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TMI Blog2024 (12) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods in clause (7) of Section 2 of Sale of Goods Act, 1930, that is expressly incorporated in clause (50) of Section 65 of the Act, which expressly excludes actionable claims. This Court has by the Constitution Bench in Sunrise Associates opined that lottery tickets are actionable claims. The High Courts have also lost sight of the fact that the sale of lottery tickets by the State is a privileged activity by itself and not rendering of a service for which the assessees are rendering promotion or marketing service.' It is seen that the judgment rendered by the Supreme Court covers the issues raised by the petitioner and therefore, they are entitled to the relief to the extent permissible in view of the judgment of the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund of Rs. 1,00,00,000/- (Rupees One Crore) which was deposited under protest by the Petitioner with the Respondent No. 2 (vide 2 TR-6 challan bearing nos.01/2009-10 dated 23.06.2009 and 02/2009-10 dated 24.06.2009) alongwith interest as per law. 3. In K. Arumugam (supra). the Supreme Court had formulated the following questions:- 1. Whether the activity of the appellants-assessees would attract service tax within the scope and ambit of Section 65 (19 (ii) read with Section 65 (105) (zzb) of the Finance Act, 1994? If not, what relief(s) the appellants are entitled to? 2. What Order? 4. The questions were answered in the following manner:- 6.8 On a reading of clause (19) of Section 65 of the Finance Act, 1994 and on analyzing the same, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lottery tickets under Clause 19(ii) of Section 65 of the Finance Act, 1994, an Explanation was added with effect from 16.05.2008. The Explanation has also been extracted above. Although the Explanation is for the purpose of removal of doubts, it is relevant to note that what is excluded in sub-clause (i) of clause (19) of Section 65 of the Act, namely lotteries being actionable claim and not goods, as analysed above, is sought to be mentioned as lottery per se in the Explanation. Thus, when lottery ticket is an actionable claim and not goods and is therefore outside the scope of sub-clause (i) of clause 19 of Section 65 of the Finance Act, 1994, it could not have been included as lottery per se in the Explanation to sub-clause (ii) of Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty which was initially sought to be covered under sub-clause (i) thereof but could not be by virtue of the definition of goods under the very same Act read with Section 2 (7) of the Sale of Goods Act, 1930. The mere insertion of an explanation cannot make an activity a taxable service when it is not covered under the main provision (which has to be read into the said sub-clause by virtue of the legislative device of express incorporation). This is because sale of lottery tickets is not a service in relation to promotion or marketing of service provided by a client, i.e., the State in the instant case. Conducting a lottery which is a game of chance is ex facie a privilege and an activity conducted by the State and not a service being rendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, there is no activity of promotion or marketing of a service on behalf of the State. Neither is the State, which conducts the lottery, rendering a service within the meaning of the Finance Act, 1994. The Explanation, therefore, cannot over-ride the main text of the provision as the Explanation which was sought to remove doubts is in fact contrary to the main provision which defines business auxiliary service and also contrary to the judgment of this Court in Sunrise Associates and having regard to clause (50) of Section 65 of the Finance Act, 1994. No doubt the Explanation was omitted with effect from 01.07.2010. However, these cases pertain to the period prior to 01.07.2010. Therefore, either under sub-clause (i) of clause (19) of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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