2014 (6) TMI 868 - HC - VAT and Sales Tax

Estimation of cooked food turn over - Held that - though the statute prescribes for supply of food along with liquor, there is no mandate that the one and the same person should supply the food and liquor. In any premises wherein the liquor is supplied, it is a necessary mandate that, there should be provision for supply of cooked food also. That alone cannot be considered, as a mandate on the licensee, under the Abkari Act and Rules, to carry on supply of the cooked food by himself. In the present case, it is to be noticed that, the supply of cooked food was carried on in the licensed premises, wherein liquor was also supplied. The restaurant in both the hotels were leased out to two separate registered dealers, who were assessed to the turn over of cooked food served in the hotel. There cannot be any assessment of the very same turn over, which has been assessed in the hands of the lessees of such restaurant. - the assessment orders insofar as estimating the turn over of cooked food at the rate of 15% of the turn over of IMFL, is set aside, only to that extent - Decided in favour of assessee.

Summary

Issues:
Challenge against assessment orders under Article 226 of the Constitution of India, estimation of cooked food turnover based on IMFL turnover, interpretation of Foreign Liquor Rules regarding ownership and operation of restaurants in hotels, applicability of Division Bench judgment on licensee's obligation to supply food with liquor.

Analysis:
1. The petitioner contested assessment orders Exts. P5 and P6 for the years 2007-08 and 2008-09, where the assessing officer estimated cooked food turnover at 15% of the IMFL turnover. The petitioner argued that the turnover estimation was unjustified as the restaurants in the bar hotels were operated by different individuals who were already assessed for the cooked food turnover, rendering the petitioner's assessment without jurisdiction.

2. While challenging the assessment directly under Article 226 of the Constitution is not common, the petitioner referred to a previous assessment in 2006-07 where a similar estimation method was used and later overturned in an appeal. The petitioner also cited a relevant case law, State of Kerala v. Hotel Amrutha, to support their contention that assessment should not be duplicated when separate individuals are already assessed for the turnover.

3. The Government Pleader highlighted Form FL3 in the Foreign Liquor Rules, arguing that the licensee should own and operate both the hotel and the restaurant where IMFL is served. However, the Court rejected this argument, stating that the form does not regulate license conditions, and there is no specific rule mandating the licensee to supply cooked food.

4. Referring to a Division Bench judgment from a previous case, the Court reiterated that the licensee is not obligated to personally supply food along with liquor. Even if there are violations of Foreign Liquor Rules, it does not imply that the licensee must directly provide cooked food. The Court dismissed revisions filed by the Revenue based on these principles.

5. Ultimately, the Court upheld the Division Bench judgment, emphasizing that while food provision is required where liquor is served, there is no requirement for the licensee to supply the food themselves. In this case, the restaurants in the hotels were leased to registered dealers who were already assessed for the cooked food turnover, leading to the setting aside of the estimation of cooked food turnover based on IMFL turnover in the assessment orders Exts. P5 and P6.

6. Consequently, the Court set aside the estimation of cooked food turnover at 15% of the IMFL turnover in the assessment orders Exts. P5 and P6, making the petitioner liable for the demand raised in those orders. The Writ Petition was allowed with modifications in Exts. P5 and P6, and the petitioner was directed to bear their respective costs.