1976 (3) TMI 74 - AT - VAT and Sales Tax

Issues Involved:
1. Discount to special customers
2. Banquet sales
3. Boarding and lodging
4. Restaurant sales
5. Cafeteria sales
6. Penalty

Detailed Analysis:

1. Discount to Special Customers:
The assessee claimed deductions on account of discounts allowed to regular customers and guests. The explanation was that such discounts were allowed after the bill for the full amount had been made out. The High Court found that the issue of whether the turnover should be computed based on the original bills or the consolidated bill was a moot point and better suited for a reference to the High Court rather than a writ petition. The Addl. Commissioner did not accept the plea for deduction of discounts, stating that they could not be deemed as cash discounts within the meaning of s. 2(h) and ordered them to be added to the turnover.

2. Banquet Sales:
The assessee argued that banquet sales, which included charges for various amenities, should not be liable to sales tax. The Financial Commissioner had previously allowed a 15% deduction on such sales. The High Court quashed the notice regarding banquet sales, holding that the original assessment order ceased to be operative vis-a-vis the banquet sales. The Addl. Commissioner followed this decision and allowed a 15% deduction. However, for the assessment year 1970-71, the Addl. Commissioner remanded the case to the assessing authority to examine whether banquet sales were indeed a contract for service.

3. Boarding and Lodging:
The assessee claimed that combined receipts from boarding and lodging could not be taxed. The assessing authority added back purchases of raw materials used in meals to the taxable turnover. The Addl. Commissioner increased the amount added per guest per day from Rs. 1.20 to Rs. 1.75 for the year 1967-68 and reduced it from Rs. 3 to Rs. 2.50 for the year 1970-71.

4. Restaurant Sales:
The assessee claimed exemptions at the rate of 50% of total receipts for restaurant sales, arguing that the bills included charges for amenities. This claim had been consistently rejected in the past and was disallowed by the assessing authority. The Financial Commissioner supported this view, stating that the sale price included any sum charged for services provided before the delivery of goods.

5. Cafeteria Sales:
The assessee claimed total exemption for sales made to employees from the cafeteria. The Financial Commissioner had previously held that cafeteria sales were not liable to sales tax. The High Court upheld this view, stating that the hotel could not be regarded as a dealer for cafeteria activities as there was no profit motive. The Addl. Commissioner increased the value of raw materials purchased for the cafeteria from Rs. 1,000 to Rs. 5,000 per quarter.

6. Penalty:
A penalty of Rs. 15,500 was imposed for not submitting returns and paying tax on time. This penalty was upheld by the assessing authority and confirmed in appeal.

Conclusion:
- Appeals No. 158/STT and No. 2165/STT were dismissed.
- Appeal No. 2166/STT was partly allowed, modifying the order of the Addl. Commissioner to set aside the remand concerning banquet sales and confirming a 15% exemption on such sales. Other aspects of the order were confirmed.

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