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TMI Blog2003 (1) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... other than the State of Tamil Nadu were not only unreasonable, but also devoid of jurisdiction. Interim orders were passed in the said writ petitions, enabling the agents to purchase the lottery tickets organised and conducted by other States subject to the condition of payment of sales tax in advance and also not indulging in single digit lotteries. Such orders were in force as on January 8, 2003. The date January 8, 2003 assumes significance as the State of Tamil Nadu issued G.O. Ms. No. 20 Home (Courts II) Department dated January 8, 2003, prohibiting the sale of all lottery tickets, including the one organised and conducted by the State of Tamil Nadu. Writ petitions of the year 2003 are filed assailing the said Governmental Order. Interim Order was passed on January 14, 2003, permitting the sale of the lottery tickets, which were subjected to payment of advance sales tax under section 7-D of the Tamil Nadu General Sales Tax Act, 1959 giving a time of one week therefor. The matters have been finally heard on January 23, 2003. 2.. M/s. G. Masilamani, R. Krishnamurthy, V.T. Gopalan, A.L. Somayaji, R. Gandhi and Mrs. Nalini Chidambaram, the learned Senior Counsel, advanced argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Mr. R. Krishnamurthy, the learned Senior Counsel appearing for the State of Mizoram has supported the above arguments. Mr. R. Gandhi, the learned Senior Counsel appearing for the petitioners in Writ Petitions Nos. 1403 and 1404 of 2003, has reiterated the above arguments laying particular stress on paragraph-16 of B.R. Enterprises case [2000] 120 STC 302 (SC). Mr. V.T. Gopalan, the learned Senior Counsel appearing for the State of Maharashtra in W.P. No. 1806 of 2003 submits that the lottery scheme, namely, "Maha lottery" was announced on January 6, 2003 with a draw to be made on March 30, 2003 and that the impugned Government Order cannot scuttle the lottery scheme and the sale of lottery tickets thereto and the consequent draws to be held. He further submits that once the tickets are sold while lotteries scheme are in operation and in accordance with the provisions of the Lotteries Act, the State Government has got no power to interfere in the further process, and that further process has to go on, and only the Central Government under section 6 of the Act can intervene should it find that the lotteries are being organised in contravention of section 4 or 5 of the Act. Mrs. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtionality has got no relevance relating to the business in lotteries and the moment the impugned Government Order was issued, the umbilical cord of authorisation has been snapped making the lottery business a standstill and unauthorised, and the sales tax received authorising the lottery tickets to be sold cannot have any legal sanction beyond January 8, 2003, and that to workout equities the Government is formulating a Scheme as to how best the monetary compensation can be determined and awarded. He further submits that every aspect has been addressed by the Supreme Court in B.R. Enterprises v. State of U.P. [2000] 120 STC 302; (1999) 9 SCC 700, and that is the law holding the field relating to lotteries, and that all the pleas made by the learned counsel for the petitioners are fit to be rejected in toto. 6.. On the basis of the above contentions raised on behalf of the petitioners and the State, the following are the contentious issues, which can be concisely stated. (1) Whether the impugned G.O. Ms. No. 20 Home (Courts II) Department dated January 8, 2003 is unconstitutional and invalid; (2) if the impugned G.O. is valid, whether the same acts only prospectively prohibit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Indian Constitution. 8.. The cases decided by the Supreme Court in H. Anraj v. State of Maharashtra (1984) 2 SCC 292, H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165 (SC); (1986) 1 SCC 414 and State of Haryana v. Suman Enterprises (1994) 4 SCC 217 arise out of the authorisation drawn by the States from article 258 of the Constitution and enforcement of the said legal provisions. State of Bombay v. R.M.D. Chamarbaugwala AIR 1956 Bom 1. (a) In 1st Anraj's case (1984) 2 SCC 292, the Government of Maharashtra banned the sale of lottery tickets of other States while allowing the sale of the lottery tickets organised by it and that came to be questioned before the Supreme Court. Elaborately dealing with the Constitutional provisions contained in article 73 vis-a-vis article 298 as also article 258 and the legislative field available in entry 40 of List I of the Seventh Schedule to the Constitution, a three-Judge Bench of the Supreme Court held that a State, while organising its lottery, cannot have authority to ban the sale of lottery tickets of other States. Consequently, the State of Maharashtra was restrained from giving effect to the ban on the sale and distribution o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble of being bought or sold in the market and that they can also change from hand to hand as goods. The Supreme Court was considering the matter in a limited sense as to whether the lottery was goods or actionable claim. In so far as the discrimination in the levy of sales tax is concerned, the Supreme Court struck down the exemption granted by the State of Tamil Nadu over the sale of its lottery tickets, on the ground of violation of article 301 read with article 304(a) of the Constitution and on the ground that such discriminatory treatment in the matter of levying sales tax on imported lottery tickets, which are similar to the ones issued by the State Government, hampers the free-flow of trade, commerce and intercourse which the Constitution preserves in between the States in the aforesaid provisions. (c) Suman Enterprises' case (1994) 4 SCC 217 is akin to 1st Anraj's case (1984) 2 SCC 292. In that case, several States are involved as also the agents. Because of the importance of the matter and the decision rendered by three-Judge Bench in 1st Anraj's case (1984) 2 SCC 292, presumably, the matter has been referred to the Constitution Bench consisting of five-Judge Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Supreme Court and clubbing it as a batch, the Supreme Court heard the matters in B.R. Enterprises' case [2000] 120 STC 302 (SC); (1999) 9 SCC 700. 