Union of India & Others Vs Future Gaming Solutions Pvt. Ltd. & Another Etc. (Supreme Court of India)
Supreme Court held that activity of lottery distributor doesn’t constitute a service and hence imposition of service tax on distributor of lottery tickets not justifiable. Accordingly, the appeals are dismissed.
Facts- The respondents-assessees herein are engaged in the business of the sale of paper and online lottery tickets organised by the Government of Sikkim. They entered into respective agreements with the State of Sikkim.
The Parliament introduced service tax through the Finance Act, 1994 under Chapter V, which took effect on 01.07.1994. Later, through the Finance Act, 2003, the Finance Act,1994 was amended to include a new category of taxable services, namely “Business Auxiliary Service,” under sub-section (19) of Section 65, effective from 01.07.2003. Pursuant to this amendment, the Service Tax Department issued notices to the respondents-assessees herein, under the amended Finance Act in 2007, requiring them to register under the said Act for payment of service tax.
Being aggrieved, the respondents-assessees herein approached the High Court challenging the levy of service tax upon the sale of lottery tickets. Vide judgement dated 18.09.2007, the High Court allowed the writ petition filed by the respondents-assessees herein declaring that service tax was not payable on the activity undertaken by the respondents-assessees herein.
