1984 (11) TMI 312 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the Bombay Sales Tax Act - Whether snacks and soda water were provided gratis with liquor sales.

Analysis:
The judgment pertains to two references under section 61(1) of the Bombay Sales Tax Act, 1959, where the main issue was whether snacks and soda water provided with liquor sales were free of charge or formed part of the taxable turnover. The Sales Tax Officer initially subjected the turnover of liquor sales to tax at 45%, not considering the value of snacks and soda water. The respondent-dealer argued that snacks and soda water should be deducted from the turnover of liquor sales. The Sales Tax Officer rejected this claim, stating that the bills did not show a separate charge for snacks and soda water, deeming them to be provided gratis. The respondent then appealed to higher authorities, leading to the Tribunal's decision that snacks and soda water were not provided free of charge but were part of the sales to customers.

During the relevant periods, the respondent operated a western-style hotel with a liquor bar. The Sales Tax Officer determined taxable turnover for liquor sales without considering snacks and soda water. The respondent contended that these items were essential with liquor sales due to Prohibition Law. The Assistant Commissioner dismissed the appeals, but noted the separate chit for internal accounting showing the value of snacks and soda water. The Tribunal concluded that customers agreed to purchase snacks and soda water along with liquor, overturning the lower authorities' decisions. The Tribunal directed a fresh investigation to determine the value of snacks and soda water served with liquor and wines.

The Court analyzed the facts and circumstances, emphasizing that the respondent operated for profit, making it illogical to assume snacks and soda water were provided free of charge. It noted that customers would have known they had to pay for these items, even if not explicitly mentioned in bills. The Court found no merit in the argument that snacks and soda water were served gratis, as customers impliedly agreed to purchase these items with liquor. The Court highlighted that the Tribunal's factual inference was justified, and it upheld the decision in favor of the respondent-dealer.

In conclusion, the Court answered the question in the affirmative, confirming that snacks and soda water were not provided free of charge with liquor sales. The Commissioner was directed to pay the costs of the reference to the respondent-dealer.