# H. ANRAJ ETC v. GOVERNMENT OF TAMILNADU ETC - **Citation:** [1985] Supp. 3 S.C.R. 342 - **Court:** Supreme Court of India - **Decided:** 1985-10-04 - **Bench:** Iulzapurkar, SAllYASA.Clil MUKHARJl I JJ - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/h-anraj-etc-v-government-of-tamilnadu-etc-9126 - **Pages:** 40 ## Headnote Sales Tax on the sale of lottery tickets - The Tamilnsdu General Sales Tax Act, 1959 amending section 59(2) and the West Bengal Taxation Laws (second amendment) Act, 1984 making appropriate additions to sections 5(l) (aa), 5(l) (dd), 5(2) (a) (vb) and 5(2) (v) (iva) to the Bengal Finance (Sales Tax) Act, 1941 are within the legislative competence of the Stste L.egislature c and covered by Entry 54 of List lI in the Seventh Schedule - Concept of a lottery, lottery ticket, "goods", "sale", "movable property" and "immovable property" - Whether the sale of a lottery ticket il\volves a transfer of property in goods and therefore a sale of goods - Constitution of India, 19501 Article 3bb(l2) read with 1ections 2(j) and i(n) of the Tamil Nadu c;sT Act and sections i(d) aild (g) of the aengal Act section 2(7) of u the Sale of !;oods Act, section 3 of the Transfer of Property Act and section 3(26) of the General Clauses Act - Whether c.l.lMs 219 dated 3l.3.l984 of the Tamil Nadu !;overnment iB diacriroinstory and violative of Article 14 and 304(9) of the Constitution. The subject of "lotteries" organised either by the GovernE ment of India or by the Government of a State falls within the Ullion List (Entry 40 of List I) but in the absence of any law having been enacted by the Parliament on the subject the running of lotteries could be done by the Government of various Stetea only under Article 258(1) of the Constitution on entruatment of that function by the Union to the concerned State. By virtue of F that power entrusted to them by Presidential ordera, the Government of Tamil Nadu and the Government of Weit Bengal organieed a State lottery by apo1111oring a l!affle echeme and framing appropriate Rulea in that behalf. The State Governments were aleo deairou1 of levying aalee tax on the isle of the lottery ticket• by placing the incidence thereof on every dealer aelling such G ticket• within the State. II In the State of Tamil Nadu1 by a Notification GOP No. 77 dated January 28, 1984 i11ued under aection 59 of the Tamil Nadu General Sales Tax Act, 1959 the State Government ill8erted an ( H.ANRAJ V• GOvr. OF TAMILNADU 343 Entry 163 in the F.f.rst Schedule to the Act whereby lottery tickets were brought within the purview of the charge· and tax at A the rate of 20% was levied on the sale of such tickets "at the point of first sale in the State." This Notification was lster followed by a regular legisl.a"tive amendment made in the Act as required by section 59(2). . Under the Raffle scheme so promulgated, the first sale of lottery tickets issued thereuDder was by the State Government of Tamil Nadu to various llceQCed B ··agents, whole salers, stockists etc. and the State Government became liable to pay sales tax as the first dealer• Therefore, the Finance (Raffle) Department of the State Goverment issued a Notification W1s No. 219 on March 31, 1984 bringing into force certain arrangement whereunder while retaining the sale price of the ticket at its face value the tax wa~ not passed on to the C licenced dealer or to purchaser; in other- words effectively exenption from payment of aales tax was granted to the purchaser. Shri· H. · Anraj the comnon petitioner, in both the writ petitions · filed under Article 32 of the Constitution, who has been carrying on business in the State of Iamil. Nadu as ·a dealer in lottery tickets issued by the Royal Government of Bhutan, the State. of ; D Assam and various other lotteries, has challenged the validity of both the levy of sales tax on the sale of lottery ticket.a as also the execption granted under Notifkation GOMs 219 · dated 31.3.1984. In. West Bengal, the State Legislsture promulgated the West · E Bengal Taxation L.iws (second amendment). Act, 1984 whereuDder by making appropriate amendments (by way of additions) to sections 5(l)(aa) ,5(l)(dd) ,5(2)(a) (vb) and 5(2)(v) (iva) of the Bengal Finance (Sales Tax) Act 1941 sales tax at the rate of 20% was levied on the taxable'turnover of every deiil ## Text _Characters 0–39,714 of 99,313. This is a partial read: ask again with offset=39714 