Case Title | Summit Oniline Trade Solutions (P) Ltd VS The State Of Goa |
Court | Supreme Court Of India |
Honorable Judges | Justice Dipankar Datta |
Citation | 2023 (03) GSTPanacea 263 HC Supreme Court Civil Appel No. 1700,1701,1702/2023 |
Judgement Date | 14-March-2023 |
The appellant is one of several respondents in three writ petitions pending in the High Court of Sikkim. They filed separate applications seeking their removal from the list of respondents, arguing that a notification they issued, challenged in the petitions, should be addressed by the High Court of Bombay at Goa.
The appellant argued that a statute enacted by a State legislature cannot be legally questioned within the jurisdiction of a high court in a different State, especially when no cause of action arose within that jurisdiction. They contended that since none of the events giving rise to the writ petitions occurred within the territorial limits of the High Court, the petitions should not proceed against them. Additionally, the appellant highlighted that the same notification under challenge in the writ petitions was also being contested in another case (W.P.(C) No. 759/2017) before the High Court of Bombay at Goa. They suggested that to avoid conflicting judgments, the petitioners should either challenge the notification separately before the High Court of Bombay at Goa or seek intervention in the ongoing case there.
However, the High Court, in a unified ruling dated June 6, 2018, dismissed all three applications. Consequently, the appellant filed three appeals by special leave against this judgment and order.
The appeals under consideration challenge a common judgment and order, prompting the court to address them together. The core issue revolves around notifications issued under the Central Goods and Services Tax Act, 2017 (CGST Act), and the Integrated Goods and Services Tax Act, 2017 (IGST Act), along with rate notifications from the states of Goa, Maharashtra, Punjab, and Sikkim. Of particular contention is notification “No.01/2017” dated June 30, 2017, issued by the Government of Goa under the Goa Goods and Services Tax Act, 2017 (GGST Act), imposing a 14% tax on lotteries authorized by State Governments. The petitioners have invoked the writ jurisdiction of the High Court, seeking a declaration that this notification is unconstitutional and illegal.
The crux of the matter to be decided in these appeals is whether the High Court was justified in concluding that “at least a part of the cause of action has arisen within the” jurisdiction of the court. This raises fundamental questions about jurisdiction and the legality of notifications under various tax laws, making it a complex legal issue requiring careful consideration by the appellate court.
Following the dismissal of the applications by the High Court based on the finding that a part of the cause of action had arisen within its jurisdiction, the appeals were brought before this Court. Notice was issued by this Court on November 12, 2018, after the delay in presenting the petitions for special leave to appeal was condoned.
Despite being served notice, none of the writ petitioners appeared before the Court. The Court heard arguments from counsel representing the appellant, the Additional Solicitor General representing the Union of India, and counsel for other parties involved in the case.
To understand the context of the appeals, the Court considered the averments made in W.P.(C) No. 38 of 2017. In this petition, a private limited company engaged in the purchase and sale of lottery tickets organized by the Government of Sikkim within and outside the state is the petitioner. The company sells lottery tickets in Sikkim, Punjab, Goa, and Maharashtra. The petitioner argues that the lottery tickets it supplies, run by the State Government of Sikkim, should not be subjected to a higher GST rate of 28%, as they are not lotteries authorized by the respective state governments. This forms the basis of the case presented by the petitioner.
The distinction between lotteries run by state governments and lotteries authorized by state governments is crucial in understanding the legal and competitive landscape surrounding lottery operations.
Lotteries run by state governments typically refer to those lotteries directly managed and operated by the government of a particular state. These lotteries are usually initiated, organized, and conducted by state agencies or departments. The proceeds generated from such lotteries often contribute to state revenue and are utilized for various public welfare programs and projects.
On the other hand, lotteries authorized by state governments encompass a broader spectrum of lottery activities. These may include lotteries operated by private entities or organizations under the authorization and regulation of the state government. While the state government grants permission for such lotteries to operate within its jurisdiction, it may not be directly involved in their day-to-day management or operations.
The distinction becomes significant in the context of regulations, taxation, and competition. When differential tax rates are imposed based on this distinction, it can lead to legal challenges alleging discrimination and violation of constitutional provisions such as Article 14 (Right to Equality), Article 19(1)(g) (Right to Practice Any Profession), and Article 301 (Freedom of Trade and Commerce).
In the case mentioned, the petitioners sought to challenge notifications issued by the government that imposed differential tax rates on lottery tickets based on whether they were run by the state government or authorized by the state government. They argued that such differentiation was discriminatory and unconstitutional. Specifically, they contested the imposition of higher tax rates on lottery tickets not directly operated by the state government, claiming that it created an unfair advantage for state-run lotteries and hindered competition.
The petitioners also sought a refund of the excess tax paid at the higher rate, along with interest. Additionally, they contested the taxation of the face value of lottery tickets without deducting the prize money component, arguing that such taxation was unjustified as the prize money does not constitute income for the lottery operators.
Ultimately, the High Court, in its judgment, found merit in the petitioners’ arguments and ruled against the differential taxation scheme imposed by the government, deeming it discriminatory and unconstitutional. It ordered the setting aside of the impugned notifications and directed the refund of excess taxes paid, along with addressing the issue of taxation on the face value of lottery tickets.
GST Case Law