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TMI Blog1988 (9) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... her or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration, shall be deemed to be a sale of those goods by the person making the supply and purchase of these goods by the person to whom such supply is made." This explanation was inserted to take retrospective effect from 1st October, 1957, and to give effect to section 4 of the Constitution (Fortysixth Amendment) Act. It is relevant to briefly mention the background for this amendment which is to be found in the Statement of Objects and Reasons appended to the Bill which was introduced in the Parliament. Paras 8 and 13 which are relevant are reproduced below: (See: pages 62 and 63 (Statutes) in [1983] 52 STC). "8. Besides the abovementioned matters, a new problem has arisen as a result of the decision of the Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386; AIR 1978 SC 1591. States have been proceeding on the basis that the Associated Hotels of India case [1972] 29 STC 474 (SC) was applicable only to supply of food or drink by a hotelier to a person lodged in the hotel and that tax was leviable on the sale of food-stuffs b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Karnataka Sales Tax Act to give effect to the amendment of definition of "sale" brought about by the said Amendment Act so far as the restaurants are concerned. The prayer of the petitioners in these cases is, to quash the assessment orders as having been made without authority of law and to refund the tax paid. Objections to the show cause notice were filed before the assessing authority, that no tax can be levied on the sale of food and drink in the restaurant section of their hotel, relying on the decision of the Supreme Court in the First Northern India Caterers case [1978] 42 STC 386. The assessing authority has exempted the turnover only for the period 7th September, 1978 to 2nd August, 1983, on the ground that the turnover for the said period was entitled to the exemption in the light of section 6(2) of the Forty-sixth Amendment Act. The question that arises for decision in these writ petitions is, whether the assessments, taxing the turnovers relating to the sale of food and drink by the petitioners-restaurant owners for the periods prior to 7th September, 1978, are valid in law? As already stated, the Forty-sixth Amendment to the Constitution was brought abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar approach seems to be called for on principle in the case of restaurants. No reason has been shown to us for preferring any other. The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need What has been said in Electa B. Merrill LRA 1915-B 481 appears to be as much applicable to restaurants in India as it does elsewhere. It has not been proved that any different view should be taken, either at common law, in usage or under statute. "It was urged for the respondent that in Associated Hotels of India Ltd. [1972] 29 STC 474 (SC); [1972] 2 SCR 937 this Court drew a distinction between the case of meals supplied to a resident in a hotel and those served to a customer in a restaurant. We are unable to find any proposition of law laid down by the court there which could lead to that inference. We may point out that in the view which appeals to us we find ourselves unable to agree with the observations to the contrary made by the Punjab High Court in Associated Hotels of India Ltd. v. Excise and Taxation Officer [1966] 17 STC 555; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore adverting to the decisions of other High Courts relied upon by Sri Kalleshappa, it is necessary to examine the relevant provisions of the Amendment Act and the object for which the said amendment was brought about and what is the scope and ambit of the said amendment? It is the contention of the learned Government Pleader that the amendment was necessitated firstly, on account of the observations made by the Supreme Court in Associated Hotels of India case [1972] 29 STC 474 so far as the hoteliers are concerned and secondly, the observations as made by the Supreme Court in the First Northern India Caterers case [1978] 42 STC 386 with reference to restaurants and eating houses. It is, therefore, pointed out by the learned Government Pleader that section 6 of the Constitution (Forty-sixth Amendment) Act has reference to and is meant to be applied only to hotels where a composite charge was made for supply of food and other amenities and not to restaurants. Sri Dattu demonstrates that on a careful reading of section 6(2) of the Amendment Act, which provides for validation and exemption, clause (a) of sub-section (2) specifically refers to the period between 7th September, 1978 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is dominantly one of sale of food, it undoubtedly attracted levy of sales tax. It is also seen from the assessment orders that the turnover of sale as returned by the petitioners for the relevant periods which are all prior to 7th September, 1978, was brought to tax under the charging provision of the Act and no other special law was necessary. It is also not the case of the petitioners that the dominant object was not the sale of food but was merely incidental to the rendering of service to the customers. The petitioners have filed returns in form 4 disclosing the turnover in sale of food and drink and on that basis, paid the tax also. Now, it is not open to them to contend in these writ petitions that the transactions of such sale of food did not attract the tax. What is more, they have not produced any material to show that they did not collect the tax on the sale of food. The assessments were completed on best of judgment since the assessees did not produce the sale bills for the sales effected by them. Therefore, the contention that the dealer did not collect the tax in view of the decision in the First Northern India Caterers case [1978] 42 STC 386 (SC) has to be reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The stand of the Advocate-General on behalf of the Government was that there was no necessity to amend the definition of "sale" in the State Act, as the definition of "sale" or "purchase" in article 366(29A), automatically applied to the definition in the State Act also. This contention was rejected by the High Court and their Lordships formulated the question for consideration, thus: "Therefore, the question is whether section 6(1) covers both the past and future transactions of sale or section 6(1) only validates past transactions of sale?" Their Lordships, after hearing elaborate arguments of Sri Nariman, on behalf of the petitioners, answered the above question in favour of the dealer and held as follows: "Therefore, we reject the contention that no further amendment of the Sales Tax Act is necessary to levy and collect tax on sale of food-stuffs and beverages from the date of the Amendment Act." The conclusion of the High Court was that the Constitution (Fortysixth Amendment) Act does not authorise, the imposition and collection of tax on the supply of food-stuffs from 2nd February, 1983, on which date the Amendment Act came into force, but confers legislativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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