for what follows._ A B 342 H. ANRAJ ETC. v. GOVERNMENT OF TAMILNADU ETC, OCTOBER 4, 1985 [V, lJ, 'IULZAPURKAR AND SAllYASA.Clil MUKHARJl I JJ. J Sales Tax on the sale of lottery tickets - The Tamilnsdu General Sales Tax Act, 1959 amending section 59(2) and the West Bengal Taxation Laws (second amendment) Act, 1984 making appropriate additions to sections 5(l) (aa), 5(l) (dd), 5(2) (a) (vb) and 5(2) (v) (iva) to the Bengal Finance (Sales Tax) Act, 1941 are within the legislative competence of the Stste L.egislature c and covered by Entry 54 of List lI in the Seventh Schedule - Concept of a lottery, lottery ticket, "goods", "sale", "movable property" and "immovable property" - Whether the sale of a lottery ticket il\volves a transfer of property in goods and therefore a sale of goods - Constitution of India, 19501 Article 3bb(l2) read with 1ections 2(j) and i(n) of the Tamil Nadu c;sT Act and sections i(d) aild (g) of the aengal Act section 2(7) of u the Sale of !;oods Act, section 3 of the Transfer of Property Act and section 3(26) of the General Clauses Act - Whether c.l.lMs 219 dated 3l.3.l984 of the Tamil Nadu !;overnment iB diacriroinstory and violative of Article 14 and 304(9) of the Constitution. The subject of "lotteries" organised either by the GovernE ment of India or by the Government of a State falls within the Ullion List (Entry 40 of List I) but in the absence of any law having been enacted by the Parliament on the subject the running of lotteries could be done by the Government of various Stetea only under Article 258(1) of the Constitution on entruatment of that function by the Union to the concerned State. By virtue of F that power entrusted to them by Presidential ordera, the Government of Tamil Nadu and the Government of Weit Bengal organieed a State lottery by apo1111oring a l!affle echeme and framing appropriate Rulea in that behalf. The State Governments were aleo deairou1 of levying aalee tax on the isle of the lottery ticket• by placing the incidence thereof on every dealer aelling such G ticket• within the State. II In the State of Tamil Nadu1 by a Notification GOP No. 77 dated January 28, 1984 i11ued under aection 59 of the Tamil Nadu General Sales Tax Act, 1959 the State Government ill8erted an ( H.ANRAJ V• GOvr. OF TAMILNADU 343 Entry 163 in the F.f.rst Schedule to the Act whereby lottery tickets were brought within the purview of the charge· and tax at A the rate of 20% was levied on the sale of such tickets "at the point of first sale in the State." This Notification was lster followed by a regular legisl.a"tive amendment made in the Act as required by section 59(2). . Under the Raffle scheme so promulgated, the first sale of lottery tickets issued thereuDder was by the State Government of Tamil Nadu to various llceQCed B ··agents, whole salers, stockists etc. and the State Government became liable to pay sales tax as the first dealer• Therefore, the Finance (Raffle) Department of the State Goverment issued a Notification W1s No. 219 on March 31, 1984 bringing into force certain arrangement whereunder while retaining the sale price of the ticket at its face value the tax wa~ not passed on to the C licenced dealer or to purchaser; in other- words effectively exenption from payment of aales tax was granted to the purchaser. Shri· H. · Anraj the comnon petitioner, in both the writ petitions · filed under Article 32 of the Constitution, who has been carrying on business in the State of Iamil. Nadu as ·a dealer in lottery tickets issued by the Royal Government of Bhutan, the State. of ; D Assam and various other lotteries, has challenged the validity of both the levy of sales tax on the sale of lottery ticket.a as also the execption granted under Notifkation GOMs 219 · dated 31.3.1984. In. West Bengal, the State Legislsture promulgated the West · E Bengal Taxation L.iws (second amendment). Act, 1984 whereuDder by making appropriate amendments (by way of additions) to sections 5(l)(aa) ,5(l)(dd) ,5(2)(a) (vb) and 5(2)(v) (iva) of the Bengal Finance (Sales Tax) Act 1941 sales tax at the rate of 20% was levied on the taxable'turnover of every deiiler in regard to the sale of lottery tickets. By a Notification NO. 1020 FT 'dated March 29, 1984 the levy imposed under the aforesaid amendinents p was brought into force with effect from May l, 1984. By a writ petition filed "in the Calcutta High Court the appellants (being three petitioners who carry on . business ·in the State of West Bengal·as-agents and stockists of various lotteries organised by different States including the State of, West Ben;:al) challenged the validity of the aforesaid amendments made in the Bengal _ G Finance (Sales Tax) Act,' 1941 whereuDder · sales tax has been levied on the sale of •lottery tickets substantially on the ground that' a lottery ticket when sold represented an actionable claim and not "goods" and such a transaction being merely a sale of a chance to win a prize in the draw waa not exigible to sales tax ~ and, therefore, the amendments made were beyond the'legislstive H -------------------------~ A c )) H 344 SUPRllME Ci)(JRT REPORTS [1985] SUPP.3 s.c.R. competaace of the State Legialature, aa Entry 54 of Liat II in tha S.venth Schedule authoriaes legialation levying aales tax only on the aele or purchaae of "goods"; the matter ultimately went before • Diviaion Bench of that Court which by it1 judgment and order dated August 14, 1984 dismissed the writ petition upholding the constitutional validity of , the amendments in question as also the levy imposed thereunder. In substance the lligh Court came to the conclusion that lottery tickets were not actionable claims .but "goods" within the definition of that expression given in the Bengal Finance (Sales Tax) Act, 1941 and therefore, the State Legislature was competent under Entry 54 of the List 11 to enact the concerned amendment& levying sales tax on the sale of lottery tickets. Hence the appeal by special leave. The following contentions were rai1ed on behalf of the sellitlg agental (i) the levy of sales tax on the &ale of lottery is not valid on the sole ground of lack of legialative competence on the part of the concerned State Legislatures; (ii) under the charging provision contained in both the Acts (section 3 of the Tamil Nadu Act 1959 and section 4 of the Bengal Act 1941) the taxable event is the sale-of goods (here lottery tickets) and the leyy is imposed upon the taxable turnover of every dealer in. regard to the sales of lottery tickets and therefore, quite clearly, each of the State Legislature has purported to act in the exercise of its own taxill8 power under Entry 54 of the List II, which enables legislation 1mposill8 a tax, inter alia on "sale of goods". It is well settled that the expression "sale of goods" has to be construed in the sense which it has in the Indian Sale of Goods Act, 1930 and "goods" under section 2(7) thereof comprises within its scope every kind of movable property but specifically excludes actionable claim. The essence of lottery being a chance for a prize for a price the sale of lottery tickets is not a sale of goods and therefore, the leyy of sales tax on sale of lottery tickets would be beyond the ambit of Entry 54 of List II; (iii) Alternatively, a lottery ticket is an actionable claim as defined in section 3 of Transfer of Property Act or a chose-in-action known to English Law, the ticket itself being merely a slip of paper or memorandum evidencing the right of the holder thereof to claim or receive a prize if successful, in the draw and therefore the impugned leyy is outside Entry 54 of List II; (iv) So far as the Madras Act is concerned the State Government's Notification GOMs. lio, 219 dated March 31, 1984 is discriminatory and violative of Article 14 and Article 304 (a) of the Constitution inas1D11ch as thereunder the burden of sales 1-1 .At.'l!AJ v, GOVT, OF Tl\MILNADU 345 tax, aur"'Charge and additio1111l sur-charge is prohibited to be A passed on to the purchaser of Tlllllil Nadu lottery Tickets while there is no such aWlsr treatment given to the lottery tickets of other States which are being sold in the State of Tamil Nadu thereby putting the sale of other lottery tickets at a serious disadvantage. The respond~ts refuted the validity of the grounds and contended: (i) for deciding the legislative competence of the impugned Amendments levying sales-tax of lottery tickets, apart from Entry 54 of List II ("taxes on the sales or purchaae of goods") Entry 62 of List II ("Taxes on .... betting and gambling") lllllSt be looked into. If the dealer's contention were correct that lottery is a chance and when a lottery ticket is sold it is a chance that is sold, then the tax in the present case would be a C tax on betting and gambling and the same has to be levied in the