GANGTOK, 24 Sept: The division bench of Sikkim High Court has rejected the notice served to Future Gaming Private Limited by the Superintendent of Central Excise and Service Tax, Gangtok Range, Gangtok in 2012 demanding that the company pay service tax.
Future Gaming Private Limited is a Company registered under the Companies Act, 1956 and is engaged in the business of sale of lottery tickets organised by the Government of Sikkim [Respondent No. 4] under an agreement of 2009 for a term of five years. By that agreement the Petitioner procures the lottery tickets in bulk from the Government of Sikkim and resells those to the public through various agents, stockists, resellers, etc.
Future Gaming had challenged the notice demanding the service tax in the Sikkim High Court on several grounds. According to the company, with the amendment to the Finance Act, 1994 in 2012, ‘lottery’ and ‘transaction in actionable claim’ were kept outside the purview of the service tax. Specific reference was made to Sub-Sections (1), (34), (44) and (55) of Section 65B as well as Sections 66B and 66D of the Act to indicate the change in the law in clearly excluding ‘lotteries’.
The division bench of Sikkim High Court has said that the impugned letter demanding Service Tax does not have the sanction and authority of either the Constitution or the law as there is no provision anywhere for imposing of service tax on ‘lottery’.
The next ground of attack was that there is no element of service in Future Gaming’s relation with the Government of Sikkim, in respect of the Sikkim State Lotteries. The petitioner purchases lottery tickets in bulk and sells them to stockists, resellers, etc., by adding a profit margin. The stockists, resellers, etc., in turn sell these tickets to retailers who in turn sell them to the ultimate participants of the draw. As the tickets are sold to the company by the state government, the transaction is one of sale and purchase of lottery ticket and not one of rendering of any service and the company is not involved in rendering any ‘taxable service’.
Future Gaming Private Limited is a Company registered under the Companies Act, 1956 and is engaged in the business of sale of lottery tickets organised by the Government of Sikkim [Respondent No. 4] under an agreement of 2009 for a term of five years. By that agreement the Petitioner procures the lottery tickets in bulk from the Government of Sikkim and resells those to the public through various agents, stockists, resellers, etc.
Future Gaming had challenged the notice demanding the service tax in the Sikkim High Court on several grounds. According to the company, with the amendment to the Finance Act, 1994 in 2012, ‘lottery’ and ‘transaction in actionable claim’ were kept outside the purview of the service tax. Specific reference was made to Sub-Sections (1), (34), (44) and (55) of Section 65B as well as Sections 66B and 66D of the Act to indicate the change in the law in clearly excluding ‘lotteries’.
The division bench of Sikkim High Court has said that the impugned letter demanding Service Tax does not have the sanction and authority of either the Constitution or the law as there is no provision anywhere for imposing of service tax on ‘lottery’.
The next ground of attack was that there is no element of service in Future Gaming’s relation with the Government of Sikkim, in respect of the Sikkim State Lotteries. The petitioner purchases lottery tickets in bulk and sells them to stockists, resellers, etc., by adding a profit margin. The stockists, resellers, etc., in turn sell these tickets to retailers who in turn sell them to the ultimate participants of the draw. As the tickets are sold to the company by the state government, the transaction is one of sale and purchase of lottery ticket and not one of rendering of any service and the company is not involved in rendering any ‘taxable service’.
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