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TMI Blog1998 (12) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of food and beverages to the employees was not by way of sale of goods but for rendering services. This contention has been accepted by the Tribunal vide order dated September 22, 1987 passed in Second Appeal No. 211 of 1985 for assessment year 1979-80 which is under challenge in the said revision petition. 4.. In Sales Tax Revision No. 1194 of 1988 the dealer-respondent operated a residential hotel as well as a restaurant and as in other cases the dealer s contention that supplying food and beverages it was only rendering services has been accepted by the Tribunal. The Tribunal s order is dated May 27, 1988 passed in Second Appeal No. 55 of 1984. 5.. In Sales Tax Revision No. 738 of 1989 also the respondent, Poonam Hotel, raised a similar plea in respect of receipts on account of supply of food and beverages to its customers and its contention has been accepted by the Sales Tax Tribunal, Moradabad vide order dated February 10, 1989 for assessment year 1979-80 which is under challenge in the present revision petition. 6.. I have heard Sri K.M. Sahai, learned Standing Counsel for the Commissioner-revisionist and Sri Piyush Agarwal, learned counsel for the respondent in Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of Goods Act, 1930. That case related to a works contract in which movable goods were used for construction of immovable property by the contractor for the contractee and it was held that sales tax could not be levied on the value of those goods. Then in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC); AIR 1978 SC 1591; 1979 UPTC 826 again a controversy about the taxability of the receipts on account of supply of food and beverages came for consideration before the honourable Supreme Court. The dealer in that case operated a hotel and meals were served to non-residents as well as residents in the restaurant located in the hotel. The honourable Supreme Court held that such receipts were by way of rendering services and not by way of sale of goods and were not taxable under the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union territory of Delhi. This judgment subsequently came up for review and the judgment on the review petition is reported in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212 (SC); AIR 1980 SC 674; 1980 UPTC 326. The honourable Supreme Court explained that every receipt for supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (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. 9.. The said Act was operative from 3rd February, 1983. Section 6 thereof that provided for validation and exemption stands as under: 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 pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 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 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 pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch assessment, levy, collection, penalty or demand and such assessment or other order becomes, in consequence of the provisions of this Act, inconsistent with the provisions of the principal Act as amended by this Act, then, subject to the provisions of sub-section (3), any party to the proceeding or the Commissioner of Sales Tax may, within six months from the date of such commencement, make an application to such court or authority for a review of the assessment or order, and thereupon such court or authority may review the proceeding and make such order, varying or revising the order previously made, as may be necessary to give effect to the provisions of this Act. (3) The assessing, appellate or revising authority, as the case may be, may, within a period of one year from the commencement of this section or within the period specified in section 22 of the principal Act, whichever expires later, make any rectification in any order passed by it where such rectification becomes necessary in consequence of the amendment of the principal Act by this Act: Provided that no rectification, which has the effect of enhancing the assessment, penalty or other dues, shall be made unless th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the principal Act as amended by this Act and provides for rectification of the orders that are inconsistent with the provisions of the principal Act as amended by this Act. 14.. Then, he placed reliance on a judgment of the honourable Supreme Court in Commissioner of Sales Tax v. Northern Railway Catering Department, U.P. [1994] 95 STC 569; 1995 UPTC 17 by which the honourable Supreme Court referring to its aforesaid observations in Northern India Caterers case [1978] 42 STC 386 (SC) set aside the assessment and remitted the matter back to the Sales Tax Officer to hold the assessment proceedings afresh in accordance with law. Learned Standing Counsel also placed reliance on another judgment of the honourable Supreme Court in Moulin Rouge Pvt. Ltd. v. Commercial Tax Officer [1998] 108 STC 150; JT 1997 (9) SC 83. In that case following the insertion of clause (29A) in article 366 of the Constitution of India the Bengal Finance (Sales Tax) Act, 1941 was amended and the definition of sale was amended to include, inter alia, any supply by way of or as part of any service or any other manner whatsoever, of goods, being food or any other article for human consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In my view, therefore, the provisions of this Act are only enabling and could legalise statutory provisions contained in laws of the State and no question of legalisation or validation arises and where there was no such law that required to be legalised. 16.. As stated above, U.P. Sales Tax Act had its own definition of sale and supply of food and beverages by way of rendering of services was beyond the scope of that definition. That scope was widened by the Act No. 25 of 1985 which inserted a new definition of sale . The State Legislature did not want to amend the definition of sale with retrospective effect from January 26, 1950 when the Constitution of India was adopted. On the other hand, it took a conscious decision and provided that the amended definition of sale shall be effective from February 3, 1983. Therefore, in respect of transactions prior to that date the law as laid down by the honourable Supreme Court in Northern India Caterers case [1978] 42 STC 386 applies and transactions in which the dominant object was the rendering of services would not be taxable prior to February 3, 1983. However, all transactions of supply of food and beverages whether by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of which the controversy had arisen in Northern India Hotels Ltd. s case [1984] 55 STC 68 (All.), we do not wish to narrate the same in this judgment. Honourable Sapru, J., held: (i) Scope of the State s legislative competence under entry 54 of List II of the Seventh Schedule has been widened by the addition of clause (29-A) in article 366 of the Constitution and as from that date the State Legislatures are competent to enact taxes on sale or purchase of goods by hotel and restaurant owners to their customers. (ii) Since the U.P. Sales Tax Act, 1948 could not be said to have been made in pursuance of the expression taxes on the sale or purchase of goods as was the entry 54 of List II, hence sub-section (1) of section 6 of the Amendment Act has no application to the U.P. Sales Tax Act, 1948. (iii) The definition of the word sale in section 2 of the U.P. Sales Tax Act, 1948, having not been altered by the Amendment Act, the original definition stands. Under the original definition sales tax cannot be imposed on sales by a hotelier and in a restaurant where the dominant object of the hotelier or the restaurant owner when he effected the supply, was service. 9.. The net ..... X X X X Extracts X X X X X X X X Extracts X X X X
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