case of lottery tickets at the time of the sale of the tickets because it is at that time that betting takes place and as such the impugned Amendments would fall under Entry 62 of List II; (ii) a lottery ticket is "goods" within the definition of that expression given ill the two Acts as also in the Sale of Goods D Act, 1930 and not purely an actionable cl.aim; (iii) a sale of a lottery ticket confers on the purchaaer two rights (a) a right to participate in the draw and (b) a right to claim a prize if successful in the draw and thoush the latter may be an actionable claim the former constitutes beneficial interest in the movable property (incorporeal in character) in possession of the holder E of the ticket and hence "goods" capable of being possessed and bought or sold; and (iv) as regards the exemption granted by the Tamil Nadu Government under Notification No. GQMs, 219 dated March 31, 1984 the circumstance that the Tamil Nadu Government decided not to pass on the sales-tax to the purchaser cannot invalidate the same as falling under Article 14 or Article 304 inasmuch as it is open to a dealer not to pass on the burden to F · the purchaser and bear it himself ·aru1 further it is also open to all other State Governments who run lotteries to elect not to pass on the sales-tax to the purchaser of their lottery tickets. Dismissing the appeal and allowing the writ petitions in part, the Court G lll!lll: (Per Tulzapurkar, J.) 1.1 1he Amendments made to the Tamil Nadu General Sales Tax Act, 1959 and ·the Bengal Finance (Sales Tax) Act, 1942 imposing a lev)i for the first time on such sales of lottery tickets fall within the legislative competence of the concerned State Legislature under Entry 54 of List II in the Seventh Schedule. [374 A-B] H ' I I I A 346 SUPWlE COURT l\EPORIS [1985) SUPP.3 S;C.R. l.2 The lottery tickets to the extent thst they comprise the entitlement to participate in the draw are "goods" properly . so called, squarely . falling within the definition of thst · expression as given in the Tamil Nadu Act, 1959 and the Bengal Act, 1941 and to thst extent, they . are not "actionable claims" B and in every sale thereof, a transfer of· property is involved. [373 G-ll; 374 A] c · , - l.3 From a combined reading of· section 2(7) of the Sale of GOods Act and section 3(26) of the General Clauses Act, 1897, it is·. clear . thst _when section 2(7) of the Sale of goods Act defines- "gOOds" as meaning "every kind of lllCVable property other than ·actionable cla:lms · and 1110ney", the , expression "lllCVable property" occurring therein must mean property of every description except immovable property. Since lottery tickets cannot be regarded as :!movable property, but would, therefore, be "movable property" and as such they will fall within the expression "gooda~· [364 C-E] D 2.1 Whether by reason of a sa1e of lottery ticket merely a contractual document come into existence or along with - the clelivery of such a ticket to the purchaser on payment of price by him some rights are transferred to the purchaser must depend upon the intention of the parties, the mode of issuing such ticket and the Bules ·governing the Raffle Scheme. Even proceeding on the E usumption thst lottery tickets are contractual documents thst fact cannot militate against the tickets being goods and certain r18hts thereunder being transferred to. the purchaser. [365 D-F] 2.2 The-delivery of a lottery ticket issued under the Bules governiDg the Raffle Scheme in the instant case to a purchaser ' F thereof is obviously not a mere -contract creating £n obligation - ------'- or r18ht in personam between part:l,es to it, but would be in the ------ - ·c --·- '"!ture of a grant. [366 C-D) 2.3 It is well settled ,thst rights and benefits arising · lmder agreements in the nsture of a grant, unless or a personal Mture~ partake of the character of personalty as opposed to -realty and therefore, lllOVable property, capable of being assigned or tranaferred. As opposed to personal rights, like life, liberty or reputation, these would be proprietory rights and benefits and hence iI>cludible in property.· In the csse of agreements in the Mture of a grant, the right or benefits arising thereunder would H - be property 1110re .so when a party thereto _has beca:;e entitled to the same on performing his part of the contract and in fact such rights or benefits would also be assignable. [366 D-E; 367 B-c] li,ANRAJ v. GOVT. OF !AMILNADU 347 Swami Motor Transport (P) Ltd. and Anr. v. Sri SlulUx~ gal. 11utt and Arlr·, [1963) Suppl. l SCR 282 at 306 - 307 M/•• Amlllr ihsn Mdlboob & Coo V• State of Madhya Pradesh 8lld Orao, [1966) 2 SCR 40 at 49-52 distinguished. 