The Supreme Court of India has held that Only Registered Promoter is Liable to Pay Tax under the Kerala Tax on Paper Lotteries Act, 2005.
In instant appeal liability of the assessee to pay tax under the Kerala Tax on Paper Lotteries Act, 2005 is the question that arise for determination. But the primary authority found the assessee was liable for that. In appeal, the Division Bench of the High Court answered the question in favour of the assessee giving rise to the present appeal.
The assessee is a partnership firm engaged in the business of purchase of tickets in bulk in respect of the lottery conducted by the State of Kerala. The sole issue was that to decide as to whether the assessee is a promoter within the meaning of Section 2(l) of the Act so as to make it eligible to payment of tax under Section 6 and amenable to the other provisions of the Act.
The court brought into notice that the assessee admittedly, is an agent of one M/s. Mysore Sales International Limited (M/s MSIL) who was appointed as sole selling agent of the lottery tickets by the State of Karnataka.
If the respondent is not a ‘promoter’ within the meaning of Section 2(l) of the Act, the charging Section i.e. Section 6 will have no application to make the respondent liable to payment of tax under the Act nor would be the respondent be liable for registration under Section 7 of the Act.
An argument produced by the counsel of revenue that the expression ‘any other person’ appearing in said Sections after the words ‘any promoter’ would permit an expanded meaning to be given to the definition of ‘promoter’ under Section 2(l) of the Act.
Finally the Supreme Court disagreed with the arguments raised by the appellant.
The two judge bench comprising of Justice Ranjan Gogoi and Justice R. Banumathi declared that, If under Section 6 of the Act the assessee, not being a promoter, is not liable to pay tax, and they do not see how the definition of ‘promoter’, who alone is taxable under the Act, can be expanded by use of the expression ‘any other person’ appearing in other provisions of the Act.
The apex court also added that section 6 of the act relate to filing of returns and payment of penalty etc.
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