2004 (10) TMI 569 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether cool drinks and ice-creams sold in hotels/restaurants, previously taxed under section 5 of the Act, could be taxed again under section 5C.
2. Taxability of milk purchased from unregistered dealers and sold after conversion into curd.

Analysis:
1. The main issue in the judgment revolved around the taxability of cool drinks and ice-creams sold in hotels/restaurants under section 5C of the Andhra Pradesh General Sales Tax Act, 1957 (the Act), after having been taxed under section 5. The court examined the provisions of section 5C, which imposed a tax on the supply of food or drink in restaurants, and the contention of the appellants that goods once taxed under section 5 could not be taxed again under section 5C. The court referred to a similar provision, section 5E, and a previous judgment interpreting it to support the argument that goods already taxed under section 5 could not be taxed again under a different provision. The court ultimately held that cool drinks and ice-creams, having suffered tax under section 5, were not taxable under section 5C.

2. Another issue addressed in the judgment concerned the taxability of milk purchased from unregistered dealers and sold after conversion into curd. The court relied on a previous judgment in Krishna Enterprises v. State of Andhra Pradesh, which established that even if the milk purchased from unregistered dealers was converted into curd before sale, the liability to pay tax remained. The court found that the tax liability was not affected by the conversion of milk into curd and upheld the decision in Krishna Enterprises case. Consequently, the special appeals were allowed in part on this issue.

In conclusion, the court ruled in favor of the appellants regarding the taxability of cool drinks and ice-creams under section 5C, holding that they were not taxable if they had already been taxed under section 5. Additionally, the court affirmed the tax liability on milk purchased from unregistered dealers and sold after conversion into curd, based on the precedent set in Krishna Enterprises case. The judgment provided a comprehensive analysis of the legal provisions and previous judgments to support its conclusions, ensuring clarity on the tax implications of the transactions in question.