N.V. Marketing Pvt. Ltd. vs Union of India

CM No. 18902/2015 (exemption): The exemption is allowed subject to all just exceptions.

W.P. (C) 8647/2015 and CM No. 18901/2015

In this writ petition there is a challenge to the Explanation to clause (ii) of Section 65(19) of the Finance Act, 1994 as being ultra vires the Constitution of India and being beyond the legislative competence of Parliament and, therefore, being violative of Articles 246 and 265 of the Constitution. The point taken by the petitioner is that Section 65(105)(zzzzn) which is in pari materia to the said explanation has been struck down as being ultra vires the Constitution of India. In Future Gaming Solutions Pvt. Ltd. Vs. Union of India and Others, it has been, inter alia, held by the Sikkim High Court that the activity of promotion, marketing, organising or in any other manner assisting in organising games of chance, including lotteries is an activity falling under "betting and gambling" which is the subject matter of Entry 62, List II of the Seventh Schedule to the Constitution of India. Consequently, it has been held that the State Legislature alone is competent to levy any tax on such activity under the said Entry 62, List II of the Seventh Schedule to the Constitution of India. It has been stated by the learned counsel for the petitioner that the explanation which has been impugned was earlier operating as part of the business auxiliary service till 30-6-2010 when it was deleted and new Section 65(105)(zzzzn) was introduced as a specific service. The latter provision, as pointed out above, has been struck down by the Sikkim High Court. Consequently, the explanation which operated as a part of the business auxiliary service and is in pari materia with Section 65(105)(zzzzn) is also liable to be struck down as being ultra vires the Constitution and beyond the legislative competence of Parliament.

Issue notice. Notice is accepted by the learned counsel for respondent No. 1 as also by the learned counsel for respondent No. 2. The counter affidavits be filed within four weeks. The rejoinder affidavits, if necessary, be filed within four weeks thereafter.

Renotify on 11-12-2015.

In the meanwhile, no coercive measures be taken. Also, noncompliance with the interim direction given by the Tribunal with regard to the pre-deposit would not, ipso facto, render the appeal filed by the petitioner liable to be dismissed by the Tribunal. Dasti under the signature of the Court Master.