Jiwankumar Sitaram Sondhi vs The Commissioner Of Sales Tax ...
2001 Latest Caselaw 297 Bom

JUDGMENT

S.H. Kapadia, J.

1. By this writ petition, under Article 226 of the Constitution, the petitioner seeks to challenge the amending Act No. LII of 2000, to Bombay Sales Tax Act, 1959 (hereinafter referred to, for the sake of brevity, as the amending Act).

FACTS;

2. Petitioner is a citizen of India. Petitioner carries on business in the name and style of M/s. Sondhi and Company as a sole proprietor thereof and he trades as a first dealer of various State organised lotteries.

3. The State of Maharashtra has been imposing sales tax on the sale of lottery tickets within the State of Maharashtra on the basis that lottery tickets are goods on which the State is empowered to levy sales tax. That, the Bombay Sales Tax Act, 1959 deals with levy of tax on sales and purchases within the State of Maharashtra. That, under section 3 of the Act, it is, inter alia, laid down that every dealer whose sale or purchase turnover during the year ending 31st March exceeds a specified limit prescribed by the Act, shall be liable to pay sales lax under the Act on such turnover. According to the petitioners, lotteries were taxed initially at the rates prescribed in Item 152-A in Schedule II of the Bombay Sales Tax Act, 1959. That, prior to the impugned amendment, lottery tickets were charged to tax at the rate of 13% by way of sales tax on the value of sales plus 10% surcharge. According to the petitioner, till date, the State of Maharashtra was collecting tax on the lottery tickets unit-wise at the above rates excluding the actionable claim part of the ticket. On 14th November, 2000, the State of Maharashtra issued an Ordinance bearing No. XXVII of 2000 whereby Section 8-D came to be introduced. Since then, the Ordinance has been replaced by the amending Act which is impugned in this case. Under the impugned amending Act, lottery ticket is proposed to be taxed on the

basis of the draw at a fixed rate per draw. For weekly draw, the rate of salts tax is fixed at Rs. 20,000.00 for fortnightly, the rate of sales tax is fixed at Rs. 60,000.00 and for monthly drew, it is fixed at the rate of Rs. 1,00,000.00 and for special bumber draw or festival draw, it is fixed at Rs. 4.00,000.00, It is this amendment which is challenged in this Petition. The Petitioner has further stated in the Petition that various States in India organize lotteries called as "Stale Organised Lotteries"; that normally the Slate organising a lottery enters into an agreement with the sole distributor who takes the tickets from the Government and distributes the tickets throughout the country wherever the lottery tickets are being sold and that stockists are appointed in various States by the distributor for the sale of his lottery tickets in a particular State. Therefore, lotteries can be distributed into schemes, draws and units of tickets. That, each scheme has several draws and each draw has several tickets. That, a sub-distributor/stockist in a particular Stale would take the tickets in a draw in accordance with the scheme organised by the State for which he is appointed as a stockist. For example, if there are one lakh tickets in a draw under a scheme, the stockist may take ten thousand tickets for sale in Maharashtra whereas the remaining ninety thousand tickets may go to stockists/distributors in other States as appointed by the sole distributor. That, out of one lakh tickets in a draw, only ten thousand tickets in a given case may be made available to a stockist in the State for sale and, therefore, the maximum available tickets for sale by the stockist in the customer and/or actual purchaser in a Stale would be only ten thousand tickets. That, under the impugned enactment even if the stockist sells one ticket to a customer out of ten thousand tickets allocated to him, the stockist will have to pay Rs. 20,000.00 for a weekly draw, Rs. 60,000.00 for a fortnightly draw, Rs. 1.00,000.00 for a monthly draw and Rs. 4,00,000.00 for special bumper draw or festival bumper draw because under the impugned Act, the incidence of tax has been shifted from the value of the sales to the draw. This is the main ground of challenge in the Petition. That, by charging tax for the entire draw, even tickets which remain unsold would be liable to tax. Hence the impugned amending Act has been challenged.

