2007 (9) TMI 544 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of tax on food supply from a statutory canteen for employees.

Analysis:
The judgment pertains to two revisions under section 11 of the U.P. Trade Tax Act, 1948, challenging the order of the Tribunal related to the assessment years 2002-03 and 2003-04. The applicant operated a statutory canteen for the employees of a corporation and supplied food against a sale price. The assessing authority considered this supply as a sale, leading to tax imposition on the turnover. However, the applicant contended that the canteen was mandatory under the Factories Act, run on a no-profit basis for employee benefit, and thus, they were not a dealer, and the food supply was not a sale.

The key issue in these revisions was whether the supply of food from the statutory canteen constituted a sale liable for tax. The court referred to the decision in the case of Bharat Heavy Electrical Ltd., Haridwar v. Commissioner of Sales Tax, where a similar canteen operation was held liable for tax post an amendment in the definition of "dealer" in the Act. The court upheld that decision and concluded that the applicant was rightly assessed for tax on running the canteen and supplying food to employees.

In conclusion, the court dismissed both revisions, affirming the Tribunal's order and upholding the tax assessment on the applicant for operating the statutory canteen and supplying foodstuff to employees. The judgment establishes the tax liability on such canteen operations following the precedent set in earlier cases, emphasizing the importance of statutory provisions and definitions in determining tax obligations in such scenarios.