2004 (7) TMI 620 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of allowing a single application for reference of one question relating to multiple assessment periods.
2. Whether the activity of selling food-stuffs amounted to 'sale' for tax purposes.

Issue 1: Validity of single application for reference of one question for multiple assessment periods
The High Court addressed the first issue concerning the validity of allowing a single application for reference of one question relating to multiple assessment periods. The Court noted that the question did not arise from the Tribunal's order and stated that separate references might have been required. However, the Court concluded that there was no question of law arising from the Tribunal's judgment, and therefore, it was not necessary to answer this question.

Issue 2: Activity of selling food-stuffs as 'sale' for tax purposes
Regarding the second issue, the Court analyzed the facts related to a dealer operating special canteens and catering services. Initially, the dealer was considered not liable for tax due to the absence of a profit motive. However, the assessing authority later held the dealer to be a 'dealer' and taxed them for a period of three years, including levying penalties. The Court referenced various legal precedents and statutory provisions to determine the nature of the dealer's activities. The Tribunal, relying on previous decisions, held that the dealer was not liable to pay tax. However, the Court highlighted the statutory obligation under the Factories Act to provide canteen facilities on a non-profit basis, which influenced the decision.

The Court then discussed the applicability of the Supreme Court's decision in a similar case involving the sale of meals in a restaurant. The Court emphasized that the dominant object of the transaction, whether it was a sale of food or a package of services, determined the tax liability. In the present case, the Court concluded that the selling of food-stuffs by the dealer amounted to a sale, distinguishing it from cases involving the provision of a package of services. Therefore, the Court held that the activity of selling food-stuffs constituted a sale for tax purposes, and the references were disposed of accordingly.

This detailed analysis by the High Court provides a comprehensive understanding of the legal issues involved, the factual background, relevant legal precedents, and the ultimate decision reached on the questions referred to the Court by the Sales Tax Tribunal.