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TMI Blog1996 (11) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to Rs. 1,985.15 and imposed penalty and interest for sundry lapses of Rs. 170 and after taking into account the tax already deposited raised an additional demand for Rs. 6.65 (rupees six and sixty-five paise only). 3.. Aggrieved by this the dealer went in appeal to the Deputy Commissioner (Appeals) and cited Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212 (SC) in support while accepting that the sale of samosas was taxable. The Deputy Commissioner (Appeals) by an order dated April 12, 1982 in appeal No. 59/B/RST/79-80 partially accepted the appeal and remanded the matter to the assessing authority to determine what part of sales was countersales and what part of sale in the restaurant and what was the turnover in samosas and redetermine the tax payable. The penalty and interest amounts were upheld. 4.. In compliance with the order of remand the assessing authority found on the basis of the Inspector s report that the dealer did not keep accounts separately for counter-sales and other sales; that the restaurant in question was different from other restaurants inasmuch as its clientele was mostly of cinema goers who patronised it in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 7.2. The learned counsel for the non-petitioner-dealer argued that the sales were not counter-sales; that they were by way of services rendered to the cinema goers; that the cinema s doors are closed when the cinema starts; and that sales tax was not charged from the customers. 7.3. It is not in dispute that the dealer did not charge sales tax from customers. 8.. The import and effect of the 46th Constitution Amendment lies at the heart of the present controversy. 8.1. The RST Act pertains to entry No. 54 of List II-State List of the Seventh Schedule to the Constitution of India which speaks of "tax on the sale and purchase of goods......" By section 4 of the Constitution (Forty-sixth Amendment) Act, 1982, article 366 of the Constitution was amended to insert clause (29A) which defined "tax on the sale or purchase of goods", inter alia, to include in sub-clause (f) "a tax on the supply by way of or as part of any service or as in any other manner whatsoever, of goods, being food and 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". 8.2. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid tax if this section had been in force at all material times. (2) Notwithstanding anything contained in sub-section (1), any supply of the nature referred to therein shall be exempt from the aforesaid tax- (a) where such supply has been made, by any restaurant or eating house (by whatever name called), at any time on or after the 7th day of September, 1978, and before the commencement of this Act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time; or (b) where such supply, not being any such supply by any restaurant or eating house (by whatever name called), has been made at any time on or after the 4th day of January, 1972, and before the commencement of this Act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time: Provided that the burden 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provided on "inclusive terms" to residents. Meals were also served to non-residents in the hotel s restaurant. The following two questions of law were referred to the Delhi High Court under the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi: (i) Whether, the supply of meals to the residents, who pay a single all inclusive charge for all services in the hotel, including board, if they desire to partake of it, without entitling them to a rebate, if they miss it, was taxable? (ii) Whether the service of meals to casual visitors in the restaurant was taxable as sale, (a) when the charges are lump sum per meal, or (b) when they are calculated per dish? The High Court answered the first question in favour of the hotelier and the second question in favour of the Revenue. The Supreme Court had only the second question before it and it was held that the service of meals to the visitors in the hotel s restaurant was not taxable and this was so whether a charge was imposed for the meal as a whole or according to the dishes separately ordered. Precedents in English law of the concept that there is no sale when food and drink was supplied to guests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration, which would imply the customer s right to carry away the unconsumed portion of food; that the amount recovered from the customer was not the price of any goods but represented the charges for looking after the convenience and enjoyment of the customer including his needs for food and rendering him various kinds of other services and providing him with various facilities and comforts; that food was prepared and served both to the residents of the hotel as well as casual customers who came to eat in its restaurant and having regard to the nature of the services rendered there was no real difference between the two kinds of transactions and that in both cases it remained a supply and service of food not amounting to a sale. There were thus two aspects involved-the provision of service and amenities and the absence of a transfer of property in food. 8.5.2. In Commissioner of Sales Tax v. Northern