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TMI Blog2010 (8) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhutan, hereinafter, the Bhutan Government. W.A.No.1519/10 is filed by the State of Kerala and its officers, who were among the other respondents in the writ petition. W.A.No.1769/10, which has come up with leave having been granted, is filed by some of the sellers of paper lottery tickets in the State of Kerala. 2. The Bhutan Government entered into an agreement on trade, commerce and transit with the Government of the Republic of India. In WA No.88/07, a Division Bench of this Court held that the treaty between the Government of India and the Bhutan Government, has the status of a law just like any other legislation and the treaty was entered into between the two countries, taking into consideration, the age old ties, with a desire to strengthen it. It was unequivocally held that in terms of the said agreement and the protocol to the agreement, free trade and commerce in terms of that international agreement includes within its scope, sale of Bhutan lottery tickets in India and the sale of Indian Government or State lottery tickets in Bhutan, subject to the relevant laws, which may be in force on the territories of Bhutan and India, as the case may be. This situation, even on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue relating to the sale of lottery tickets of the State of Sikkim no more survives since such claim is given up as of now before us and the thrust of the appeals filed by Megha and the Bhutan Government were only in relation to their claims, relatable to lotteries of Bhutan Government. 6. The State of Kerala and the authorities under the Tax Act took the stand before the learned Single Judge that they have materials with them to show that there are violations of the provisions of the Central Act and the Rules, in relation to different aspects. They also projected a case that they had information and materials to show that the Bhutan Government has given exclusive rights to yet another person, namely Monica Enterprises and therefore, the petitioner Megha cannot continue to profess to be the agent or promoter of Bhutan Government and claim entitlement to pay tax and sell Bhutan lottery tickets on behalf of the Bhutan Government in the State of Kerala. Hereinafter, we would call the said third person Monica Enterprises, who is not a party to this proceedings, as Monica. 7. An officer of the Bhutan Government had filed a counter affidavit before the learned single Judge, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention that there is controversy as to whether the said expression in W.A.No.2011/05 is part of the ratio decidendi, or it is an obiter, or a passing observation, and also whether judicial discipline obliges us to follow it, unless of course, we are unable to reconcile ourselves with that statement. 10. It is in the aforesaid context that the Bhutan Government has filed its Writ Appeal, essentially supporting the plea of Megha in its appeal, that the learned single Judge was not within authority to have adjudicated on the vires of the Central Rules and at any rate, the interpretation of the Central Act and the Central Rules by the learned single Judge, is wrong. 11. The State Government and its officers, who are authorities under the Tax Act, appeal against the finding in the impugned judgment that Megha is entitled to pay the levies due to the State from the Bhutan Government and be the promoter of the Bhutan Government, on the strength of Ext.P1 certification and the consequential direction based on such finding. The appeal by some of the sellers of paper lottery tickets, is on the premise that the interpretation given in the impugned judgment to the Central Act and Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is pointed out that one crucial fact that has surfaced in the enquiry by the officers of the State of Kerala is that the Bhutan Government has given the exclusive purchasing rights in relation to its lottery tickets for sale in India, to Monica, which, in turn, has given the vending rights to different distributors. However, there is nothing to show that Monica has given any authorisation to Megha to be the promoter or agent for vending Bhutan lottery tickets in the State of Kerala. In that premise, it is contended that the Bhutan Government, after having parted to Monica, the sole right to purchase the tickets, cannot be heard to contend that it has appointed Megha to continue as its promoter. Dilating on the jurisdictional aspects, it was argued that there is fair room within the provisions of the Tax Act to enable the competent authorities to ensure that the amounts due as levy under the Tax Act are paid only by such person, who is the real promoter of the Bhutan Government. 