ARGUMENTS :

4. Mr. Tulzapurkar, learned senior counsel appearing on behalf of the petitioners contended that under the above Act, 1959, sales tax cannot be imposed on a draw as it did not include within it, either the element of sale or the element of goods. He further contended that sales tax cannot be collected on a draw which is held outside the State of Maharashtra. He further contended that sales tax cannot be collected in advance before the actual sale lakes place. He further contended that sales tax cannot be assessed without reference to the turnover or the actual sale. That, collecting sales tax from several First Dealers in respect of an entire draw amounts to multiple taxation. That, a draw encompasses all tickets in the scheme which are sold all over the country including Maharashtra and further imposing lax at a rate fixed per draw would amount to taxing tickets sold outside the State. Therefore, he contended that the amending Act was beyond the scope of the Authority conferred by the Constitution on the State under Entry 54, List II of the Constitution. He further contended that for the aforestated reasons, the impugned amending Act also violated Article 286(1) and Article 301 of the Constitution. He submitted that the purpose

of enacting the amending Act was to avoid legitimate competition of other State Lotteries. Lastly, he urged that by imposing sales tax at a fixed rate per draw, the mandate of the Apex Court in the case of H. Anaraj v. State of Tamil Nadu, which lays down that only a portion of the price corresponding to the right to participate in a draw is taxable. He contended that by imposing sales tax on a draw, the Government has taxed the entire M.R.P. of the ticket which includes two components viz. price corresponding to the right to participate in a draw and the price corresponding to the right to claim a price contingent upon the buyer being successful in the draw. Hence the learned counsel submits that the amending Act is unconstitutional. He further submits that the State Government is not helpless. That under the Act it is empowered to take appropriate action in specific cases of tax evasion. However, such isolated cases of tax evasion cannot empower the State Government to levy a tax which has no basis in law. Mr. Tulzapurkar has also placed reliance on a Trade Circular issued by Commissioner of Sales Tax on December 30, 2000 clarifying that under the amending Act, every First Dealer selling lottery tickets in the State of Maharashtra shall be liable to pay sales tax on each draw instead of the existing system of sales tax. Under the Trade Circular, the Commissioner has further clarified that if there are more than one First Dealers in the State who are selling lottery tickets of a draw then each dealer shall pay such tax for the said draw as per the rate provided in the Schedule. Further, under the said Circular, it has been clarified that under the amending Act, a lumpsum amount was payable by the dealers on the basis of the rate per draw, irrespective of the number of tickets sold. Under the said Circular it is further pointed out that the unit for levy of tax on lottery tickets is a draw because after the results of the draw become known, the tickets loose their value and character and, therefore, when a particular draw is held and some lottery tickets remain unsold, no tax shall be refunded because the levy of tax is irrespective of the turnover. Hence the learned counsel submitted that the Trade Circular dated 30th December, 2000 clearly shows that the unit for levy of tax has been shifted from the turnover to a draw. Learned counsel for the petitioner further submitted that the amending Act is unreasonable and arbitrary because even if a single ticket is sold by any dealer in the State, he would be responsible for paying the entire tax at the rate per draw. He invited our attention to a chart which finds place at page 368 of the Paper book. The said chart refers to details of Draw Date-wise Lottery sold during June,. 2000. For example, he points out that in April, 2000, there were 150 draws. The net sale amount, as per the Returns filed by the petitioners, was Rs. 130 lakhs which, in terms of the Supreme Court Judgment, consists of two parts as stated above. The price component relating to the right to participate in a draw which alone could be taxed, was Rs. 40 lakhs whereas, the prize component relating to the right to claim a price which could not be taxed was Rs. 126 lakhs. As per the said chart, for the month of April, 2000, the actual collection made by the petitioner was Rs. 8,82,018.00 [i.e. receipt from sales minus expenses towards purchase). Therefore, the tax levied prior to the amendment would be Rs. 5,31,782.00 whereas under the amendment, since there were 150 draws in April, the tax payable on actual collection of Rs. 5,31.782.00 would be Rs. 30 lakhs which is more than

