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TMI Blog2004 (12) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Assessing authority took the view that the petitioners are authorised dealers of online lottery and are bound to take registration under the Act since their turnover exceeded the registrable minimum as specified in section 13 of the Act. On enquiry and on the basis of the materials gathered from Pan India Net Work Infravest Pvt. Limited, assessing authority noticed that the assessees' turnover for sale of online lottery tickets attracted tax liability under section 5(1) of the Act and proposed to tax at the rate of 8 per cent under entry 177 of Schedule I to the Kerala General Sales Tax Act. 3.. M/s. Pan India Net Work Infravest Pvt. Limited (hereinafter called "the company") along with the assessees had approached this Court by filing W.P.C. No. 4143 of 2004 contending that the assessees are not dealers under section 2(viii) of the Act and that the company alone is the dealer liable to take registration and pay licence fee as provided under section 5BA of the Act and that the retail outlets manned by the assessees are only additional places of business of the company. Learned single Judge of this Court disposed of the writ petition with direction to the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that controls the entire system. Counsel submitted that the terminals merely obey the commands of the server. Terminal has absolutely no control over the printing of the ticket but merely acts as a printeron-command. Sale therefore takes place only once and under the full control of the central server by the State and payment is received on behalf of the company by its representatives manning the terminal at the retail counters. Counsel submitted that in this system the entire stock is in electronic form several transfers can take place in that form alone and that retail outlet has no stock-in-trade and that the retailers are not selling any goods. 7.. Counsel further submitted that the relationship between the company and the retailer is that of master and servant and they cannot be treated as commission agents, del credere agents or mercantile agents. Counsel also took us through the meaning of those expressions with the help of the Black's Law Dictionary. Counsel also referred to the agreement laying down various terms and conditions between the company and the retailer. Counsel also submitted that the retail outlets are only additional places of business of company withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o carries on the business of buying, selling, supplying or distributing goods and is widely couched. Clause 1.2 of the retail agreement which is very relevant is extracted below: 1.2. The company is desirous of establishing a network of retail agents for the sale of the computerised network lottery tickets and for that purpose has framed criteria for the selection of retail agents and appointed.............. as its distributor for assistance in the establishing of the retail agent net work. Evidently, above mentioned clause would indicate that network of retail agents are selected and appointed for the sale of the computerised network lottery tickets. Clause 1.3 states that the retailer has applied to the company for its appointment as a retail agent for the sale of computerised network lottery tickets. Clause 1.4 also would indicate that retail agents are appointed to sell computerised lottery tickets. Clause 1.5 stipulates that the retailers shall sell the lottery tickets at its authorised price and not at a price discounted or higher than that fixed by the company. Clause 3.3 stipulates that retailer shall pay to the company refundable security deposit of Rs. 2,50,000. Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention raised that the retailers are only acting as servants of the company and no sale is effected from the retail outlets since there is no stock-in-trade. We are not prepared to say that there is no sale of ticket at the retail outlets. Customers go to retail outlets and purchase lottery tickets and they are not concerned with the arrangement between the principal and the retail outlets; nor are they concerned with the installation of terminals at the retail outlets with a central server connected to the satellite or other technology or use of the software. So far as the customers are concerned, they purchase tickets from the retail outlets after effecting payment. Method of accounting the receipt of the price of the tickets or the source of the origin of the lottery tickets is not the concern of the customer. Sale is effected at the retail outlet itself. We may in this connection refer to the recent decision of the apex Court in Tata Consultancy Services v. State of Andhra Pradesh [2004] 137 STC 620 (SC); (2004) 192 CTR 297 wherein the question arose as to whether the sale of canned softwares, that is C.D. rom containing software programme is a sale of "goods" w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, which is beneficial interest in movable property, would fall within the definition of "goods". Sales tax is leviable if sale is effected by the retail agent who is manning the retail outlet. The retailers are selling online lottery tickets which is intangible and once turnover exceeds assessable minimum assessee is bound to take registration under the Act and pay tax on the taxable turnover. We are, therefore, unable to agree with the reasoning of the learned single Judge in W.P.C. No. 28480 of 2004 that since dealer outlets are synchronised to a common system and common draws are conducted and tax for all draws are paid under section 5BA by the company, there may not be any scope for separate assessment on agents. In our view, transaction of the retailer dealer in respect of the goods in question qualifies all the requirements of a sale of goods which would attract tax liability under section 5(1) of the Act with an option to pay licence fee in lieu of tax. 11. The dealer in lottery has also an option to pay sales tax under section 5(1) of the Act or alternatively pay licence fee in lieu of tax under section 5BA. Section 5BA reads as follows: "5BA. Levy of licen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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