10.. The validity of the Lotteries Act was challenged on the ground that the lotteries do not come within the purview of gambling and the lotteries being a trade, are governed by articles 301 and 303 of the Indian Constitution. It was also argued that section 5 of the Act was discriminatory in allowing the State to conduct its lotteries while banning the lotteries of other States, thus violating article 14 of Indian Constitution. A further contention was raised that the lottery not being a gamble, is a fundamental right guaranteed under article 19(1)(g) of the Indian Constitution. By section 3 of the Lotteries Act, which reads, "save as otherwise provided in section 4, no State Government shall organise, conduct or promote any lottery", there is a curtain drawn on the controversy as to a particular lottery, whether organised by the State or authorised by the State. As already stated above, the lottery is one organised by the State if it is traceable to a legislation enacted under entry 40 of List I or in exercise of the execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the lottery or to ban it but if the State runs a lottery, it shall permit the lotteries of other States and if the State bans its lottery activities, then it is entitled to ban the lottery activities of other States. This is the authoritative pronouncement of the Supreme Court and is the law of the land under article 141 of the Indian Constitution and the question relating to the validity of the Lotteries Act on any ground is no more res integra. 11.. Under article 163 of the Indian Constitution, the Governor acts with the aid and advice of Council of Ministers headed by the Chief Minister. All executive functions of the Government of a State shall be expressly taken in the name of the Governor under article 166 of the Constitution. The learned Advocate-General has produced the file before us, from which it is clear that the Council of Ministers met on January 8, 2003 at 11 a.m. in the Secretariat and the meeting was presided over by the Chief Minister. While item No. 1 related to the Governor's address to the Legislative Assembly for the year 2003, item No. 2 related to the State lotteries. Referring to the judgment of the Supreme Court in B.R. Enterprises' case dated May 7, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erment of vested rights on the sole agent and passed on to the retailers and the individual purchasers. It should be borne in mind that the Lotteries Act is a Central enactment flowing from List I of the Seventh Schedule and only the Central Government has got exclusive privilege of the same and in fact, it is an Act regulating the organising of lotteries by the States and the State is not given any right or laxity in tinkering of the provisions of the Act excepting that a State can ban its lotteries and consequently banning the lotteries of other States and barring this right, the State has got no joints to play in the Lotteries Act and the show is entirely of the Central Government. As rightly pointed out by Mr. V.T. Gopalan, learned Additional SolicitorGeneral of India, if there is any violation of section 4 or 5 of the Lotteries Act, it is for the Central Government to take appropriate action and the States have got no role to play and the reason is obvious, as, the supervision and surveillance is against the States themselves. A reading of the provisions of the Lotteries Act leaves no doubt that once the lottery is organised by a State and the State, by its Regulations, has se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last with full transparency. It was also held that State lotteries for public revenues have been authorised and legalised and once this having been done, it is expected from the State to take such measures to see that people at large, faithfully and hopefully participate in large numbers for the greater yield of its revenue with no fear in their minds. 15.. For the reasons mentioned supra, we hold that (i) the impugned G.O. Ms. No. 20, dated January 8, 2003 is valid; (ii) the impugned G.O. Ms. No. 20, dated January 8, 2003 has got only prospective operation from January 9, 2003 and from that date onwards, no lottery ticket, either of State of Tamil Nadu or other States, shall be authenticated or subjected to sales tax; (iii) all such lottery tickets, either of the State of Tamil Nadu or of other States and which have suffered the sales tax under the Tamil Nadu General Sales Tax Act up to January 8, 2003, can be transferred by the sole agents to sub-agents (retailers) and they, in turn, to the individual purchasers; (iv) the appropriate authorities are directed to conduct draws of the lottery tickets mentioned in clause (iii) above; (v) by conducting such draws as mentioned in cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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