three times the amount of revenue received by the petitioners. Hence, the learned counsel submits that the impugned amending Act introduces a tax system which is totally arbitrary, absurd and unreasonable. Mr. Tulzapurkar further contended that lottery, as a subject, falls in the Union List; that Parliament alone can legislate on the subject of lottery; that. Parliament in its wisdom, has enacted Lotteries Regulation Act, 1998, under which the Parliament has laid down certain conditions which are to be complied with for any legally acceptable State Lottery; that arranging of tickets in a particular manner did not infringe any of the conditions of Section 4 of the Act, 1998 and if at all, there is any such breach in the matter of compilation of tickets, the remedy lies elsewhere and the malpractices alleged is not relevant for the purposes of deciding the issue which arises in this case. Learned counsel submits that the entire purpose of enacting the amending Act is to stall any competition from other Stales in the matter of sale of lottery tickets and, therefore, a backdoor method is adopted to stop sale of such tickets of other States which have become more popular and which provide competition to Maharashtra State Lotteries. Learned counsel for the petitioner submits that a draw encompasses all the tickets in a scheme and several dealers who deal with only a part of the tickets in a draw may be required to pay the tax on entire draw which amounts to double taxation. That, under the amending Act, the tickets sold outside the State of Maharashtra would also be taxed by the State of Maharashtra on the basis of the draw which takes place outside the State which is beyond the power of the State under the Constitution [See Article 286(1)(a) of the Constitution]. He further contended that the tax is sought to be levied on a draw without there being any nexus to the number of tickets purchased or sold by the First Dealer in the State of Maharashtra and that the impugned amending Act has no nexus with the number of lottery tickets in a draw because the entire draw is taxed at a fixed rate. Further, the element of turnover or the actual sale within the State which ought to be the basis of any sales tax enactment is discarded. That the word "draw" does not come within the definition of the word "sale" as mentioned in the Sale of Goods Act. That, the Lottery Regulation Act, 1998 enacted by the Parliament permits other States to sell their lottery tickets in the State of Maharashtra if the Slate is running its own lottery and, therefore. State of Maharashtra cannot impose a ban on sale of other State lotteries, but by the impugned Act, in order to stifle any competition, by a backdoor method, a ban on sale of other Stale lottery tickets is sought to be brought in. Therefore, the amending Act is passed to avoid competition. That, the impugned Act is in the nature of a restrain on inter-State trade and commerce within Union of India and, therefore, it is also violative of Article 301 of the Constitution. Mr. Tulzapurkar further contended that under Section 40 of the Act, 1959 an assessee is entitled to be assessed by way of regular assessment. That, under Section 40, a composite tax could be levied in lieu of regular assessment provided the assessee opts for such composite tax in lieu of regular assessment. However, such composite tax cannot be levied by disregarding the regular assessment if the assessee does not opt for such composite tax. It was contended that the amending Act makes Section 40 also redundant, although Section 40 still holds the field. Learned senior counsel further submitted that though imposition of sales tax fell within the

