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TMI Blog1991 (9) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to be adjudicated whether the taxing authorities are required to investigate as to whether the supply of food for cash or deferred payment by the assessee in question at the relevant time was a package of service or was sale of food, service being incidental when the assessee raised such a question. 2.. The historical background of levy of tax on supply of food-stuff and service of meals and various decisions on the point need reference. Whether service of meals to casual visitors in a restaurant, a lodging house where meals are provided, when the charges are lump sum per meal or charged along with the services for the entire day had come up for consideration before the apex Court from time to time (sic). In State of Himachal Pradesh v. Associated Hotels of India Ltd. [1972] 29 STC 474 (SC) the question that arose was whether the supply of food to the residents of a hotel, constituted "sale" for the purpose of levy of sales tax and whether it was legally permissible for the Revenue to split up the transaction into two parts, namely, one of service and the other of sale of food-stuffs in order to tax sale of food. Their Lordships were of the opinion that the transaction betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [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 by a restaurant. But overruling the decision of the Delhi High Court, the Supreme Court has held in the above case that service of meals whether in a hotel or restaurant does not constitute a sale of food for the purpose of levy of sales tax but must be regarded as the rendering of a service in the satisfaction of a human need or ministering to the bodily want of human beings. It would not make any difference whether the visitor to the restaurant is charged for the meal as a whole or according to each dish separately." The Amendment Act came into force on 2nd February, 1983. Under section 4 of the Amendment Act, clause (29A) was inserted in article 366 of the Constitution and it reads as follows: "(29A) '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6(2)(a) of the Amendment Act, the assessing authorities are required only to find out whether the assessee had collected sales tax during the relevant period or not, the burden being on the assessee to prove that he had not collected it. The authorities are not required to find out the dominant object of the assessee regarding the supply of such foodstuff, that is, whether the supply of such food articles during the relevant period was in lieu of package of service or was intended to be sale of foodstuffs, service being incidental. Reliance is placed on a decision in Shri Krishna Enterprises v. State of Andhra Pradesh [1990] 76 STC 67 (SC), in which their Lordships remitted the matter to the assessing authorities directing to give opportunity to the assessees to establish that they come within the exemption clause of section 6 of the Constitution (Forty-sixth Amendment) Act, 1982. 5. In Shri Krishna Enterprises' case [1990] 76 STC 67 (SC), the question before their Lordships was whether the assessees were entitled to the exemption under section 6(2)(a) of the amending Act it being their plea that they had not collected the tax during the relevant period. Finding that opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time or not as the assessee was liable to be assessed for the sale of food-stuff, the same being exigible taking into consideration the law as declared by the apex Court in Northern India Caterers case [1978] 42 STC 386 and [1980] 45 STC 212. 7.. In both the original and review judgments in Northern India Caterers' cases [1978] 42 STC 386 and [1980] 45 STC 212, the apex Court in *Reported in [1992] 85 STC 553 (Orissa). unambiguous terms had observed that where sale of food happened to be the dominant object in the case of an eating house or a restaurant, the transaction would be undoubtedly exigible to sales tax. This declaration of law made by the apex Court must be deemed to be the legal position in existence all through. Therefore, the assessee whose dominant object while supplying food articles was sale of the food-stuffs, services being incidental, was all through liable to pay sales tax. Therefore, in each case even after the amendment the taxing authorities are required to investigate as to whether at the time the assessee sold the food-stuffs, service was incidental or the supply of food was in lieu of package of service, if the assessee claims that his dominant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assumes importance. 8.. As has been seen before, it is the exclusive responsibility of the assessee to establish, so as to bring itself within the protection of the exemption, that during the period for which exemption has been granted it had not collected the tax for supply of the articles of food in question and that such collection had not been made because of the fact that sales tax was not leviable nor collectible at that time because of the nature of the transactions effected by it. The only ground on which the contention that the tax was neither leviable nor collectible during the transactions, it was principally rendering service and not selling and because of the law decided by the Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 and [1980] 45 STC 212 no tax was leviable or collectible on such transactions. To establish such fact it has necessarily to establish that in effecting the transactions its dominant intention was rendering service and not sale. Viewed from this perspective an assessee who puts forth the objection of it being not liable to sales tax on account of the exemption under section 6(2)(a) has to establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as sale assessable to tax on account of decisions of this Court", for which their Lordships were not called upon to decide, when there are disputed facts before the assessing authority as to the transaction of supply of food being by way of sale or was in lieu of package of services; (ii) Transactions in hotels and restaurants where dominant object was sale were taxable all through. It is for the assessing authority to ascertain from the facts and to determine that sale of food supplied was intended if such question is raised by the dealer claiming exemption under section 6(2)(a) of the Act; (iii) Transactions where dominant object is service, are not to be taxed between the period from 7th September, 1978 to 2nd February, 1983, and thereafter till 7th April, 1984 (date of amendment of the definition of "sale" in the Act), if no tax has been collected by the assessee; and (iv) The assessing officer has to give opportunity to the assessee to show that no tax was collected. The burden of proof is on the latter. The reference is accordingly answered. B.L. HANSARIA, C.J.-I agree. L. RATH, J.-I agree. Reference answered accordingly. - - TaxTMI - TMITax - CST, VAT & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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