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TMI Blog1999 (10) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... d to adopt proceedings thereagainst, subject to the law. - Civil Appeal No. 1416 of 1990, 354 of 1985, 1415 of 1990, Writ Petition (Civil) No. 3522, 9901 of 1983, 15227, 17245 of 1984, 11812, & 9022-9047 of 1985, W.P. Nos. 8516, 5311 of 1989 - - - Dated:- 12-10-1999 - BHARUCHA S.P.,KIRPAL B.N., KHARE V.N., MOHAPATRA D.P. AND SANTOSH HEGDE N. JJ. C.S. Vaidyanathan. Additional Solicitor-General. V. Balachandran, S. Aranindh, Senthil Jagadeesan, P.P. Tripathi, Ms. Swati Singh, Ms. Neelima Tripathi, Kavin Gulati, R.B. Misra, C. Sidharth, R.C. Verma, S. Srinivasan, Ms. Nina Gupta, Ms. Arpita roy Choudhary, Ms. Tania Bery, Sanjay Katyal, Sanjay Chaudhary, Vineet Kumar, Yashank Adhyaru, P.K. Jain, Mrs. Urmila Siru, D.P. Mukerjee, Mrs. Kamini Jaiswal, V. Krishanmurthy, A. Mariarputham, T. Harish Kumar, V. Rama Subramaniam, G.B. Sathe, S.P. Singh Chauham, K.K. Mohalik, Debasis Mohanty, D. Goburdhan, M. Veerppa, Kh. Nobin Singh, Neeraj Kr. Jain, Ms. Amita Gupta, A.S. Bhasme, K. Ram Kumar, Ms. Santi Narayan, Y. Subba Rao, B. Sridhar, S.N. Terdol, P. Parameswaran, Ms. B. Sunita Rao, C.V.S. Rao, Mrs. Shureshta Bagga and K.R. Nambiar. Other Advocates. A.K. Goel. Additional Advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dealt specifically with the levy of sales tax upon the service of meals to casual visitors in a restaurant. The question was whether the service of meals to non-resident customers in the appellant s restaurant constituted a sale of foodstuff. This Court said that the view taken in the case of Associated Hotels of India Ltd. [1972] 29 STC 474 (SC); [1972] 2 SCR 937, indicated the approach to the question. This Court considered the origin and historical development of the institution of a restaurant and found it akin to what, historically, was an inn. An innkeeper or hotelier does not lease his rooms, so he does not sell the food he supplies to the guest. It is his duty to supply such food as the guest needs, and the corresponding right of the guest is to consume the food he needs, and to take no more. Having finished his meal, he has no right to take food from the table, even the uneaten portion of food supplied to him, nor can he claim a certain portion of food as his own to be handed over to another in case he chooses not to consume it himself. The title to food never passes as a result of an ordinary transaction of supplying food to a guest . This principle, put in the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for our purposes, it read: Tax on the sale or purchase of goods includes: .............................................. (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. By reason of this amendment the States became entitled to levy a tax on the supply of food and drink. 6. In Tamil Nadu, the Tamil Nadu General Sales Tax Act was amended by the Tamil Nadu General Sales Tax (Fourth Amendment) Act, 1984. The definition of sale now included a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended, relying upon the judgments aforementioned, that, in the eye of the law, the tax on food served in restaurants could not be levied on the sum total of the price charged to the customer. In his submission, restaurants provided services in addition to food, and these had to be accounted for. Thus, restaurants provided an elegant decor, uniformed waiters, good linen, crockery and cutlery. It could even be that they provided music recorded or live, a dance floor and a cabaret. The bill that the customer paid in the restaurant had, therefore, to be split up between what was charged for such service and what was charged for the food. 9. The provisions of sub-clause (f) of clause (29A) of article 366 need to be analysed. Sub-clause (f) permits the States to impose a tax on the supply of food and drink. The supply can be by way of a service or as part of a service or it can be in any other manner whatsoever. The supply or service can be for cash or deferred payment or other valuable consideration. The words of sub-clause (f) have found place in the Sales Tax Acts of most States and, as we have seen, they have been used in the said Tamil Nadu Act. The tax, therefore, is on the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l hotels in the State of Maharashtra. They provide lodging and boarding to several thousand of customers in every assessment year. It is in practical terms impossible for the sales tax authorities to make assessments upon the basis of the facts relevant to each individual customer in each individual hotel. Generalisations are, therefore, inevitable and there is every likelihood that the basis of the generalisation made by one Sales Tax Officer would differ from the basis of the generalisation made by another, leading to unacceptable arbitrariness. Rules that indicate to Sales Tax Officers how to treat composite charges for lodging and boarding would eliminate substantial differences in their approach and, thus, arbitrariness. 