domain of the State Government by virtue of Entry 54 List II, the aforestated power is not an unfettered power to impose sales tax on articles which are not goods and/or without considering the turnover and/or without considering actual sales and/or in cases when goods are sold outside the State of Maharashtra. Under the above circumstances, the petitioner has sought a declaration that the impugned amending Act is unconstitutional, ultra vires and unreasonable and, therefore, the same should be struck down. 5. Per contra, Mr. Rana, learned counsel appearing for the State contended that the Lottery Regulation Act, 1998 regulates business of lottery. That in many cases, draws are held by sole distributors; that prizes are also paid by such distributors; that in the guise of a State Lottery, private lotteries are held; that the petitioner is also a dealer who is dealing in private lotteries. That the provisions of the Act, 1998 are blatantly breached in the manner indicated in the Affidavit-in-Reply vide Para 5. That, the business of lottery leads to widespread evasion of tax on sale of lottery tickets within the State. That before the amending Act, sales tax was levied at 13% on the price of the lottery tickets. However, investigations revealed widespread evasion of tax, particularly because a large part of the sales of lottery tickets in the State goes undetected and no lax is paid on such sales. That sales tax on the lottery tickets was earlier payable on the value of the lottery tickets, less the prize money and, in order to plug evasion, it was decided a certain sum of money should be fixed as payable by the First Dealer in the State on the basis of approximate number of tickets sold per draw. That every State usually has a single authorised dealer who sells the lotteries in the State. It was contended that in the present case, the tax amount calculated is not based on the draw, but it is based on the taxable component of approximate number of tickets sold per draw in the State [See Para 8 of the Affidavit-in-Reply of Sarupchand Jain, Assistant Commissioner of Sales Tax, Maharashtra]. It was further contended that even the State of Tamil Nadu had introduced a similar modification in the Tamil Nadu Sales Tax Act, requiring payment of fixed amounts. That, imposition of tax at a fixed rate would work to the benefit of the dealer inasmuch as, even if the dealer sells a higher number of tickets on which the tax on percentage basis would be higher, still the amount of tax to be paid would remain fixed and in that respect, the new scheme would work for the benefit of the dealer. It was contended that on a bare reading of the impugned Act, the lax is leviable on the sale of lottery tickets and the figures arrived at represents the sale price of the lottery tickets, less the amount distributable as prize money. That, although the impugned tax has been specified with reference to each draw, the tax levied is only on the taxable component viz. the sale price of the lottery tickets in the State in each draw and, therefore, the legislation is valid. It was further contended that the method of collection of tax became necessary as mentioned in the impugned enactment for the aforestated reasons viz. that the revenue received by the State was not commensurate with the turnover. That, under the proviso to the amending Act, if a dealer has paid tax under the amending law with regard to sale of lottery tickets of a particular name and of a particular State and for a particular draw, then no tax shall be payable in respect of the sale of such lottery tickets by any other dealer in the State of Maharashtra and, therefore, there was no question of double taxation.

It was argued that the tax amount fixed would be the lax payable in respect of the lottery tickets in each draw which are sold within the State and if there are several dealers of a particular lottery, it is only the First Dealer who would be subjected to tax and the subsequent dealers were not required to pay any tax and, therefore, there is no double taxation and, therefore, there is no violation of Article 286 of the Constitution. It was further contended that there was only one authorized dealer for each scheme who collects the lottery tickets outside the State and who sells the same to various dealers in the State of Maharashtra and under the amending Act it would be this authorized dealer who sells the lottery tickets to various stockists/dealers in the State of Maharashtra, who would be liable to pay sales tax and all other stockists would not be required to pay any tax in view of the proviso to the amending Act. Hence it was contended that there was no violation of Article 301 of the Constitution. It was contended that the quantum of tickets sold within the State for each draw and the evasion of tax has led to the enactment of the impugned amendment. Learned counsel for the State submitted that the tax is not levied on a draw. That, the Stale has not prohibited sale of other State lottery tickets within the State of Maharashtra. That the sales lax law in Tamil Nadu has also been amended on the same lines. In the circumstances, it is contended that the impugned amending Act in intra vires the Constitution.

POINTS FOR DETERMINATION :

(A) Whether the amending Act Section 8-D seeks to shift the incidence of tax from sales to draw irrespective of the amount of sale and if so, whether the impugned amending Act levies tax on both the aforementioned components [contribution towards prize fund (C.P.F.) and cost of participation in draw (C.P.D.)]?

(B) Whether the amending Act violates Article 286(1)(a) of the Constitution?

(C) Whether the amending Act violates Articles 301 to 304 of the Constitution?

(D) Whether the entire Section 8D is liable to be struck down?

