1988 (4) TMI 418 - HC - VAT and Sales Tax

Summary

Issues:
Validity of sales tax on transactions by restaurants/canteens prior to 2nd February, 1983 under the Constitution (Forty-sixth Amendment) Act, 1982.

Detailed Analysis:

The Rajasthan High Court addressed the issue of sales tax applicability on transactions by restaurants, canteens, and eating houses serving food, snacks, and beverages before 2nd February, 1983, under the Constitution (Forty-sixth Amendment) Act, 1982. The Tribunal's order stated that sales made before this date were not taxable unless tax was specifically collected from customers and deposited. The Department challenged this decision through various revisions against the common order of the Rajasthan Sales Tax Tribunal dated 14th April, 1986. The primary question revolved around the interpretation of sub-section (2) of section 6 of the Constitution (Forty-sixth Amendment) Act, 1982, which provided exemptions for certain supplies. The Tribunal's decision was limited to transactions by eateries before 2nd February, 1983, as per the Amendment Act's provisions.

The Tribunal's order was based on the historical context of taxing sales by eateries, which had been a subject of debate and Supreme Court rulings. The Forty-sixth Amendment Act of 1982 aimed to address these challenges by amending relevant provisions of the Constitution. The Court highlighted the importance of sub-sections (1) and (2) of section 6, with the latter providing exemptions for specific types of supplies, including those by restaurants and eating houses before the enactment of the Amendment Act. The burden of proving tax exemption was placed on the claimant under this provision.

The Court considered the arguments presented by the assessees' counsel, focusing on the impact of sub-section (2) of section 6 in relieving eateries from tax liabilities for transactions before 2nd February, 1983. The Court emphasized that the scope of the revisions was limited to pre-Amendment Act transactions by eateries serving food, snacks, and beverages. It clarified that sub-section (2) provided a clear exemption for such transactions, regardless of any potential tax liabilities under sub-section (1).

In conclusion, the Court dismissed the revisions while acknowledging potential ambiguities in the Tribunal's order. It reiterated that the tax liability of each assessee should be determined based on the provisions of the Constitution (Forty-sixth Amendment) Act, 1982, specifically sub-section (2) of section 6. The Court's decision upheld the exemption for pre-2nd February, 1983 transactions by restaurants, canteens, and eating houses, as outlined in the relevant legal framework.