2000 (7) TMI 956 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the Sales Tax Appellate Tribunal was justified in granting exemption on the turnover of cooked food sold by the assessee in the restaurant.

Analysis:
1. The matter pertains to the Kerala General Sales Tax Act, 1963, with the revenue as the revision-petitioner for the assessment year 1991-92. The respondent-assessee, a dealer in Indian-made foreign liquor with a restaurant attached to the liquor shop, claimed exemption from tax on the sale of cooked food based on S.R.O. No. 1003/91. The assessing authority and the first appellate authority rejected the claim, but the Sales Tax Appellate Tribunal granted the exemption, leading to the revision.

2. The central issue is whether the Appellate Tribunal's decision to grant exemption on the turnover of cooked food sold in the restaurant was justified. The relevant provision, entry 12 of the Third Schedule to the Act, exempts the sale of cooked food in hotels or restaurants from sales tax when the turnover does not exceed rupees five lakhs. S.R.O. No. 1003/91 provided total exemption for cooked food sales not falling under specific categories, applicable to all hotels and restaurants not classified as bar attached or star hotels.

3. The Tribunal observed that the assessee operated a foreign liquor shop and a separate restaurant, with the restaurant not meeting the criteria of a bar attached hotel. Since the turnover was below rupees five lakhs and the liquor license did not cover bar operations, the Tribunal found no justification for taxing the cooked food turnover. The Tribunal correctly applied the law and the exemption notification, leading to the dismissal of the revision petition.

4. To impose tax on cooked food turnover, the establishment must qualify as a bar attached or star hotel, requiring specific licenses under the Abkari Rules. As the assessee only held a foreign liquor shop license and operated an independent restaurant, not serving liquor in the restaurant, the Tribunal's decision aligns with the legal framework. Even if the turnover exceeded rupees five lakhs, the exemption under S.R.O. No. 1003/91 would still apply, reinforcing the Tribunal's justified action in excluding the cooked food turnover from assessment.

5. In conclusion, the High Court upheld the Tribunal's decision, dismissing the revision petition and affirming the correctness of exempting the cooked food turnover from taxation based on the provisions of the Kerala General Sales Tax Act and the relevant exemption notification.

Judgment:
- The High Court of Kerala dismissed the revision petition, upholding the Sales Tax Appellate Tribunal's decision to grant exemption on the turnover of cooked food sold by the assessee in the restaurant.