FINDINGS ON POINT A :

6. In the case of H. Anaraj v. Government of Tamil Nadu, it has been held that lottery tickets arc goods and not actionable claims. That, a sale of lottery ticket confers on the purchaser two rights a right to participate in the draw (hereinafter referred to, for the sake of brevity, as 'CPD') and a right to claim the prize contingent upon the purchaser being successful in the draw (hereinafter referred to, for the sake of brevity, as 'CPF'); that CPD is taxable whereas CPF is not taxable; that the State Legislature was competent to levy sales tax on sale of lottery tickets under Entry 54, List II of the VIIth Schedule to the Constitution. Therefore, this Court has to proceed on the basis that lottery tickets are goods and therefore, at the very outset we reject the contention of the petitioner that lottery tickets are not goods.

7. The Bombay Sales Tax Act, is an Act to consolidate and amend the law relating to levy of tax on sale or purchase of goods in the State. Under Section 2(28), the word "Sale" is defined to mean a sale of goods made within the State for cash or deferred payment or for any other valuable considera-

tion. Under Section 2(29), the expression "Sale Price" is defined to mean the amount of valuable consideration paid or payable to a dealer for any sale including any sum charged for anything done by the dealer in respect of goods at the time of or before delivery thereof, other than cost of insurance for transit when such cost is separately charged. Section 2(36) defines the expression "Turnover of Sales " to mean aggregate amount of sale price received and receivable by a dealer in respect of any sale of goods made during a given period. Section 2(11) defines the word "Dealer" to mean any person who, for commission, remuneration or otherwise carries on the business of buying or selling goods in the State. Chapter II deals with incidence and levy of tax. Section 3 deals with incidence of tax. It lays down that every dealer whose sales turnover during the relevant period exceeds the limit prescribed in Section 3(4) shall be liable to pay tax on his sale turnover. Section 3(4), inter alia, lays down the limits of the turnover in the case of a dealer who is an importer. It also prescribes the limit of the turnover in the case of a dealer who is a manufacturer and lastly, it prescribes limits of a turnover for all other cases. Section 3(5) of the Act lays down that for the purposes of calculating the limit of turnover, the turnover of all sales shall be taken into account whether such sales are taxable or not and the turnover shall include all sales made by the dealer on his own account and also on behalf of his principals mentioned in his accounts. Section 8 of the Act deals with levy of value added sales tax on goods specified in Schedule C. It lays down that there shall be levy, a sales tax, on the turnover of sales of goods specified in Schedule C at the rate set out in column 3. Item 151 -A in Schedule C, which existed prior to the amending Act, indicates levy of value added sales tax on lottery tickets at the rate of 13%. On the passing of the amending Act, this Entry has been deleted. By the impugned amending Act, the Legislature has introduced Section 8-D which deals with levy of tax on lottery tickets. Section 8-D reads as follows:

"Section 8-D :

8D. (1) Notwithstanding anything contained in any other provisions of this Act, every dealer in lottery tickets in the State shall be liable to pay tax on sales thereof, only under this section, as provided in the Table hereunder. -

TABLE

Sr. No. Type of Draw Rate per draw

1. Weekly Draw Rupees Twenty thousand (Rs. 20.000)

2. Fortnightly draw, including any draw the period of which is more than a week but less than fortnight.

Rupees Sixty thousand (Rs. 60,000)

3. Monthly draw, including Monthly Bumper Draw and any draw the period of which is more than a fortnight but less than a month.

Rupees One lakh (Rs. 1,00,000)

4. Special Bumper Draw or Festival Bumper Draw including any other draw not covered by any other category and any draw the period of which is more than a month.

Rupees Four lakhs (Rs. 4,00,000)

Provided that, where a dealer has paid the tax under this sub-section in respect of the sale of lottery tickets for a particular name and type of lottery ticket of a particular Slate and for a particular draw; no lax shall be payable in respect of the sale of such lottery tickets by any other dealer or arty person in this State liable to pay tax under this Act.

(2) Notwithstanding anything contained in any other provisions of this Act, lax payable under sub-section (1) shall be paid ten days prior to the draw."

