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2008 (7) TMI 893 - HC - VAT and Sales TaxWhether, on the facts and in the circumstances of the case, when the dominant object of the transactions effected by the assessee is sale, the Tribunal is correct in law to allow benefit of exemption available under section 6(2) of the Constitution of India (Forty-sixth Amendment) Act, 1982 in respect of sales of food-stuffs to the customers for consumption inside the hotel on the ground that no tax has been collected on such sales? Held that - In the present case, learned Tribunal has categorically held that the dealer was an unregistered dealer during the years 1980-81 and 1981-82 and had not collected any sales tax on the transaction of sale of food and eatables from the customers inside the restaurant. Here the assessment years in question were 1980-81 and 1981-82 and on the basis of the Constitution Amendment Act, the Orissa Act was amended and the amended provisions came into force on April 7, 1984. Thus the benefit contemplated by the Forty-sixth Amendment of the Constitution is extended up to the date of the State legislation. In view of the above settled position of law, the question of law is answered against the Revenue and in favour of the assessee.
Issues:
Interpretation of exemption under section 6(2) of the Constitution Amendment Act, 1982 for sales of food-stuffs inside a restaurant by an unregistered dealer. Analysis: The case involved a dealer running a restaurant during the financial years 1980-81 and 1981-82, who was considered an unregistered dealer. The assessing officer and appellate authorities determined that the primary purpose of transactions in the restaurant was "sale." The pivotal question was whether the dealer could benefit from the exemption under section 6(2) of the Constitution Amendment Act, 1982, for sales of food-stuffs to customers consuming inside the restaurant without collecting any tax on such sales. The Tribunal, citing the decision in Piplani Sweets v. Sales Tax Officer [1988] 70 STC 153, acknowledged the dominant object of the transactions as sale and held that the dealer was liable to pay tax but could avail exemption for sales of food and eatables to customers for consumption inside the restaurant from September 7, 1978, to February 2, 1983, under section 6(2) of the Amendment Act. The Revenue challenged this decision, arguing that since the assessing officer and appellate authorities had deemed the transactions as sales, the Tribunal erred in annulling the assessment. The Constitution Amendment Act, 1982, introduced provisions under section 6 validating and exempting certain transactions. Section 6(2)(a) specified the exemption for supplies made by restaurants from September 7, 1978, to February 2, 1983, provided that tax was not collected on such supplies due to the inability to levy or collect tax at that time. The Tribunal's decision was supported by the Full Bench in Sri Prabhudayal Agrawalla v. Orissa Sales Tax Tribunal [1993] 88 STC 473, extending the benefits of the Amendment Act up to the State legislation date of April 7, 1984. Furthermore, the Supreme Court's ruling in K. Damodarasamy Naidu & Bros. v. State of Tamil Nadu [2000] 117 STC 1 clarified that section 6 of the Amendment Act validated sales tax levied on the supply of food and drinks before February 2, 1983, only if the State law allowed for such levy. In this case, the Tribunal correctly determined that the dealer, being unregistered and not collecting sales tax on food sales inside the restaurant, was entitled to the benefit of the Forty-sixth Amendment up to the State legislation date. In conclusion, the Tribunal's decision aligns with the legal framework established by the Constitution Amendment Act, 1982, and subsequent judicial interpretations. The question of law was resolved in favor of the assessee, leading to the dismissal of the tax revision petition by the Revenue. Judgment: The tax revision petition was dismissed, with both judges concurring on the decision.
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