2.4 ln every Raffle Scheme bssed on the sale of lottery tickets, aimilsr to the schemes sponsored by each of the two State in this case, a participant is required to purchue a lottery ticket by paying a price therefor (the face value of the ticket) and auch purchase entitles him not merely to receive or clsim a prize in the draw, if succes1ful but, before that, al10 - to participate in such draw. ln other words, a 1ale of a lottery ticket confera on the purchaser thereof two rights (a) a right to participate in the draw and (b) a right to cl.aim a prize contingent upon hie being 1uccea1ful in the draw. Both would be benefic:lal intere1t1 in movable property, the former "in preaenti"; the latter "in futuro" depending on a cont:h1aency. Lottery tickate, not as pbyaical art:l.clea, but a• 1lipa of paper or memoranda evidence not one but both theae beneficial intereata in movable property which are obvioUlly capable of being tra1111ferred, aaligned or aold and on their tra1111fer, a11iglllll8nt or aale both theae beneficial interests are made over to the purchuer for a price. [367 D-F) · The two entitlements which arise on the purchue of a lottery ticket are of a different character, i11&11WCh as the right to participate arises :In preaenti, that ia to aay it ia a choate or perfected right in the purchaser on the strenath of which he can enforce the holding of the draw while the other ia inchoate right which is to lll&terialiae in future aa and when the draw takes plsce depending upon his being succeasful in such draw. Moreover, on the date of the purchase of the ticket, the entitlement to participate in the draw can be aaid to have been ddlivered unto-the-posaession of the purchaaer who would be enjoyina it from the time he bu purchased the ticket and as such it would be a chose in posaea1ion while the other would be an actioneble clsim or a choae-in-action. 'Ihus a transfer of the right to participate in the draw which tak.e1 plsce on the 1ale of a lottery t:l.ckat would be a tranafer of ben•ficial interest in movable property to the purchaeer and therefore, amounte to transfer of goods and to that extent it ia n0 transfer of an a.:t:l.onable claim; to the extent that it involvea a tra1111fer of the right to clai111 a prize depending on a chance it will be an a .. ignment of an actionable claim. When a purchaaer purchaae1 a lottery ticket_ he pays consideration (price) nor merely for th• A B c D E F G H A B c D E F G H 348 SUPREME COURT RF.BOR'l:S [l985] SUPP.3 s.c.a. i:ight to claim in future a prize in the draw but also for the right i!!, presenti to participate in the draw, that ie to 1ay not Olli but two distinct rights are tra111ferred to the purchaeer and therefore, the contention that the two together coll8titute a aiDgle right cannot be accepted. [367 G-11; 368 A-DJ Joaea Vo c.rter, 8 Q•B• 134 • English Reports Vol. CXV PP• 825-826; Eis>g v. Cozmllre & Anr., 61 CLR 596 at 607 quoted with approval. 2.5 The analogy of capital issue by a Joint Stock Canpany is wholly insppropriate. The capital issue by a Joint Stock Coinpany is governed by the provisions of the Companies Act and Memorandum and Articles of Association of the company (whereunder no C01llp8ny can subscribe to or purchase its own shares since it lllllOunts to reduction of capital) whereas the issue of lottery tickets would be governed by a Raff le Scheme and the Rules framed therefor by the promoter (who in the instant case happens to be a State Government) containing provisions entirely different from those governins issue of share capital. Moreover, tbe agreement that comes into existence as a result of the sale of a lottery ticket by a promoter to a buyer is in the nsture of a grant conferring the two rights (the right to participate and the right to claim a prize if successful) upon such buyer; if this be the true nsture of the agreement it implies that both the rights come into existence and are with the promoter no sooner a Raffle Scheme together with the Rules governing it (Rules which fix the number of series to be issued, the number of tickets in esch series, the manner of holding a draw, the