first respondent to forbear from levy, demand or collecting and recovering the sales tax, surcharge on sales tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod of assessment adopted by the assessing authorities subsequently shows that the vice of discrimination pointed out by the Supreme Court in H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165; AIR 1986 SC 63 is sought to be avoided by the assessing authorities, and consequently, the learned single Judge refused to countenance the plea of the appellants that the method of assessment adopted by the assessing authorities even after the decision of the Supreme Court in H. Anraj's case [1986] 61 STC 165; AIR 1986 SC 63, really grants an exemption to the raffle tickets of the Tamil Nadu Government. In the result, the learned single Judge dismissed the writ petitions. However, the learned single Judge observed that if the appellants are aggrieved by the assessment orders, they should resort to normal remedies available under the Act. These writ appeals are directed against the said orders of the learned single Judge. 8.. Before us, Mr. N.C. Raghavachari, learned Senior Counsel for the appellants in Writ Appeals Nos. 143 to 149 of 1992, Mr. Govindasamynathan, learned Senior Counsel appearing for the appellants in W.A. No. 155 of 1992, Mr. R. Krishnamurthy, learned Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusions the impugned amendments made in the two concerned Acts for levying tax on sale of lottery tickets will have to be upheld as falling within the legislative competence of the concerned State Legislature under entry 54 of List II in the Seventh Schedule..........." Further, it is not in dispute that the State Government has competence to levy tax on the sale of lottery tickets of the Government of Tamil Nadu as well as the lottery tickets of other States. Again, it is also not in dispute that uniform rate of levy of tax on the sale of lottery tickets of the Tamil Nadu Government as well as the lottery tickets of other States is prescribed. The only question we have to consider in these writ appeals is whether the discrimination as pointed out by the Supreme Court has been removed so that there could be uniform rate of levy of tax not only on the sale of lottery tickets of other States, but also on the sale of raffle tickets of the Government of Tamil Nadu. In other words, the question we have to examine is whether by the method of assessment adopted by the respondents, the incidence of the tax on Tamil Nadu Government raffle tickets is passed on to the purchasers of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tamil Nadu raffle ticket as the gross and allowed the actual discount given at the time of sale to the agents as deduction, to arrive at the net taxable turnover in terms of rule 5-A of the Tamil Nadu General Sales Tax Rules read with section 2(r) of the said Act. If 20 per cent discount is granted to purchaser on the sale of Tamil Nadu raffle ticket priced at Rs. 100 per hundred tickets, the taxable turnover for the levy of tax on the Tamil Nadu raffle will be Rs. 80 on which sales tax and surcharge have been imposed and realised and will continue to be levied. For the outstation tickets also the face value of the tickets as billed and sold will be taken as gross turnover and the actual discount granted to immediate buyer whatever its quantum, will be taken as a deduction to arrive at the taxable turnover and taxed under SI. No. 163 of the First Schedule at 10 per cent with surcharge and additional surcharge and additional sales tax as applicable. In both cases, the face value less discount as billed will be construed as inclusive of tax so that there will be no ground for any charge of discrimination. (c) It is respectfully submitted that for Tamil Nadu raffle, if face val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40 as additional surcharge at 5 per cent on the tax due. The position will be the same if the imported lottery ticket is sold with the same margin of discount and the net tax effect and the incidence will be the same to the purchaser of the raffle tickets of other States. The above position clearly shows that the tax burden imposed on the Tamil Nadu raffle tickets is passed on to the purchaser on such raffle tickets and that they are not exempted from payment of sales tax as contended by the learned counsel appearing for the appellants. 11.. Further, it is necessary to refer to the assessment order dated 5th April, 1991, by which the Director of Tamil Nadu Raffle Department was assessed by the Commercial Tax Officer, in order to appreciate the procedure followed by the department in finalising the assessment and to examine the question whether Tamil Nadu raffle tickets are exempted from payment of sales tax as a result of the method of assessment adopted by the respondents as contended on behalf of the appellants. The said assessment order dated 5th April, 1991, reads thus: "The High Court of Madras in its judgment in W.P. Nos. 2346 of 1986 and 2837 of 1988 and others dated 20t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm the proposals as in the notice and finally determine the total and taxable turnover at Rs. 5,26,51,164 under the Tamil Nadu General Sales Tax Act for 1985-86 and assess to tax at 20 per cent. Tax at 20 per cent on Rs. 5,26,51,164 Rs. 1,05,30,233 Tax paid Rs. 24,66,324 --------------- Balance ... Rs. 80,63,909 --------------- A notice in form B3 is issued. Surcharge due at 5 per cent on Rs. 1,05,30,233 Rs. 5,26,512 Surcharge paid Rs. 60,233 --------------- Balance ... Rs. 4,66,279 --------------- A notice in form U is issued. Additional surcharge due at 5 per cent on Rs. 1,05,30,233 Rs. 5,26,512 Additional surcharge paid Rs. 60,233 ------------ Balance ... Rs. 4,66,279 ------------ A notice in form U is issued. Sd B.V. Lakshmipathy Commercial Tax Officer, Esplanade I Assessment Circle. To The Director, Tamil Nadu Raffles Department, 233, N.S.C. Bose Road, Madras-1. Copy submitted to the Assistant Commissioner (CT), Zone I, Madras-6." A careful reading of the assessment order dated 5th April, 1991, will go to show that the raffle tickets of Tamil Nadu have been taxed on the face value less actual discount given to the immediate age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax included therein. However, while completing the assessments, the only exclusion given is to the trade discount. In this view it is submitted that the Government of Tamil Nadu raffles has not been given any concession or exemption to the sales tax on Tamil Nadu raffle tickets sales. The Government is in fact collecting tax which is passed on to the purchasers and paid over to the Commercial Tax Department. " The above materials clearly go to show that when a person buys a Tamil Nadu raffle ticket with a face value of Re. 1 and pays Re. 1 being the price of such a raffle ticket, such price of Re. 1 will include the discount offered to the agents, the sales tax, surcharge on the tax due and the additional surcharge on the tax due, apart from the base value of the raffle ticket. The above factual position will clearly go to show that the tax burden imposed on the Tamil Nadu raffle tickets is passed on to the purchaser of such raffle tickets and is actually borne by him and that there is no question of granting exemption from payment of tax on sales of Tamil Nadu raffle tickets. Equally, if the imported lottery ticket is sold with the same margin of discount, the net tax effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lottery tickets of other States on the ground that there is an exemption in so far as the levy of tax on sales of Tamil Nadu raffle tickets are concerned. In fact, it is made available on record that the State has been levying tax on sale of Tamil Nadu raffle tickets by reducing the base value to the extent to which the liability on tax has to be included. While so, the dealers, sellers, agents, etc., who are effecting sales of other State raffle tickets are liable to pay tax as the Tamil Nadu Government have been paying, but treating the face value of raffle tickets of other States as inclusive of sales tax payable to the Tamil Nadu Government at the rate as levied by the Tamil Nadu Government on the sale of Tamil Nadu raffle tickets." 14.. From the above discussion, it is clear that G.O. Ms. No. 219 dated 31st March, 1984, was struck down by the Supreme Court in H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165; AIR 1986 SC 63 on the ground that by the said G.O., the State Government granted exemption to its own lottery tickets and levied sales tax on the sale of lottery tickets of other States and therefore, it is discriminatory and violative of article 301 read with art ..... X X X X Extracts X X X X X X X X Extracts X X X X
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