14. We, therefore, direct that the State of Maharashtra shall henceforth not make assessments of the tax on the supply of food and drink on hotel owners who provide lodging and boarding for a composite sum until it frames rules that set out formulae for such assessment which take account of the fact that residential hotels may provide lodging and full or part board as set out above. If the Rules are framed by June 1, 2000, the assessments that are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State on section 6 of the Constitution (Forty-sixth Amendment) Act, but the argument was turned down. The judgment and order of the High Court of Uttar Pradesh is under appeal (C.A. No. 354 of 1985). 19. Learned counsel for the States of Maharashtra and Uttar Pradesh relied upon section 6 of the Constitution (Forty-sixth Amendment) Act. The said section 6 reads thus: 6. Validation and exemption.-(1) For the purposes of every provision of the Constitution in which the expression tax on the sale or purchase of goods occurs, and for the purposes of any law passed or made, or purporting to have been passed or made, before the commencement of this Act, in pursuance of any such provision,- (a) the said expression shall be deemed to include, and shall be deemed always to have included, a tax (hereafter in this section referred to as the aforesaid tax) on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) for cash, deferred payment or other valuable consideration; and (b) every transaction by way of supply of the nature re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proving that the aforesaid tax was not collected on any supply of the nature referred to in clause (a) or, as the case may be, clause (b), shall be on the person claiming the exemption under this sub-section. (3) For the removal of doubts, it is hereby declared that,- (a) nothing in sub-section (1) shall be construed as preventing any person- (i) from questioning in accordance with the provisions of any law referred to in that sub-section, the assessment, reassessment, levy or collection of the aforesaid tax, or (ii) from claiming refund of the aforesaid tax paid by him in excess of the amount due from him under any such law; and (b) no act or omission on the part of any person, before the commencement of this Act, shall be punishable as an offence which would not have been so punishable if this Act had not come into force. 20. Learned counsel for the States of Maharashtra and Uttar Pradesh argued, to start with, that the said section 6 validated the sales tax laws of the States with retrospective effect and that, therefore, the States were entitled to levy the tax on the supply of food and drink regardless of the fact that there was no provision in the State Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of sales tax on the supply of food and drink prior to February 2, 1983, in the State of Maharashtra and in the State of Uttar Pradesh is bad in law. 22. Learned counsel for the State of Uttar Pradesh submitted that there were some observations in the judgment of the High Court of Uttar Pradesh under appeal which suggested that the said section 6 could have no application to the U.P. Sales Tax Act because it was a statute that was enacted prior to the Constitution. We agree with learned counsel that the observations in this behalf are not justified. The language of the said section 6 would show that it applies to all laws passed or made before the Constitution (Forty-sixth Amendment) Act, 1982. 23. Writ Petition No. 9901 of 1983 is made absolute to this extent: The State of Maharashtra is directed henceforth not to make assessments of the tax on the supply of food and drink on hotel owners who provide lodging and boarding for a composite sum until it frames Rules that set out formulae for such assessment which take account of the fact that residential hotels may provide lodging and full or part board. If the rules are framed by June 1, 2000, the assessments that are not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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