number and the terms on which the prizes to be awarded, etc. etc.) is sponsored, published and the tickets are offered for sale and these rights are transferred upon the sale of the ticket to the purchaser. The mere fact that under the Rules the promoter is disabled from participating in the draw or from claindng a prize in such draw does not mean that these rights do not come into existence or are not with the promoter before the actual sale of the tickets to the buyer nor does it mean that these rights come into existence for the first time only upon the sale of the ticket to the buyer. Such disability imposed upon the promoter by the Rules is necessary to create confidence in the participants about the promoter's bonafides in the Raffle Scheme and prevents the Scheme being viewed as a fraudulent or fishy affair. In other words a transfer of the rights from the promoter (grantor) to the buyer (grantee) is clearly involved in the sale of a lottery ticket. [369 C-E; 370 D-H; 371 A-DJ l!.ANRAJ V• GOvr. OF TAMlLNADU 349 ' Further tbia right to participate in the draw under a lottery ticket remains·a valuable right till the draw takes place and it is for:tbia reason that licenced agents or wbole-salers or dealers of such tickets are enabled to effect sales thereof till the draw actwilly takes place and as such till then the lottery tickets . constitute their stock-in-trade and therefore a merchandise. In _other wrds, lottery tickets n0t as physical · articles but as slips of paper or meiooranda evidencing the right to participate in the draw must in a sense be regarded as the dealer's mercb.andise and therefore, goods, capable of : being bought or sold in the market. They can alao change from hand to hand as goods. Therefore; for the purpose of :Imposing the levy. of · sales-tax lottery tickets comprising the entitlement to a right ·to participate in a draw will haw to be regarded as "goods" properly so called. [371 D-ti; 372 A] Uuf.ted States Y• Hi>e11er, (178) (Second series) Federal · Reporta 593. at 594 quoted with approval. 2.6 It , is true · that this entitlement to a · right to · parUcipate in the draw is an entitlement to beneficial interest which is of incorporeal or intangible nature but that cannot prevent it frum being regarded as goods• If incorporeal right like copy right·or an intangible thing like electric energy can be regarded as goods exigible to salea tax there is no reason why the enUtlement to a right· to ' particii>ate ·in a draw which· is beneficial interest in movable property . of incorporeal or intangible character should not be regarded as 'goods' for the purpose of levying sales tax~ Lottery tickets which comprise such enUtlement do constitute the stock-in-trade of every dealer and therefore bis merchandise which can be . brought and sold in the market. Lottery tickets comprising such entitlement, therefore 'lilJuld fall within the definition of "goods" given in the Tamil Nadu Act and the Bengal Act. [372A; 373 E-G] "'nn1safooer of Sales Tax, H.P. Y• Madhya Pradesh Electricity ~· Jabalpur, (1969] 2 SCR 939 applied •. A.V. He.iyappai:i Y• Co-intoner of ~ Tau, Madras, Alli. 1969 Madras 284 approved. • A B c D E F G (The Court applied non-liquet on the alternative submission that legislaUve competence for ·enacUng the :Impugned Amendments wuld alao be there under Entry 62 . of List 11 in the Seventh • Schedule of the Constitution.) H " 350 ~UPRl!ME COURT REPORTS [l985j SUPP.3 s.c.R. A 3.l The impugned Notification GCl!a. 219 elated March 31, 1984 issued by the State Government of Tamil Nadu is clearly violative of Article 301 read with Article 304 (a) of the Conatitution. [374 CJ 3.2 In A.T.B. llebtab llajid and Co. 'a case [1963 J Suppl. 2 B SCR 435, the Supreme Court held thst taxing laws can be restric~ tiona on trsde, cOlllllerce and intercourse, if they hampered free flow of trade and if they are not what can be termed to be compensatory tax on regulatory measure; thst sales tax of the kind under conaideration could not be said to be a measure regulating any trade or a compenaatory tu levied for the use of trading facilities; that the sales tax which had the effect of C discriminating between goods ol: one State and gooda of another may affect the free flow of trade and it will then offend againat Article 301 but will be valid only if it comes within the terms of Article 304(a). Here, the real question is whether