1. In the instant petitions, HC concerned with the amendments made in the Finance Act, 1994 by the Finance Act, 2016. The previous Division Benches have come to a conclusion that no service tax is imposable and leviable on lottery, but we are dealing with the service tax on related activities in distribution and sale of lottery tickets.
2. On gleaning through various amendments made from 2010 onwards, it is evident that the service tax was intended on promotion, marketing, organizing, selling of lottery or facilitating in organizing lottery of any kind, in any other manner. By the impugned amendment a cosmetic change has been made in the Amendment Act, 2010, as initially the words “any person or any other person” was used. In 2015, it was modified to the extent that any activity carried out, for a consideration, in relation to or for facilitation of, a transaction in money except an actionable claim excluding the activity carried out (a) by a lottery distributor or selling agent in relation to promotion, marketing, organizing, selling of lottery or facilitating in organizing lottery of any kind, in any other manner. The lottery distributor or selling agent is a person appointed or authorized by a State for the purpose of some activities. By the impugned amendment the words “a person appointed or authorized by a State for the purpose of …………………. ” were substituted by the words “by a lottery distributor or selling agent on behalf of the State Government, …………….. “. The substitution does not make substantial changes and the intention remains the same in pith and substance.
3. In the case on hand, Article 268A, which was incorporated by the Constitution (Eighty-eighth Amendment) Act of 2003, has recently been omitted by the Constitution (One Hundred and First Amendment) Act, 2016. Entry 92C was inserted by the same constitutional amendment, but admittedly never notified, as pleaded by the learned counsel appearing for the parties and the same has also been omitted by the Constitution (One Hundred and First Amendment) Act, 2016. Thus, reliance can be placed on Entry 97 invoking competence to impose service tax. However, Article 268C confers power and competence on the Union-Parliament to levy service tax on the service providers for consideration.
4. In T.N. Kalyana Mandapam Assn. and All India Federation of Tax Practitioners’, the Supreme Court held that service tax was made by the Parliament under the residuary powers.
5. It is deducible from the aforestated cases that the Union – Parliament is competent to impose service tax for the services rendered for consideration by a person. It is well settled principles as laid down in the cases (supra) that entries in the three lists are fields of legislation. Taxation is a distinct matter for the purpose of legislative competence and it must flow from the specific entry provided for levy and imposition of taxes. The relevant service tax leviable is not on the lottery as also submitted by the respondents, but on promotion, marketing, organizing, selling of lottery or facilitating in organizing lottery of any kind, in any other manner.
6. For the analysis and reasons mentioned hereinabove, we are of the considered and conscience view that the Union-Parliament is conferred with the power and competence under Article 268A read with Entry 97, List I (Union List) to impose and levy service tax on other related activities, as aforestated. The impugned amendment brought in Finance Act, 2016 is not unconstitutional.