1975 (12) TMI 146 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the foreign liquor business and hotel business are separate businesses?
2. Whether the turnover of foreign liquor business should be excluded from the dealer's turnover for assessment purposes?

Analysis:
1. The case involved references under section 24(1) of the Orissa Sales Tax Act regarding the unity or separation of the foreign liquor business and hotel business run by a partnership firm. The Sales Tax Officer initially treated both businesses as one entity, but the Tribunal disagreed, finding no unity between the two. The High Court held that based on the common set of accounts and other evidence, the businesses were not separate entities, ruling in favor of the revenue.

2. The assessment was conducted under rule 90 of the Orissa Sales Tax Rules, which provides for a special mode of assessment for businesses like hotels. The rule specifies different percentages based on annual turnover for calculating tax liability. The contention arose whether the sale of foreign liquor, a tax-free item, should be included in the turnover for assessment. The High Court clarified that drinks mentioned in the rule do not cover liquor sales. Therefore, the turnover of the foreign liquor business should be excluded from the dealer's turnover for tax calculation purposes, as per the notification exempting sale of foreign liquor from sales tax.

Conclusion:
The High Court ruled that the foreign liquor business and hotel business were not separate entities and should be considered together for assessment purposes. However, the turnover of the foreign liquor business should be excluded from the dealer's turnover for calculating tax liability. The judgment was delivered by Misra R.N. and Das N.K., JJ.