1980 (2) TMI 249 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of taxable turnover in sales tax case.
2. Contention regarding exemption from tax on turnover of cooked food.
3. Timing of raising legal points in appeal and revision.
4. Interpretation of previous legal decisions on tax liability.
5. Impact of recent Supreme Court order on sales tax assessment.

Analysis:
1. The case involved a revision filed by the Commissioner of Sales Tax regarding the assessment of taxable turnover for an assessee dealing in sweets, namkin, and cold drinks. The assessing officer estimated the turnover at Rs. 1,60,000, which was later reduced to Rs. 40,000 by the appellate authority. The revising authority accepted the contention that the assessee, being a restaurant, was not liable to pay tax on the turnover of cooked food, sweets, etc., based on a Supreme Court decision. The Commissioner challenged this decision in the present revision.

2. The revising authority confirmed the liability of the assessee to pay tax on foodgrains, which was not challenged by the Commissioner. The Commissioner's submission that the assessee could not raise the contention of tax exemption on cooked food for the first time before the revising authority was rejected. It was established that the assessee served cooked food, sweets, and drinks at their premises, and the Supreme Court decision applied to the case, allowing the assessee to claim exemption based on the nature of transactions.

3. The judgment clarified that legal points affecting the jurisdiction of an authority could be raised at any time, even in revision. The timing of raising legal arguments, especially those related to tax liability, was crucial, and the assessee's plea for exemption based on the Supreme Court decision was deemed valid despite being raised for the first time before the revising authority.

4. The Commissioner relied on a previous decision to argue that the assessee, having admitted tax liability on admitted turnover, was barred from claiming exemption in revision. However, the court distinguished this case, emphasizing that the current plea for total exemption based on the nature of transactions could be raised for the first time in revision, especially considering the significant impact on tax liability.

5. A recent order by the Supreme Court clarified the application of its previous decision on the tax liability of restaurant owners. The revising authority was directed to reevaluate the case in light of the clarification, emphasizing that if the dominant object of the transactions was the sale of food, then sales tax would be applicable. The case was referred back to the revising authority for a fresh decision based on the new interpretation.

In conclusion, the revision was allowed, and the case was remanded to the revising authority for a fresh assessment considering the clarified legal principles regarding tax liability on the turnover of cooked food and related items served by the assessee.