2004 (5) TMI 549 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Full Bench's decision that canteen sales are not exigible to tax was correct.
2. Whether failure to consider an existing Supreme Court decision constitutes an error apparent on the face of the record.
3. Whether the review application by the Revenue is maintainable.

Detailed Analysis:

Issue 1: Whether the Full Bench's decision that canteen sales are not exigible to tax was correct.

The Full Bench had held that canteen sales by the assessee, a public limited company, were not exigible to tax. The assessee was primarily engaged in the manufacture and sale of cloth and yarn and operated the canteen as a welfare measure for its employees, as mandated by the Factories Act. The Board of Revenue had found that the canteen was a service institution, and thus, its turnover could not be added to the taxable turnover of the assessee. The Full Bench's decision was challenged by the Revenue, which relied on the Supreme Court's decision in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 STC 426, arguing that the sale of food articles in the canteen should be taxable. However, the Full Bench maintained its stance, distinguishing the facts of the present case from those in the Burmah Shell case.

Issue 2: Whether failure to consider an existing Supreme Court decision constitutes an error apparent on the face of the record.

The court addressed whether the Full Bench's oversight of the Supreme Court decision in Burmah Shell constituted an error apparent on the face of the record. It was argued that judicial discipline requires adherence to Supreme Court rulings, and failure to do so could be grounds for review. The court cited various precedents, including the Mysore High Court's decision in Selection Committee for Admission to the Medical and Dental College v. M.P. Nagaraj AIR 1972 Mys. 44, and the Himachal Pradesh High Court's decision in Nalagarh Dehati Co-operative Transport Society Ltd. v. Beli Ram AIR 1981 HP 1, which supported the view that ignoring a binding Supreme Court decision constitutes an error apparent on the face of the record.

Issue 3: Whether the review application by the Revenue is maintainable.

The court examined whether the review application was maintainable, emphasizing that review is not an appeal in disguise and should be used only to correct apparent errors. The court noted that the Full Bench had based its decision on the specific facts found by the Board of Revenue, which had determined that the canteen was a service institution. The court cited the Supreme Court's decision in Commissioner of Income-tax v. Imperial Chemical Industries (India) (P) Ltd. [1969] 74 ITR 17, which held that findings of fact by the Tribunal are not open to challenge in a reference under section 44 of the Act. The court concluded that the Full Bench's decision did not suffer from an error apparent on the face of the record and that the review application was not maintainable.

Conclusion:

The court dismissed the review petition, holding that the Full Bench had correctly answered the reference in favor of the assessee based on the facts found by the Board of Revenue. The court emphasized that the decision in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 STC 426 was distinguishable on facts and did not necessitate a different outcome. The petition was dismissed with no order as to costs, and the court expressed appreciation for the assistance provided by the Amicus Curiae.