2012 (10) TMI 959 - HC - VAT and Sales Tax

Summary

Issues:
The issues involved in this case are the applicability of the U.P. Trade Tax Act, 1948, specifically in relation to the classification of food items served in a restaurant as a sale or not, and the impact of relevant legal precedents on the assessment of trade tax.

Applicability of Legal Precedents:
The appellant, engaged in the hotel business, contested the addition of service items as sales for the assessment years 1981-82 and 1982-83. The appellant relied on the precedent set by the case of Northern India Caterers (India) Ltd., arguing that food items served in the restaurant do not amount to a sale. The first appellate authority accepted this argument and deleted the additions for both years. However, the Tribunal overturned this decision, reinstating the assessing officer's order. The appellant then filed revisions challenging this decision.

Interpretation of Legal Amendments:
The court considered the impact of an amendment to the Constitution of India and the U.P. Trade Tax Act, 1948, which deemed the supply of goods as part of a service to be a sale. The amendment specified that such transactions, including the supply of food or drink for consideration, would be treated as sales. This amendment, effective from February 2, 1983, was not retrospective but prospective in nature. Therefore, transactions prior to this date were to be governed by the precedent set by the Northern India Caterers case.

Judgment:
The court set aside the Tribunal's order and directed the assessing officer not to charge trade tax on food items served in the restaurant before February 2, 1983. It was clarified that post the amendment date, any items served in a restaurant or hotel would be considered a sale under the Trade Tax Act, 1948. The revisions were disposed of based on these directions and observations.