the direct and imnediate result of the impugned Notification is to impose an unfavourable and discriminatory tax burden on the imported goods (here lottery tickets of other States) .when they are sold within D the State of Tamil Nadu as against indigenous goods (Tamil Nadu Government lottery tickets) when these are sold within the State from the point of view of the purchsser and this question has to be considered from the normal business or COlllllercial point of view and indisputably if the question is so considered the impugned Notification will have to be regsrded as directly and E illlllediately hampering free flow of trade, counerce and intercourse. Discriminatory treatment in the matter of leyying the sales tax on imported lottery tickets which are similar to the ones issued by the State Government so as to hamper free flow of trade, C011111erce and intercourse ia writ large on the face of the impugned Notification. (378 D-f!; 379 A] F Atiabllri Tea Co. Ltd. y, Die State of Asaaa and Ors., [1961] l SCR 809; A.T.B. llebtab llajid and Co. V• State of lladraa and Jmr,, [1963] Supp. 2 SCR 435; A. Bajee Abdul Shakoor and Cooq>alQ' V• State of lladras, [1964] 8 SCR 217; State of lladras Vo 11,L liataraja l!pdal1ar, [1968] 3 SCR 829; QmmWih lla1du & Sona Vo G State of Tamil lllldu & Anr., 38 STC 565 followed. (Per Sabyaaacbi llotbarji, J.) (Concurring) l. l Both under the relevant provisions of the relevant Tamil Nadu Act and the West Bengal Act, in order to attract the li leyy of sales-tax, there D11St be aale of goods i.e. transfer of property. In other words, both these Acts insist tranafer of H.ANRAJ v. GOVT. OF TAMILNADU 351 property in goods. Article 366(12) of the Constitution gives an incluaive definition of "goods" indicating thereby goods" incJ.udea all materials, cOldllOdities and articles. The·refore, there 11111St be tranafer of property in the goods for a price, the concept has the aame meaning which it has undu the Sale of Goods Act, 1930. [379 E] 1.2 "Grant" is an agreement of some sort which creates rights in the grantee and an agreement which transfers rights may be termed as assignment, but it cannot be said that such a grant/right, nsmely, the right to participate in the draw, in the facts and circumstances of the case, existed in the grantor. [379 G-1!; 380 A] Under the rules, the promoter is not able to participate in the draw or claim a prize in such a draw. Therefore, the right that is transferred to the·purchaser of lottery ticket is not the same right which was existing in the grantor, in this case the promoter. By the sale by the promoter and purchase by the grantee of the ticket, there is no transfer of the same property namely the property which existed in the grantor nsmely disability from participating in the draw which is granted to the purchaser or the grantee of the lottery ticket. The transfer of right from the promoter-grantor to the buyer-grantee is involved in the sale of a lottery ticket but, the issue whether it is transfer of the same right which the promoter or grantor had or a larger or greater right created by the factum of transfer in favour of the grantee is a point of some complex! ty and there is no easy solution. However, the State can create such right for the first time and such transfer of the right by the State as a promoter would amount to a transfer of property and being in consideration of a price can be sale of goods. The right to participate in the draw under a lottery ticket · remains a valuable right till the draw takes place and it is for this reason that licence agents or whole-salers or dealers of such tickets are enabled to effect sales thereof till the draw actually takes place and therefore lottery tickets, not as physical articles but as slips of paper or memoranda evidencing the right to participate in the draw can be regarded as dealer's merchandise and therefore goods which are capable of being bought or so~ in the market. [380 D-li; 381 A-DJ 1.3 The analogy of capital issue by Joint Stock Company is not appropriate. [381 A] A B c D E F G ORIGINAL JURISDICTION : Writ Petitions Nos. 435 and 436 of . H 1985. r~- A B 352 SUPRil!E COURT REPORTS [1985] SUl'P.3 s.c.R. (Under Article 32 of the Constitution of India) AND Civil Appeal No. 4099 (NT) of 1984. From the Judgment and Order dated 14;8.1984 of the.Calcutta High Court in Civil Rule No. 6431 (W) of 1984~ . .. ~-- - Soll