2018 (5) TMI 908 - HC - VAT and Sales Tax

Levy of sales tax - penalty u/s 12 (5) (ii) of TNGST Act - sale of food and drink - composite charges - Held that - identical issue decided in the case of K. Damodarasamy Naidu & Bros. Versus State of Tamil Nadu and Another (and other appeals and writ petitions) 1999 (10) TMI 598 - SUPREME COURT OF INDIA , where it was held that the levy of sales tax on the supply of food and drink prior to February 2, 1983, in the State of Maharashtra is bad in law - tax case revision petition dismissed.

Summary

Issues:
1. Levy of tax on the sale of food and drinks.
2. Levy of penalty.

Levy of Tax on the Sale of Food and Drinks:
The judgment involved an appeal against the order of the Appellate Assistant Commissioner confirming the tax assessment on the sales turnover of food and drinks for the years 1991-92 and 1992-93. The issue revolved around whether the sale of food and drinks should be considered taxable. The Court held that after the 46th amendment to the constitution, the position was clear, and consistent court views supported the taxation of the entire turnover where the dominant object of an eating house or restaurant was the sale of food and drinks. As service charges were not reported separately and could not be segregated from the sale of food and drinks, the Court dismissed the appeals and upheld the orders of the Appellate Assistant Commissioner.

Levy of Penalty:
Regarding the levy of penalty under Section 12(5)(ii) of the Tamil Nadu General Sales Tax Act, 1959, the Appellate Assistant Commissioner had set aside the penalty. The dealers had filed revised returns and paid the due taxes, leading to the conclusion that penalty could not be levied in such circumstances. Citing a decision of the Hon'ble Tamil Nadu Taxation Special Tribunal, the Court found no reason to interfere with the Appellate Assistant Commissioner's orders. Consequently, the Court dismissed the appeals related to the levy of penalty.

The judgment highlighted the legal principles surrounding the taxation of food and drinks sales, emphasizing the importance of consistent court views and statutory amendments in determining tax liability. Additionally, it underscored the significance of compliance with tax regulations and the consequences of filing revised returns in penalty assessments. The Court's decision was based on established legal precedents and statutory provisions, ultimately dismissing the Tax Case Revision petition in line with the applicable legal framework.