15. On behalf of the Bhutan Government, it was argued that following the earlier interim orders in the writ appeal, the Director of Lotteries of the Bhutan Government had filed a further specific addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is to be entered into with the State of Central Government or any Union Territory or any country, which has a bilateral agreement or treaty with the Government of India for the sale of lottery tickets in the State. In distinction to that provision, the term 'promoter' is defined in Section 2(l) of the Tax Act to mean the Government of India, the Government of a State or Union Territory or any country which has a bilateral agreement or treaty with the Government of India for organising, conducting or promoting a lottery and includes any person appointed for selling lottery tickets by the Government in the State of Kerala on its behalf where such Government is not directly selling lottery tickets in the Sate. Therefore, when the Government of India or the Government of a State or the Union Territory or any eligible country under a bilateral agreement does not sell its lottery tickets directly in the Sate of Kerala, it is authorised to appoint any person to sell lottery tickets and a person so appointed, is a promoter for the purpose of S.2(l) of the Tax Act. This is in contra distinction to the concept of agent in S.2(a), where an agreement in the form of an agency ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of arguments, it was also pointed out that on 17.09.2010, the Principal Secretary to Government of Kerala, Taxes (H) Department, had issued a letter to the Joint Secretary in the Ministry of External Affairs, Government of India, New Delhi, raising certain queries in relation to the lotteries of Bhutan Government and that the Director in the Ministry of Home Affairs had addressed the Principal Secretary Taxes (H) Department of the Government of Kerala on 29.09.2010, providing certain information. Such materials are absolutely necessary for a complete decision on this particular issue. Therefore, the Bench also wanted to see such materials, which were not until then, placed before this Court. Those letters have been placed on record along with a memo dated 11.10.2010, filed on behalf of the State of Kerala with CF No.5291/10. We have perused those letters. We admit them as evidence and mark them as Exhibits A1 and A2 respectively in WA No.1519/10 (the appeal filed by the State of Kerala and others). In Ext.A2 letter, the Ministry of Home Affairs in the Government of India has informed the Principal Secretary, Taxes Department that Megha is a sole proprietary conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, a sole purchaser or any other inter-meddler in the commercial activities of the Bhutan Government, being involved in identifying the promoter of the lotteries of Bhutan Government in so far as the Tax Act is concerned. This is the inescapable conclusion on a clear reading of Section 2(l) of the Tax Act. 22. For the aforesaid reasons, the appeal of the State of Kerala, fails and the impugned judgment stands to that extent. 23. In re issue No.(B) On behalf of Megha, Bhutan Government and the ticket sellers, it was argued that the impugned judgment, in so far as it relates to the interpretation of the Central Act and Rules and the consequential finding that there could be only one draw of the lotteries of a State for one week is wrong. It was also argued on behalf of Bhutan Government and Megha that even in the absence of the Union of India on the party array, it was impermissible to have considered the question of vires of the relevant Central Rules and those Rules have been erroneously construed even ignoring some of the other provisions therein as also, some of the relevant provisions of the Central Act. It was also suggested that there was no indication even at hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f legislation is valid. Equally so, with subordinate legislations. It is also salutary that in the process of adjudication, the courts would give effect to all provisions in a legislation. Harmony in construction and application of a legislative piece, would inexcusably, be one of the prominent among the intentions of any legislature. In the attempt to harmoniously construe and apply the provisions of a legislation, if the court reaches at such an irreconcilable situation on the basis of any predominant view on the face of the legislation that may tend to create an unambiguous situation in the interpretative process, the immediate next attempt would be made to interpret using external aids. With the passage of time, this approach has gained acceptance and importance, bringing in the concepts of purposive interpretation in situations of any harm that would result out of a literal interpretation of a provision that falls for consideration. The learned Judges have also, with the passage of time, started to adopting a practice of arriving at a conclusion that is available on the face of the statute and then testing that conclusion, also on the touch stone of external aids attendant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be organised, conducted or promoted. The condition in Section 4(e) that the State Government itself shall conduct the draws of all the lotteries is sufficient intrinsic legislative material to hold that the State Government is entitled to organise more number of lotteries than one. Similarly, the condition prescribed in Section 4(i) that draws of all kinds of lotteries shall be conducted between such period of the day as may be prescribed by the State Government is also a further pointer to the conclusion that a State Government can conduct different kinds of lotteries because it is one among the enumerated conditions in Section 4. The corresponding power of the State Government is also specifically granted in Section 12 (2)(b) of the Central Act. The State Government means the Government which organises, conducts or promotes any