Lottery Dealers in Haryana can pay Lump sum tax. Who? What? When? How?

CA. RAJAT MOHAN[1]

I           Applicability- When?

Every dealer engaged in the business of purchase or sale of lottery tickets of face value of less than Rs. 7 per ticket ("lottery dealer") shall at his option pay lump sum.

II          Rates- What?

Dealer shall pay lump sum tax at the rates given below –

III        Steps- How?

(a)                The lottery dealer exercising this option shall have to do so in respect of all the schemes of lottery operated by all the States or private operators of lotteries dealt in by him.

(b)               The option to pay lump may be exercised by a lottery dealer at any time and it shall take effect from the next first draw after exercising the option. The lump sum payable in respect of draws to be held within a week of exercising the option shall be paid before they are held.

(c)                A lottery dealer liable to pay lump sum may purchase lottery tickets for sale on the authority of declarations in Central form C, which he shall disclose use of at the time of applying for issue of forms and in quarterly returns to be filed in Form VAT-R9 within a month of the close of the quarter.

(d)               Lottery dealer liable to pay lump sum shall pay it 7 days before the date of draw for each scheme of lottery and the treasury receipt in proof of payment of tax shall be furnished to the appropriate assessing authority within a week of the payment made.

IV        Conditions of this scheme- Who & How?

(a)    Lump sum tax payable shall be deemed to be tax for the purpose of application of provisions relating to assessment, use of declarations and maintenance of record relating thereto, levy of interest, imposition of penalties for offences committed under the Act, and recovery.

(b)   Once an option to pay lump sum has been exercised, it shall not be withdrawn until

ü      the rate of lump sum is revised; or

ü      the rate of tax on goods which the lump sum dealer deal in are revised

(c)    and the lump sum dealer makes an application within 15 days of the date of the publication of the notification that he does not wish to pay lump sum at the revised rate [exception under rule 49]

(d)   A lump sum dealer shall not issue a tax invoice as defined in section 2(1) (zl).

(e)    The input tax in respect of goods purchased by any dealer from a lump sum dealer shall be nil.

(f)     Notwithstanding anything contained in this Chapter, the State Government may at any time withdraw the facility of making payment of lump sum in lieu of tax from anyone or more or all classes of dealers.

(g)    No Surcharge under section 7A shall be applicable in this case.

V          Judicial Rulings

Sunrise Associate Vs NCT of Dehi(2006) 27 PHT 550 (SC) (FB)

Supreme Court, in the above case held that the lottery tickets are not goods but are in the nature of actionable claims. The lottery ticket is merely an evidence of the right to participate in the draw. It has no value in itself and is merely a piece of paper. With this observation, one can say that on lottery tickets, no tax is leviable.

[1] B.com (H), ACA, DISA.

CA. Rajat Mohan has written 4 book on direct as well indirect taxes. He is Deputy Convener for GST Research Study Group of NIRC of ICAI. He is a regular contributor of articles on tax matters, which are published on several online portals and in the columns of reputed tax journals and magazines. He conducts seminar/workshops for professionals and students on ‘GST’ and ‘Income Tax and Service tax’ respectively.

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