2014 (10) TMI 58 - HC - VAT and Sales Tax

Claim of sales under section 5 of Tax Free Goods - applicant also claimed turnover of first sales as covered by entry 191 of Notification under section 41 - applicant collected taxes separately on the footing that the food items namely thali is charged separately under the heading thali but without the usual contents thereof - The charge is shown separately for vegetable, farsan and salad - Held that - Tribunal seems to have proceeded on the footing that the argument of the applicant that the sales of vegetables, curd/milk, papad, salad, farsan are separate from the sale of Thali. There is no evidence on record to show that there is separate order for these items. These items, however, are incapable of deduction from the item of food, Thali and that is how the argument on the second point has been rejected - Tribunal s order on the Appeal as also on the Rectification Application does not answer the issues raised and particularly why the revenue has not been able to collect the taxes or the assessee was justified in arguing that in all the bills the standard thali does not include anything over and above the vegetables and other ingredients. The charge is separately levied for farsan, salad, papad and curd - In these circumstances, whether the Tribunal s approach can be said to be justified is something which this Court will have to consider in depth and in details - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
1. Dispute over the Tribunal's order in Rectification Application No.109 of 2007 and the Original Order in Second Appeal No.507 of 2000.
2. Allegation of overlooking evidence, law position, and retrospective amendment by the Tribunal.
3. Interpretation of sales tax liability for a hotelier under the Bombay Sales Tax Act.
4. Assessment of separate tax collection by a hotelier on food items.
5. Upholding of assessment order by the First Appellate Authority.
6. Distinction of sales of tax-free items from sales of Thali in the Tribunal.
7. Rejection of arguments based on tax collection and separate sales of food items.
8. Lack of evidence for separate orders on food items and rejection of arguments by the Tribunal.
9. Justification of the Tribunal's order on the Appeal and Rectification Application.
10. Admission of application for opinion on specific questions by the High Court.

Detailed Analysis:
The judgment revolves around the applicant's dissatisfaction with the Tribunal's order in Rectification Application No.109 of 2007 and the Original Order in Second Appeal No.507 of 2000. The applicant alleged that the Tribunal overlooked evidence, legal positions, and a retrospective amendment. The applicant, a hotelier under the Bombay Sales Tax Act, claimed sales under tax-free goods and turnover under a specific notification. The Enforcement Branch observed separate tax collection on food items during a visit to the applicant's business. The Assessing Officer upheld the notice based on this observation, which was also affirmed by the First Appellate Authority. The Tribunal's decision was challenged based on the distinction between sales of tax-free items and Thali, with arguments on penalty and tax liability deemed erroneous by the applicant.

The Tribunal's rejection of the applicant's contentions was based on the minimal tax collection compared to total sales value and the lack of separate evidence for sales of vegetables, curd/milk, papad, salad, and farsan. The Tribunal concluded that these items could not be deducted from the Thali's sale item and rejected the arguments accordingly. The High Court admitted the application for opinion on specific questions regarding the Tribunal's justification for concluding an artificial bifurcation of Thali's sale price and ignoring facts like retrospective amendments for remission from interest and penalty deletion. The High Court directed the Tribunal to refer these questions for the Court's opinion within eight weeks, ultimately disposing of the application.