lottery. In the context of Bhutan Government, the term State Government includes it also. Now, the Central Rules provides that the Organising State shall announce in advance, the information about matters in clauses (a) to (j) of Rule 3(3) about every lottery. Rule 3(2) also provides that the State Government may organise a lottery or lotteries and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 and connected cases wherein it was stated that the State can run only 52 ordinary lotteries and 6 bumper lotteries in an year. Firstly, we find that such an issue did not arise for consideration in that case. Decision on any such issue was not necessary to answer the focal question in that writ appeal, namely, the question of on-line lottery tickets and ban thereof. In the context of the questions arising for decision in these writ appeals, we do not find any utility for the aforesaid judgment being applied as a precedent. The ratio decidendi of that is not relevant for the decision of these writ appeals. Without labouring much, we can conclude that there is no principle of law laid in the judgment in W.A.2011/05 and connected cases which can be applied as the precedent to hold that an Organising State can run only 52 lotteries in an year. However, we may notice that we find formidable support to the view taken by us on the interpretations of the Central Act, in a judgment of the Karnataka High Court - judgment dated 11.3.2004 in W.P.(C) No.28018 of 2003. 30. For the aforesaid reasons, the finding in the impugned judgment that Megha can deposit amounts payable under the Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentation of revenue and lotteries should not be held in a manner that would affect the poor and illiterate people is a guiding beacon for all concerned. A socialist society cannot afford any situation where the economically challenged or otherwise marginalised should be placed in vulnerable situations and exposed to exploitation for commercial purposes. A cohesive consideration of the provisions of Part III and Part IV as to Fundamental Rights and Directive Principles of State Policy, understood in the backdrop of the core constitutional doctrines necessarily makes it the national need that interests of all parties are appropriately balanced. Concentration of wealth in a few is against the constitutional vision. Providing for all is part of the constitutional vision. In this process, deprivation of vulnerable sectors by exposing them to the temptation offered by lotteries should always be under the continued watch of the Governments. It is in this context that the State Government as well as the Central Government would stand duty bound to do the needful to ensure that no provision of the Central Act and the Rules is violated. In terms of the law as it is settled, action can come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Organising State at a Government Press or any other high security press included in such panel. The need to ensure that printing is done in terms of the relevant prescriptions is of grave national importance. The requirement is not one that is confined to the management of the lotteries. Any situation aiding free flow of unaccounted money has necessarily to be checked. Taxation, including of income, is a matter of grave revenue concern. Even in terms of the bilateral treaty and the protocol therein, the Bhutan Government stands to accept that it shall be governed by the Indian laws regarding lotteries which means that it has to act in terms of the Central Act and Rules. Therefore, the regulation to the printing of the lottery tickets of Bhutan Government is a matter of which the competent authorities should necessarily be concerned. There were submissions made with all responsibility on either side that the conduct of lotteries needs to be regulated appropriately and this itself is the fundamental purpose of the Central Act and Rules. Therefore, the query of the State Government in that regard, not having been answered and communicated appropriately, the State Government would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, to receive amounts that may be deposited. However the demand drafts were returned on the premise that interest was not paid and certifications were also not placed. Those were not grounds on which the competent authority could have refused to receive amounts payable under the Tax Act, particularly when there was a direction of this Court to receive it if paid on behalf of the Bhutan Government. This situation is only the making of the State Government and its officers, by returning the amounts even on the face of judicial order, passed interim, in the appeal. In such circumstances, we direct that the tax due for October, 2010 shall be received from the petitioner as promoter of Bhutan Government without any claim for interest and be treated as paid on or before the last date on which such amount was due for the month of October, 2010 as per the rates then applicable. The competent statutory authority from among the respondents is directed to receive such amounts, issue receipts and permit immediate transit of the tickets of Bhutan lottery into the State of Kerala for the month of October, 2010. Such remittance would entitle for lawful transit of the tickets to Kerala for sale. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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