J. Sorabjee, K. Srinivasan, N.B.B. Raju and Vineet Kulliar for the Petitioners in W.P. No. 435 of 1985. y.s. Chitale, Vineet Kumar and K. Srinivasan for the c Petitioners in w.P. No. 436 of 1985. D K. Parasaran, Attorney General and A.v. Rangam for the Respondent in W.P. Nos. 435-36 of 1985. K.K •. Venugopal,. Vimal Dave, Miss. Kailash Mehta and Mrs. - Neel.am Kalsi for the Appellants in C.A •. No. 4099 of 1984. . N. Gooptu and H.K. Puri for the Respondent in C.A. No. 4099 of 1984. The following Judgment~ were delivered E TllLZAPUl!XAR, J • These Writ Petitions and the Civil Appeal "-F G H raise a COlllllOn question of law, namely, whether sales tax can be levied by a State Legislature on the sale.of the Lottery Tickets in the concerned State?- The facts giving rise to the aforesaid question lie in a narrow compass and in the writ petitions the question arises out of the levy.imposed for.the first time on such sales of lottery tickets by an amendment made in the Tamil Nadu .General Sales Tax Act 1959 with effect _from January 28, 1984 while in the_ civil _.appeal it arises out· of a similar levy imposed for the first tiiiie by making -suitable amendments in the Bengal Finance (Sales Tax). Act, 1941 with effect .from May r, 1984. Indisputably the subject of "Lotteries" organised either by the _Government of Iridia or by the Government of a State falls within the·Union List (Entry 40 of List I) but in the absence of any law having been enacted by the Parliament on the subject the running of lotteries could be done by-the Government of vario\is H.ANRAJ V• GOVT. OF TAMILNADU [TULZAPURKAR, J. J 353 States only under Article 258(1) of the Constitution on A entrustment of that function by the Union to the concerned State. Accordingly at the instance of the Tamil Nadu Government which proposed to organise its own State Lottery the Central Government entrusted that function to the State Government by means of a Presidential Order dated October 27 ,1971, the operative part whereof ran thus: B "Now, therefore, the President is pleased to permit the Government of Tamil Nadu to conduct a sj:ate lottery, subject to the condition that the tickets of the lottery shall not be sold .in any other State without the permission of the Government of that C State. The President is further pleased to entrust the Government of Tamil Na du under clause ( 1) of Article 258 of the Constitution the executive power of the Union in respect of lotteries organised by that D ' GoVernment. " Pursusnt to the aforesaid Presidential Order the Government of Tamil Nadu organised a State Lottery by sponsoring a Raffle Scheme and framing appropriate Rules in that behalf. The State Government was also desirous ·of levying sales tax on the sale of E the lottery tickets by placing the incidence thereof on every dealer selling such tickets within the State and for that purpose by a Notification G.o,p, No. 77 dated January 28, 1984 issued under s. 59 of the Tamil Nadu General Sales Tax Act, 1959 the State Government inserted an Entry 163 in the First Schedule to the Act wherebY lottery tickets were brought within the purview of the charge and tax at the rate of 20% was levied on the sale F of such tickets "at the point 0£ first sale in the State". This Notification was later followed by a regular legislative amendment made in the Act as required by o.59(2). Presumably this was done in the exercise of its own indeFendent taxing power under Entry 54 of List 11 in the Seventh Schedule to the Constitution. It seems that under the Raffle Scheme so pr01111lgated the G first sale of lottery tickets issued thereunder was by the State Government of Tamil Nadu to various licensed agents, whole salers, stockists etc. and the State Government became liable to pay sales tax as the first dealer. Therefore, the Finance (Raffle) Department of the State Government issued a Notification GOMs No. 219 on March 31, 1984 bringing into force certain arrangement whereunder while retaining the sale price of the H 354 SUPRE21E COURT REPORTS [1985] SUPP.3 s.c.a. A ticket at its face value the tax was not passed on to the licenced dealer or to purchaser; in other words effectively exemption from payment of sales tax was granted to the purchaser. Shri a. Anraj the common petitioner in both the writ petitions, who has been carrying on business in the State of Tamilnadu as a dealer in lottery tickets issued by the l