1996 (6) TMI 323 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether a shop serving cool drinks and ice-creams qualifies as a "restaurant" for the purpose of exemption from sales tax under G.O. Ms. No. 1025.
2. Interpretation of the relevant notification issued under G.O. Ms. No. 1025 regarding the exemption criteria for restaurants, eating houses, or hotels.

Analysis:
The High Court of Andhra Pradesh addressed two tax revision cases concerning the classification of a shop serving cool drinks and ice-creams as a "restaurant" for sales tax exemption under G.O. Ms. No. 1025. The State contended that the shop did not qualify as a hotel or restaurant, while the respondent argued that serving cool drinks and ice-creams made the shop fall within the definition of a restaurant. The central issue was whether a cool drink house could be considered a restaurant. The notification under G.O. Ms. No. 1025 exempted dealers running restaurants, eating houses, or hotels with an annual turnover below a specified limit from sales tax on food or drink supplies.

The Court analyzed the notification's language and the intention behind the exemption. It noted that the exemption aimed to benefit small eating houses, restaurants, and hotels from sales tax charges. The Court interpreted the term "restaurant" using the Oxford Concise Dictionary definition as a place offering meals or refreshments. It concluded that a place serving cool drinks, fruit juice, aerated water, and ice-cream could be considered a restaurant under an extended meaning of the term. Additionally, the Court found that the Governor's intention was to grant exemption to dealers with turnovers below a certain threshold, which would include a cool drink house with a turnover below the specified limit. Therefore, the Court upheld the Tribunal's decision to grant the benefit of exemption under G.O. Ms. No. 1025 to the shop serving cool drinks and ice-creams. As a result, the Court dismissed both tax revision cases, finding no illegality in the Tribunal's order.