Reading of the impugned amending Act shows that Section 8-D starts with a non obstante clause. The said Section seeks to levy tax on lottery tickets. This Section deals only with levy of tax on lottery tickets. It constitutes a separate Code by itself. The first part of the Section, just before the table which itself is incorporated in Section 8-D, provides that every dealer in lottery tickets in the State of Maharashtra shall be liable to pay tax on sales exclusively under Section 8-D and in the manner provided in the table incorporated in the said Section. A proviso is also given to Section 8D(1). The said proviso lays down, inter alia, that where a dealer has paid tax under Section 8D(1) in respect of the sale of lottery tickets of a particular name and type of a particular State and for a particular draw, then no lax shall be payable in respect of the sale of such lottery tickets by any other dealer or any person in the State liable to pay tax under the Act. Vide Section 8D(3), Entry 151-A in Schedule C, appended to the principal Act, is deleted. Section 40 of the Bombay Sales Tax Act. 1959 finds place in Chapter V which refers to assessment, payment, penalty and recovery of tax. Section 40, inter alia, lays down that in certain circumstances, the Commissioner may permit any dealer to pay in lieu of the amount of tax payable by the dealer under the provisions of the Act, a lumpsum amount determined in the prescribed manner by way of composition and on payment of such lumpsum amount, the dealer shall be deemed to have been assessed under Section 33 which also finds place in Chapter V of the Act.

Therefore, on reading the provisions of the principal Act i.e. Bombay Sales Tax Act. 1959 it is clear that section 3 referred to above, of the principal Act, speaks about the incidence on the occurrence of which a dealer becomes liable for registration. Section 3(2) lays down that every dealer whose sale/purchase turnover exceeds the relevant limit specified under Section 3(4) shall be liable to pay tax under the Act with effect from the said date i.e. the date on which the turnover exceeds the relevant limits. It is for this reason that limits of turnover have been prescribed under Section 3f4) of the Act for various types of dealers. Section 3(4) also indicates further that it is the value of the taxable goods sold or purchased which constitutes the basis for prescribing the limits of the turnover. It is for this reason that the Act specifically defines the expression "Sale Turnover" to mean the aggregate of the amounts of sale price received and receivable by a dealer in respect of any sale of goods made during a given period. It is for this reason that under Section 3(5) it is further laid down that for the purposes of calculating the limit of turnover for liability of lax, the turnover of all sales shall be taken into account, whether such sales are taxable or not. In other words, the liability of tax is based oh the turnover. This concept is very important to decide the present matter. It shows that liability accrues only on sale of goods. Therefore, the event which attracts the liability to pay sales tax is sale of goods. In the present matter, the

Legislature has shifted the incidence of tax from sale of the lottery tickets to a draw under a scheme. Therefore, such a change is clearly contrary to the basic principle of taxation under the Bombay Sales Tax Act. Even with regard to levy of value added sales tax on goods specified in Schedule C, it is laid down, inter alia, that such a sales tax shall be levied on the turnover of sale of goods mentioned in Schedule C after deducting from such turnover, resale of goods on the purchase of which the dealer is liable to pay purchase tax under Section 14. The point which this Court would like to emphasize is that both, under Section 3 and Section 8, the legislature has emphasized rightly, that sales tax shall be levied on the turnover of sale of goods. The tax is levied on sale. However, the unit of the tax is based on the turnover. It is for this reason that limits of turnover are specifically enumerated in Section 3(4). Under the amending Act, by way of Section 8-D, the Legislature has introduced Section 8-D which, as stated above, begins with a non obstante clause. The said Section exclusively deals with levy of sales tax on sale of lottery tickets. It does not deal with any other subject. Even Section 8D(1) emphasizes that every dealer in lottery tickets in the State shall be liable to pay tax on sale. The difficulty comes in when the table incorporated under the said Section is looked at. Section 8D(1) basically consists of two parts. As stated above, it is a separate Code by itself because it exclusively deals with levy of tax on lottery tickets. The first part represents a charging Section. It lays down that every dealer shall pay tax whenever lottery tickets are sold. To this extent, there is no problem. However, a table is prescribed. This table lays down what we may call as a Computation Section. It is well settled, in any branch of taxation, that the Charging Section and the Computation Section must be based on certain common taxation principle. Section 8D(1) merely states that on the happening of an event, namely sale of lottery tickets, a dealer becomes liable to pay sales lax. This part of Section 8D(1) is in consonance with Section 8. It is also in consonance with Section 3 of the principal Act. However, the table prescribed by Section 8D, which represents Computation shifts the incidence of tax from 'sale' to 'draw'. The table has no reference to the turnover. The table has no reference to the number of tickets in a draw because the entire draw is taxed at a fixed rate. The turnover has no reference to actual sale of tickets within the State. By shifting the incidence of tax from 'sales' to 'draw', the Legislature has sought to levy tax on both the above two components i.e. CPF and CPD. No material has been placed before us to indicate the basis on which the rate or draw is arrived at. The only argument advanced before us on this point by the learned counsel for the State is the tax evasion. In this connection our attention is invited to the Statement of Objects and Reasons on the basis of which it was contended that the above amending Act was introduced because sales tax receipts from the lottery date within the State were not commensurate with the turnover of lottery. That, lottery ticket was prone to tax evasion and to overcome the said disability, in some States ad valorem tax levy on sale of lottery ticket has been replaced by specific tax levy with reference to each draw of the lottery and for effective collection of tax, the above mechanism has been introduced by electing Entry 151-A from Schedule C of the principal Act. We do not find any merit in this argument of the State. Tax evasion is no ground to exclude the basic taxation principle on which the principal Act is based.

