1980 (12) TMI 159 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of sales tax exemption for cooked food sold by a dhabawala under specific notifications.

Analysis:
The case involved a reference under section 44(1) of the M.P. General Sales Tax Act, 1958, regarding the classification of an assessee as a dhabawala and the tax exemption on cooked food sold by them under specific notifications. The assessing authority initially did not accept the assessee's claim of being a dhabawala, but the Board of Revenue, on appeal, found in favor of the assessee, stating that the sale of cooked food was exempt under relevant notifications. The main question referred to the High Court was whether the Tribunal was justified in its decision regarding the assessee's classification as a dhabawala and the tax exemption for the cooked food sold.

The State Government had issued Notification No. 965-V-ST dated 31st March, 1964, exempting cooked food from sales tax when sold by dhabawalas. The Board of Revenue, based on the evidence, found that the assessee served "katcha bhojan" in thalis with mainly Indian sitting arrangements, which aligned with the characteristics of a dhabawala. The Board emphasized that the presence of some sweetmeats on festivals or additional amenities like newspapers and towels did not change the fundamental nature of the establishment from a dhaba to a restaurant. Therefore, the Board's conclusion that the assessee was a dhabawala was deemed justified.

The State's counsel referred to a previous decision of the Court where it was held that establishments selling large quantities of sweets and snacks could not be classified as dhabawalas. However, this case was distinguished from the present one as the Board's findings supported the assessee's classification as a dhabawala due to serving "katcha bhojan" in thalis with Indian sitting arrangements. The High Court, considering these factors, answered the question in the affirmative, supporting the Board's decision and ruling against the department. The parties were directed to bear their own costs in the proceedings.

In conclusion, the High Court upheld the Board of Revenue's decision regarding the assessee's classification as a dhabawala and the exemption of cooked food from sales tax under the specific notifications, emphasizing the importance of the establishment's characteristics and the nature of food served in determining the applicability of tax exemptions.