2024-VIL-1300-SIK-ST
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SERVICE TAX High Court Cases

Service Tax – Sale of Lottery Tickets, Demand under Business Auxiliary Service – Petitioner challenge imposition of service tax by the Union of India on the activities of promotion or marketing of sale of lottery tickets under Section 65(19)(ii) of the Finance Act, 1994 - Whether the activity of the petitioner of outright purchase and sale of lottery tickets 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 – HELD - The Supreme Court in the case of K. Arumugam v. Union of India held that the sale of lottery tickets by the State is a privileged activity by itself and not rendering of a service for which the petitioner can be said to be rendering a promotion or marketing service. Lottery tickets being actionable claims and not "goods" within the meaning of sub-clause (i) of clause (19) of Section 65 of the Finance Act, 1994, would expressly get excluded from the scope of the said provision. The Explanation sought to bring the activity of sale of lottery tickets within sub-clause (ii) of Clause 19 of Section 65 of the Finance Act, 1994, when it was excluded from sub-clause (i) on account of the lottery tickets being interpreted as actionable claims and not goods, cannot override the main text of the provision. Therefore, service tax could not have been levied on the promotion or marketing of sale of lottery tickets under either sub-clause (i) or sub-clause (ii) of Clause 19 of Section 65 of the Finance Act, 1994 - in terms of the judgment of the Supreme Court in K. Arumugam v. Union of India, the writ petition is allowed
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