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TMI Blog1991 (7) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale/supply of cooked food. With the object of revising rate of tax on sales of cooked food served in or supplied from any air-conditioned restaurant and such other places, a new item No. 2 was inserted in Schedule IV to the 1941 Act, raising the rate of tax from 8 per cent to 15 per cent for the item with effect from April 1, 1988. This was accomplished by the West Bengal Taxation Laws (Amendment) Act, 1988. By this amendment, the rate of tax became 15 per cent for air-conditioned hotels, restaurants, etc., and the rate remained at 8 per cent for others. It is alleged that this amounts to inequality among equals and to an artificial discrimination without any rational basis. Allegedly, there cannot be different rates of tax on the same articles sold from different places. This is said to be violative of article 14 of the Constitution of India. Provision for air-conditioning does not come within the expression "goods" under the 1941 Act. So, no tax can be levied thereon under that Act. It is further alleged that air-conditioning having been subjected to tax as "luxury" under the aforesaid 1972 Act, the State Legislature has imposed another tax on the very same thing once again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from and served in all hotels, restaurants, etc., were exigible to sales tax at 8 per cent. With effect from April 1, 1988, item 2 was inserted in Schedule IV to the 1941 Act by the impugned 1988 amendment. Item 2 of Schedule VI reads as follows: "cooked food, other than those referred to in items 101, 102 and 103 in Schedule I served in or supplied from any air-conditioned- (a) hotel, (b) restaurant, (c) refreshment room, (d) club, or (e) eating house." Section 5(1)(d1) of the 1941 Act lays down that the rate of tax on the taxable turnover shall be 15 per cent to the extent such turnover relates to sales of goods included in Schedule IV. Items 101, 102 and 103 of Schedule I comprising tax-free goods are certain sweetmeats and salted items specified therein. Therefore, with effect from April 1, 1988, cooked food other than those items, served in or supplied from the specified air-conditioned places became taxable at 15 per cent. The present batch of applications have been filed challenging levy of this higher rate of tax with effect from April 1, 1988. 5.. Mr. Benoy Rej, learned advocate for the applicants, referred to the Statement of Objects and Reasons annexed to the Bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat when the language of the statute is clear and free from ambiguity, recourse to objects and reasons is not permissible. 6.. Mr. Rej then submitted that there is already a luxury tax levied under the West Bengal Entertainments-cum-Luxuries (Hotels and Restaurants) Tax Act, 1972, which was enacted on the strength of entry 62 of List II of the Seventh Schedule to the Constitution. According to him, the impugned enhanced rate of tax, viz., 15 per cent, is also based on air-conditioning which is a luxury. Thus, two taxes cannot be levied in exercise of the powers under entry 62. He submitted that though the disputed tax is called sales tax, it is really a luxury tax under entry 62, and it cannot be a tax under entry 54. According to him, the impugned tax of 15 per cent is directly relatable to the places of sale or air-conditioned places and not to the goods sold. He complained that the Legislature could not do this. The learned State Representative opposed these contentions and submitted that the taxable event is sale of cooked food and not luxury or the place of sale and according to him, the reference to the specified air-conditioned places is only to make a classification among t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 941 Act on sales of goods under entry 54 of the same List. The subject-matter of one is totally different from that of the other. The purpose of one is also distinct from that of the other. In fact, sales of cooked food were being already taxed at the rate of 8 per cent prior to the 1988 amendment. The enhancement of the rate for certain specified dealers had not the effect of changing the character of the levy. So, the charge of double taxation is not sustained. In this connection, the learned State Representative very rightly relied on the case of Banarsi Dass v. Wealth-tax Officer [1965] 56 ITR 224 (SC), where it was held that none of the items in the legislative Lists of the Constitution is to be read in narrow or restricted sense, and it is not reasonable to import any limitation in interpreting a particular entry in a legislative List by comparing or contrasting it with another entry in the same List. In determining the scope of the area covered by a particular entry the court must interpret the relevant words in the entry in a natural way and give them the widest interpretation. 