The impugned amending Act introduces Section 8D into Bombay Sales Tax Act. 1959 which is the principal Act. The principal Act speaks about the incidence on the occurrence of which, a dealer becomes liable for registration. Under Section 3(2), every dealer whose sale turnover exceeds the relevant limit mentioned in Section 3(4) shall also be liable to pay tax with effect from the date when his turnover exceeds the relevant limit. This principle is also enshrined in Section 8D(1). However, by virtue of the table introduced in Section 8D(1), the incidence on the occurrence of which a dealer becomes liable under the Act to pay sales tax shifts from sale to draw. This is because the table prescribes the rate per draw. The table gives a goby to the principle mentioned in Section 3(2) of the principal Act. It may be noted that even after the amending Act, Section 3 continues to remain on the Statute Book. Even if Section 8D is read as a non obstante clause, the Legislature in it's wisdom has not given a go-by to the principle mentioned in Section 3 inas much as even under Section 8D introduced by the amending Act, every dealer in lottery tickets shall be liable to pay tax on sale. Therefore, even after the amending Act under the first part of Section 8D, the incidence on the occurrence of which a dealer who sells lottery tickets becomes liable for registration, is the sale. Therefore, the first part of section 8D is in consonance with Sections 3 and 8. However, as stated above, under Section 3(2), the liability to pay sales tax arises only from the date when the sale turnover exceeds the relevant limit prescribed under Section 3(4). It is the limit of the turnover. Such limit of turnover is not prescribed by the table given in Section 8D. This brings about the aforestated inconsistency inasmuch as the incidence on the occurrence of which a dealer becomes liable to pay the sales tax on exceeding the turnover prescribed, shifts from 'sale' to 'draw' which may take places outside the State of Maharashtra. A 'draw' is an event which precedes the sales. The entire edifice of Bombay Sales Tax Act is based on the incidence of sale. This is recognised by the Legislature in the first part of Section 8D(1). However, by virtue of the table, the incidence shifts from 'sale' to 'draw' and in the result, an unreasonable effect takes place, as discussed above viz. that on a collection of Rs. 8 lakhs (which represents CPD), the assessee is required to pay a composite tax of Rs. 30 lakhs in view of Section 8D whereas, under the law prevailing before the amending Act, the assessee was required to pay Rs. 5.31 lakhs. Further, by shifting the incidence from 'sale' to 'draw', both the components viz. CPF and CPD are made taxable which is contrary to the judgment of the Supreme Court in the aforestated case of H. Anaraj (supra). Further, even on the unsold tickets, the provision for refund, which existed before the amending Act came into force is done away with. This also shows that the incidence of tax, in effect, is shifted from 'sale' to 'draw'. We may also point out that we called for Tamil Nadu General Sales Tax Act, 1959 because we were told that a similar provision existed under that Act. It is not so. Section 7D of the Tamil Nadu General Sales Tax Act. 1959 is similar to Section 40 of Bombay Sales Tax Act which refers to payment of sales tax at compounded rates. It appears that the respondents herein have bodily lifted the impugned provisions from the Tamil Nadu General Sales Tax Act, 1959. However, they have missed out one aspect viz. that even Tamil Nadu General Sales Tax Act has proceeded at the relevant time by seeking to levy sales tax on the basis of draw, but that was in the context

