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2021 (9) TMI 477 - HC - VAT and Sales TaxRefund claim - availability of Sales tax exemption or not - whether the petitioner namely M/s. Akbari Continental Pvt. Ltd. is a Hotel or comes under Guest House and Restaurants under Clause-27 of the ineligibility list - Entry 30-FFFF vide Finance Department Notification dated 16.08.1990 - disallowance of claim of first point sale of cold-drinks and IMFL U/s. 5(2) (A) (a) read with Section 8 of Orissa Sales Tax Act. Whether by selling IMFL, cold drinks in its hotel it was part of the list of units excluded from exemption under Sl. No. 27 of IPR 1989? - HELD THAT - The Tribunal has for the three AYs 1993- 94, 1994-95 and 1996-1997 rejected the plea of the Department that the Petitioner s unit is to be categorized as a restaurant and denied the exemption in terms of Entry 30-FFFF. This Court finds no reason why only for AY 1995-96 the Department s case ought to be accepted by the Tribunal particularly since the eligibility certificate issued by the DIC is the same for all these AYs - question is answered in favour of the Petitioner and against the Department by holding that the Petitioner is a hotel and does not fall under Clause 27 of the ineligibility list of IPR-1989 and is entitled to sales tax exemption under Entry 30-FFFF in terms of the Finance Department Notification dated 16th August, 1990. Whether in the facts and circumstances of the case, disallowance of the case, disallowance of claim of first point sale of cold-drinks and IMFL U/s. 5(2) (A) (a) read with Section 8 of the Act is sustainable in law? - HELD THAT - It is not in dispute that the Petitioner is not the first seller in respect of cold drinks. It has produced the invoices to show from whom it has purchased the soft drinks. The Tribunal appears to have rejected these invoices only because the seller was not a registered dealer. But the Tribunal has for the AYs 1993-94 and 1996-97accepted that the cold drinks have suffered tax at the first point of sale and that irrespective of the sellers of such cold drinks not being registered dealers themselves, the cold drinks cannot be made exigible again to sales tax. This appears position also flows from a reading of Section 8 read with Explanation (1) to Section 5 (2) (A) (a) of the OST Act. Reliance placed in the case of GOVINDAN CO. VERSUS THE STATE OF TAMIL NADU 1974 (2) TMI 69 - MADRAS HIGH COURT , where the Madras High Court held that to claim benefit of tax on the ground that the sales effected by the Assessees were second sales, they need not show that their sellers had in fact paid the tax at the first point. It was enough for them to show that the earlier sales were taxable sales and the tax was really payable by their sellers. The issue is thus answered partly in favour of the Petitioner by holding that the disallowance of claim of first point sale of cold drinks under Section 5(2) (A) (a) read with Section 8 thereof was not sustainable in law. However, the observation of the Tribunal in regard to the issue of sale of IMFL requiring further enquiry is upheld and the issue of sale of IMFL by the Petitioner for the AY 1995-96 is therefore remanded to the Assessing Authority for a fresh determination. Petition disposed off.
Issues Involved:
1. Classification of the petitioner as a "Hotel" or "Guest House and Restaurant" under Clause-27 of the ineligibility list for sales tax exemption. 2. Disallowance of claim of first point sale of cold drinks and IMFL under Section 5(2)(A)(a) read with Section 8 of the OST Act. Detailed Analysis: Issue (i): Classification under Clause-27 of the Ineligibility List 1. Background: The petitioner, a hotelier, claimed eligibility for sales tax exemption under the Industrial Policy Resolution, 1989 (IPR-1989). The Sales Tax Officer (STO) disallowed the exemption, citing the lack of evidence that the petitioner’s unit was set up within the specified dates under the 1980 Policy. The Assistant Commissioner of Sales Tax (ACST) partially allowed the appeal, recognizing the petitioner’s eligibility for exemption till 30th April 1996. However, the Tribunal reversed this, stating the petitioner failed to produce a certificate proving it was a Small Scale Industry (SSI) unit set up within the required timeframe. 2. Court's Analysis: The court noted that the Department did not initially dispute the petitioner’s status as a unit under the 1980 Policy or its continuation under the 1989 IPR. The crucial point was whether selling IMFL and cold drinks in the hotel categorized the petitioner under the ineligible list. The court emphasized the DIC certificate, which confirmed the petitioner’s eligibility for sales tax exemption for seven years from 1st December 1989 to 30th November 1996. 3. Precedents and Consistency: The court referred to previous Tribunal orders for AYs 1993-94, 1994-95, and 1996-97, which consistently recognized the petitioner’s eligibility for exemption. These orders distinguished the petitioner’s hotel from a guest house and restaurant, affirming that the eligibility certificate could not be nullified by the Department. 4. Conclusion: The court held that the petitioner is a hotel and does not fall under Clause-27 of the ineligibility list of IPR-1989, thus entitled to sales tax exemption under Entry 30-FFFF. The Department’s case for AY 1995-96 was not accepted, given the consistency of the Tribunal’s earlier decisions and the validity of the eligibility certificate. Issue (ii): Disallowance of First Point Sale of Cold Drinks and IMFL 1. Cold Drinks: The petitioner argued that it was not the first seller of cold drinks, and the goods had already suffered tax at the first point of sale. The Tribunal had previously accepted this for AYs 1993-94 and 1996-97, recognizing that the subsequent sale of cold drinks by the petitioner was not taxable again. The court cited precedents, including Govindan and Company v. State of Tamil Nadu, which established that subsequent sellers need only show that the first sale was taxable, not that it had paid tax. 2. IMFL: The Tribunal noted that IMFL became first point tax paid goods only from 14th July 1995. Therefore, there needed to be a bifurcation of purchase and sale turnover for the periods before and after this date. The court agreed that further inquiry was necessary to determine the exact figures for these periods. 3. Conclusion: The court held that the disallowance of the first point sale of cold drinks was not sustainable in law. However, the issue of the sale of IMFL required further inquiry, and the matter was remanded to the Assessing Authority for fresh determination. Final Disposition: The revision petition was disposed of with the order dated 4th September 2006 of the Tribunal being modified accordingly. The court directed the records of the Tribunal to be returned and a certified copy of the order to be sent to the Assessing Authority for further inquiry.
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