Railway Catering Department, U.P. [1994] 95 STC 569, the Supreme Court allowed the appeals and set aside the order of the Allahabad High Court dismissing as not maintainable the applications seeking review (on the basis of the clarification given by the Supreme Court in Norther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1983 relating to serving food, snacks and beverages, etc., for consumption by the assessees all of which are restaurants, canteens, eating houses, etc. To this category of assessees and to such transactions sub-section (2) of section 6 of the Constitution (Forty-sixth Amendment) Act, 1982 clearly provides exemption where the tax has not been collected on such supply between the period specified therein. It is only such transactions and by such assessees for this period prior to February 2, 1983 that the Tribunal rendered its decision by the impugned order. Sub-section (2) applies notwithstanding anything contained in sub-section (1) which means that even if the tax liability arises by virtue of sub-section (1) the exemption would be available to the assessees in respect of the tax not collected for such supply during the specified period. All such transactions during the specified period being exempt in this manner, the assessee ultimately gets the benefit and, therefore, it is unnecessary to consider and decide the larger question which apparently was not raised, considered or decided at any stage earlier. It may however be clarified that it would be open to the assessee to rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g it in line with article 366(29A) of the Constitution? His Lordship, the honourable Mr. M.B. Sharma, J., held that (a) the definition of "sale" in the RST Act did not stand automatically amended by virtue of the 46th Constitutional amendment and the RST Act had to be specifically amended as indeed it was, on April 1, 1987 and (b) that as the definition of "sale" in the RST Act prior to its amendment did not cover the supply of food-stuffs by way of service the validation by section 6(1) of the Constitution (Forty-sixth Amendment) Act, 1982 would not be available if such transactions in food-stuffs had been taxed. A contrary view appears to have been taken by the Madras High Court in Hotel Parisutham (P) Ltd. v. State of Tamil Nadu [1994] 94 STC 577, but that need not detain us as this Tribunal is bound by the decision of the Rajasthan High Court on this point. As regards refund in the absence of adequate material the honourable Mr. M.B. Sharma, J., directed the assessing authority to make an enquiry and authorised the refund only if sales tax had in turn not been collected by the assessee from its customers. This was not done in terms of section 6(2) of the Constitution (Forty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them afresh as to whether the supply of food or other articles, etc., for human consumption or any drink in given case is dominantly part of service or sale, keeping in view the review judgment passed in Northern India Caterers (India) Ltd.'s case [1980] 45 STC 212, the latest judgment of the Supreme Court in Commissioner of Sales Tax v. Northern Railway Catering Department, U.P. [1994] 95 STC 569 and Govind Ram v. State* 1982 WLN 1." (Emphasis** added) 8.5.6. This Tribunal followed State of Rajasthan v. Milkh Raj [1995] 99 STC 493 (Raj) in Sales Tax Revision No. 205 of 1988, Rajasthan Tourism Development Corporation Ltd. v. C.T.O. decided on July 18, 1996 and remanded the matter to the assessing authority to determine whether the supply of food was dominantly part of service or not. 9.. On the basis of the foregoing the following propositions can be made: (a) The sale of food and drink not dominantly by way of service was always exigible to tax. (b) The Supreme Court s decision in Northern India Caterer s case [1978] 42 STC 386 and [1980] 45 STC 212, must be seen with reference to its factual context, i.e., an inclusive charge, the provision of a wide range of amenities and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be obvious that only if the transactions of the dealer in food and drink had been dominantly by way of service would the effect of the Constitution (Forty-sixth Amendment) Act, 1982 which came into force on February 2, 1983 and of its provisions in section 6(1) and (2) as well as of whether the dealer had recovered sales tax from customers become relevant. If no finding existed the question of remand would become relevant following Milkh Raj's case [1995] 99 STC 493 (Raj); (1994) 16 RTJS 239. As the assessing authorities finding that the element of service was negligible stands undisturbed the considerations that weighed with the Board and the principle sought to be laid down (cf. extracts from its impugned order in para 6 supra) were not applicable to the case in hand. As already noted (para 8.5.1. supra) the Supreme Court had in Northern India Caterer's case [1980] 45 STC 212 at page 218 unequivocally and unhesitatingly laid down in no uncertain terms "that where food is supplied in an eating house or restaurant, and it is established upon the facts that the substance of the transaction, evidenced by its dominant object, is a sale of food and the rendering of services is merely i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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