of a composite tax being levied at the option of the assessee as provided under Section 40 of the present enactment. Under Section 40 of the Bombay Sales Tax Act, the Commissioner may, in certain circumstances, permit any dealer to pay in lieu of the assessed amount of tax payable under Section 33, a lumpsum amount as determined in a prescribed manner by way of composition. Therefore, a composite tax lays down an entirely different basis. Under the present impugned Act, the first part of Section 8D(1) refers to sate as incidence of tax- However, the table prescribed proceeds on the basis of draw which could be the basis in cases of composite tax under Section 40 of the Bombay Sales Tax Act which is similar to Section 7D of the Tamil Nadu General Sales Tax Act, but Section 40 of the Bombay Sales Tax Act or Section 7D of the Tamil Nadu Sales Tax Act only deal with composition which has no bearing to the incidence in levy of sales tax as mentioned in Section 3, Section 6 and even under Section 8D(1) [first part]. Therefore, a total inconsistent legislation has been brought about. However, we would like to emphasize that even a fixed rate of tax could be introduced, having a nexus with the turnover. This would bring about the uniformity in the Act. Since the incidence is changed from 'sale' to 'draw', we are also of the view that the provisions of Article 286(1)(a) would stand violated in cases where the draw takes place outside the State of Maharashtra. Article 286 lays down restrictions as to Imposition of tax on the sale or purchase of goods. Article 286(1) lays down that no law of a State shall impose or authorise imposition of a tax on the sale of goods where such sale takes place outside the State. In the present case, by shifting the incidence of tax from 'sale' to 'draw', particularly in the table given in Section 8D(1) of the amending Act. Article 286(1)(a) stands violated.

In the circumstances, Point A referred to above, is answered in the affirmative.

FINDINGS ON POINT B :

8. For the reasons given hereinabove. Point B is answered in the affirmative. It is not necessary to repeat the above reasons once again.

FINDINGS ON POINT C :

9. In the case of B.R. Enterprises and Ors, v. State of Uttar Pradesh, it has been held by the Supreme Court that sale of lottery tickets does not attract Article 301 inasmuch as such sales do not constitute trade or commerce. In view of the said judgment of the Supreme Court, Article 301 to 304 has no application. Hence Point C is answered in the negative i.e. against the petitioner. Since we are concerned with sale of lottery tickets Articles 301 to 304 of the Constitution has no application vis-a-vis the amending Act No. LII of 2000.

FINDINGS ON POINT D :

10. We have tried to save a portion of Section 8D(1) of the amending Act because the first part of Section 8D(1) expressly imposes liability to pay tax on sale. The inconsistency is brought about by the table which refers to the rate per draw. If this table is struck down, the Section becomes beleaguered. Section 8D(2) and Section 8D(3) are consequential upon Section 8D(1). Therefore, the entire amending Act by which Section 8D is introduced is hereby struck down. We accordingly hereby strike down and/or quash the

impugned amending Act No. LII of 2000 as arbitrary, inconsistent and contrary to the basic scheme of the principal Act viz. the Bombay Sales Tax Act, 1959 and also as ultra vires and violative of the provisions of the Constitution of India. However, with Section 8D being struck down, the earlier Section 8 with Item 151A of Schedule C would stand revived. 11. Accordingly, writ petition stands allowed. No order as to costs.