2009 (6) TMI 959 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether charges for "amenities" collected by the respondent along with the sale bill for the sale of liquor and food in the bar hotel constitute turnover for the purpose of levy of turnover tax.

Analysis:
The case involved a revision filed by the State questioning the Tribunal's decision on the justification of considering charges for amenities collected by a bar hotel as part of turnover for tax purposes. The respondent, a bar attached hotel with a restaurant, claimed that additional charges for amenities were justified due to facilities like lawn, air-conditioning, parking, etc. The State argued that these charges were merely bifurcated from the sale price to avoid tax. The respondent presented bills showing separate charges for amenities, even though no specific facility or service was mentioned for the charges. The critical question was whether these separately charged amenities should be excluded from turnover. The Court emphasized that turnover tax is payable on all amounts received for the sale of goods, which includes charges for services provided. The Court noted that the respondent's method of bifurcating prices between cost and amenity charges was a dubious attempt to evade tax.

The Court referred to Explanation 2 to section 2(xxvii), which includes sums charged for services provided by the dealer in the price for which goods are sold. The Court highlighted that charges for amenities provided in a bar hotel or restaurant are part of the price for goods sold. The respondent's total collection under the amenity head was significant, indicating a clear correlation between charges levied and amenities provided to customers. The Court cited a judgment by the Bombay High Court, which held that luxury charges by a hotelier form part of turnover. Drawing a parallel, the Court concluded that the respondent's bifurcation of prices under the "amenities" head was akin to the concept of luxury charges and should be considered part of turnover.

In light of the above analysis, the Court allowed the revision case by overturning the Tribunal's decision and restoring the assessment of amenity charges as part of turnover. The judgment emphasized that charges for amenities provided in conjunction with the sale of goods, such as liquor and food in a bar hotel, are integral to the turnover calculation for tax purposes.