8.. Next Mr. Rej for the applicants argued that the impugned 1988 amendment is violative of arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons including higher establishment cost. Secondly, the object is to realise more tax from the more affluent sections of the people who frequent air-conditioned hotels, etc. Thirdly, according to Mr. Chakraborty, it is easy to locate the more affluent sections with reference to air-conditioned hotels, etc. Mr. Chakraborty referred to [1989] 74 STC 102 (SC) (Federation of Hotel & Restaurant Association of India v. Union of India) and we also rely on that decision for the proposition that although taxing laws are not outside the scope of article 14, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, the Legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are less rigorous. A Legislature does not have to tax everything in order to be able to tax something. Here, the applicants would not have any grievance on this score, had the Legislature enhanced the tax-rate for sales of cooked food from any place. But the Legislature is not required to do that. It was further held in [1989] 74 STC 102 (SC) (Federation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be achieved. The legislative wisdom cannot be lightly faulted. There is nothing to demonstrate that the exercise of the legislative wisdom was constitutionally erratic. In [1989] 74 STC 102 (SC) (Federation of Hotel & Restaurant Association of India v. Union of India) the Supreme Court upheld the classification on the basis of room rent over Rs. 400 per day per individual for the purpose of expenditure tax. 11.. Mr. Rej, learned advocate for the applicants, took pains to distinguish the decision in the case of Kerala Hotel & Restaurant Association v. State of Kerala [1990] 77 STC 253 (SC) on which the learned State Representative placed reliance. We cannot, however, agree with Mr. Rej that the decision in [1990] 77 STC 253 (SC) (Kerala Hotel & Restaurant Association v. State of Kerala) can be reasonably distinguished from the present case. From the very first paragraph of the judgment in [1990] 77 STC 253 (SC) (Kerala Hotel & Restaurant Association v. State of Kerala) it will appear that constitutional validity of similar provisions in the States of Kerala and Tamil Nadu resulting in imposition of sales tax on cooked food sold to the affluent in the luxury hotels while exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidence are well recognised. The court followed the decision in [1989] 74 STC 102 (SC) (Federation of Hotel & Restaurant Association of India v. Union of India) to which we have already referred. The court held that classification made whereby the tax net covers only the sale of costlier cooked food in the posh eating houses thereby confining the burden to the more affluent in the society, satisfies the requirements of a valid classification. Such classification was held to be not arbitrary being within the limits up to which the Legislature is given a free hand for making classification in a taxing statute. We reproduce below a small passage from the said judgment of the Supreme Court appearing at page 269: "In addition, the course adopted has the result of taxing fewer people who are more affluent in the society for raising the needed revenue with the added advantage of greater administrative convenience since it involves dealing with fewer eating houses which are easier to locate. This accords with the principle of promoting economic equality in the society which must, undoubtedly, govern formulation of the fiscal policy of the State." It was also held in that case that tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affects the earnings. Following the decision in [1989] 74 STC 157 (SC) (Express Hotels Private Ltd. v. State of Gujarat) and having regard to the facts of the present cases, we are of the opinion that the impugned provision does not infringe article 19(1)(g). 14.. The applicants have also challenged the validity of section 13 of the 1941 Act, read with rule 67A of the 1941 Rules, as regards the requirement that the names and addresses of purchasers in respect of transactions exceeding Rs. 20 should be entered in cash memo. It has been challenged on the grounds of unreasonableness and impossibility of performance. Section 13 deals with the requirement of certain dealers to keep true and up to date accounts of their transactions. It lays down that cash memo should be issued to a purchaser for a sale of any goods exceeding Rs. 20 in value. Rule 67A was inserted by Notification No. 1794-F.T. dated June 1, 1987, with effect from that date. It was prescribed in rule 67A that every bill or cash memo, in respect of a transaction of sale of any goods exceeding Rs. 20 in value should contain, inter alia, the date of sale, date of supply of goods sold and details of challan, if any, the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses of the purchasers. It may be noted that both the aforesaid cases were in connection with the Income-tax Act and no statutory provision or rule appears to have been involved in those cases. But here, it is a statutory provision emanating from section 13, namely, rule 67A framed under that section. Therefore, the question of any option on the part of the dealers does not arise in the cases before us and the aforesaid decisions do not apply.
15.. In the result, we hold that item 2 in Schedule IV to the 1941 Act, inserted by the West Bengal Taxation Laws (Amendment) Act, 1988 and section 13 of the 1941 Act, read with rule 67A of the Bengal Sales Tax Rules, 1941, in so far as it relates to the requirements of certain dealers to record names and addresses of purchasers in bills or cash memos are valid and constitutional and do not infringe articles 14 and 19 of the Constitution of India. All the 14 applications in RN-267 to 277 and RN-310, 311 and 384 of 1990 are accordingly dismissed. Interim orders, if any, are vacated. No order is made for costs.
S.P. DAS GHOSH (Chairman).-I agree.
P.C. BANERJI (Technical Member).-I agree.
Applications dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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