2007 (6) TMI 495 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 5B of the Kerala General Sales Tax Act, 1963 and item 12 of the Third Schedule to the Act regarding tax liability on cooked food and beverages.

Analysis:
The case involved a dealer registered under the Kerala General Sales Tax Act, 1963, engaged in selling cooked food and beverages. The assessing authority granted limited exemption based on section 5B of the Act and item 12 of the Third Schedule. The first appellate authority accepted the dealer's stance, except for ice cake turnover, directing a fresh tax calculation. The Revenue appealed to the Tribunal, which overturned the appellate authority's decision, leading to the dealer filing tax revision cases.

The dealer raised questions of law concerning the Tribunal's decisions, particularly focusing on tax liability under section 5 and exemption under section 5B. The dealer argued that since their turnover was below five lakhs, they should not be liable for tax under section 5(1) of the Act. The dealer's counsel emphasized the provisions of section 5B, which authorize payment of a license fee instead of tax.

Section 5 of the Act establishes tax liability and related aspects, including exemptions and taxable turnover. Section 5B allows dealers in cooked food to pay a license fee if their turnover exceeds five lakhs. The proviso under section 5B states that dealers falling under its purview are not liable to pay tax under specified sections. Item 12 of the Third Schedule exempts cooked food and beverages under certain conditions, such as turnover not exceeding five lakhs.

The court analyzed the provisions of section 5B and item 12, noting that the dealer's turnover was below five lakhs, making them ineligible for the license fee provision. The assessing authority rightly directed tax payment on certain items not covered by the exemption. The court upheld the Tribunal's decision, rejecting the dealer's arguments and confirming the tax liability under section 5(1) of the Act.

In conclusion, the court dismissed the revision petitions and related applications, affirming the Tribunal's orders. The judgment clarified the application of section 5B and item 12 to determine tax liability on cooked food and beverages, emphasizing turnover thresholds and statutory exemptions.