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TMI Blog2012 (10) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... onth of April and May, the revenue cannot levy tax at the rate of 12.5 per cent. Hence, the order passed by the revisional authority cannot be sustained. The substantial question of law framed in these appeals is held in favour of the appellants. - STA Nos. 6, 7,27,28 of 2011 - - - Dated:- 4-10-2012 - SREEDHAR RAO K. AND MANOHAR B., JJ. For the Appellants : Kamath and Kamath For the Respondent : Smt. S. Sujatha, Additional Government Advocate, The judgment of the court was delivered by B. MANOHAR J.- The appellants are the assessees, being aggrieved by the order dated November 15, 2010 in ZAC-I/MNG/SMR-3/2010-11 and the order dated November 16, 2010 in ZAC-I/MNG/SMR-4/2010-11 passed by the Additional Commissioner for Commercial Taxes, Zone I, Bangalore, setting aside the order passed by the Joint Commissioner of Commercial Taxes (hereinafter referred to as the first appellate authority ) have filed these appeals. 2. Since the common question of law and facts are involved in these appeals, all these appeals are disposed of by this common order. 3. The appellants are the private limited companies incorporated under the Companies Act, 1956 and carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nover of ₹ 24,82,370 and the sale of coffee, tea and snacks is only four per cent. Though the appellants-firms are registered under section 15(1) of the Act, the sale of snacks with coffee and tea was found to be incidental to the main business of ice cream parlour. Accordingly, a proposition notice was issued on March 22, 2006 under section 39(1) of the KVAT Act calling upon the appellants to file their objections. The appellants filed detailed objections to the show-cause notice contending that earlier they are running ice cream parlour and from April 1, 2005, apart from the ice cream parlour they have started a hotel and catering business after obtaining necessary trade licence from the competent authority. An advertisement was also given in the newspapers, since the hotel was newly started. Percentage of business in tea, coffee and snacks compared to ice cream business was less. Since the appellants opted the composite scheme, they are entitled to pay tax under section 15(1)(c) of the KVAT Act and sought for dropping the proceedings under section 39(1) of the Act. 5. The assessing authority after considering the objections filed by the appellants levied tax in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority is contrary to law and error apparent on the face of the record. In view of coming into force of the KVAT Act, they got registered as dealers and opted to remit the tax by way of composition. Accordingly, composition tax registration certificate was obtained which is valid from April 1, 2005 and it will be in operation till it is cancelled by the authorities concerned. Prior to April 1, 2005, the appellants were running the ice cream parlour. In view of the request made by the public, they wanted to start the restaurant along with ice cream parlour. Accordingly, they made an application to the Mangalore City Corporation and obtained a trade licence to run the hotel, restaurant, ice cream parlour and catering. Accordingly, an advertisement was given in Udayavani Newspaper to the general public stating that from April 1, 2005, they are selling coffee, tea and other snacks in their hotel. Accordingly, the monthly returns for the month of April and May 2005 have been filed declaring the turnover tax and paid the same. The assessing authority accepted the same. However the Deputy Commissioner for Commercial Taxes, Audit-I, issued notice under section 39(1) of the Act for reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. It is not in dispute that prior to registration of the appellants-firms under the KVAT Act, they were running ice cream parlour. In view of the request made by the general public, they wanted to start a hotel in the same premises along with the ice cream parlour. Accordingly, they obtained a trade licence from the competent authority and started a hotel along with the ice cream parlour with effect from April 1, 2005. The advertisement given in Udayavani newspaper clearly discloses that the appellants have started a hotel from April 1, 2005. In view of the registration under the KVAT Act and obtaining the composition tax registration certificate, the authorities had to assess under section 15(1)(c) of the Act. Since the hotel business was newly started, there is less transaction in respect of coffee, tea and snacks are concerned for the month of April and May. For the last so many years, the appellants are running the business only in ice creams. Apart from that, the appellants have obtained the trade licence from the competent authority and started hotel business along with the ice cream parlour. The assessing authority doubted the running of hotel by the appellants and levied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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