9911796707
TMI Blog2012 (10) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... ional 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 business in the name and style as M/s. Ideal Cream Parlour at GHS Road, Mangalore and M/s. Ideal Traders Cream Parlour Pvt. Ltd. at Market Road, Mangalore. They sell ice creams, fruit salad, fruit juice, etc. 4. In view of coming into force of the Karnataka Value Added Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Commercial Taxes, Audit-I, inspected the business premises of the appellants on March 16, 2006 and verified the books of accounts maintained and copies of the returns filed and also noticed that though there are two kitchens in the premises, only coffee, tea and snacks are being manufactured and sold, but, cutlets, carrot halwa, badam milk, chocolate dad are purchased from the local registered dealers and in one kitchen, only coffee, tea and badam milk are prepared besides ice creams, milkshakes and juice. The turnover of the ice creams, milkshakes and juices is about Rs. 23,93,168 out of total turnover of Rs. 24,82,370 and the sale of coffee, tea and snacks is only four per cent. Though the appellants-firms are registered under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxes (Appeals), Mangalore in KVAT/AP/28-31/ 2006 and KVAT/AP/32-35/2006. The first appellate authority by its order dated November 30, 2006 allowed the appeals and set aside the order passed by the assessing authority holding that for the month of April and May, the appellants have to be classified under composite tax benefit thereby, the turnover declared by the assessees is liable to be taxed at four per cent and in view of amendment to section 15(1)(c) to the Act with effect from June 7, 2005 in Act No. 27/2005 and also set aside the penalty and interest for the month of April and May, 2005. The Additional Commissioner of Commercial Taxes, on reassessment found that the order passed by the first appellate authority is erroneous in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot levy tax under section 4(1)(b) of the Act and sought for setting aside the order passed by the revisional authority. 6. On the other hand, T.K. Vedamurthy, learned High Court Government Pleader, argued in support of the order passed by the revisional authority and also contended that 96 per cent of the business turnover is by sale of ice creams and related products and only four per cent is from the sale of coffee, tea and snacks. Hence, the appellants are not entitled to take the benefit of the composition tax and sought for dismissal of the appeals. 7. These appeals are admitted to consider the following substantial question of law: "Whether the finding of the revisional authority is perverse and arbitrary as the registration c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different rates. For the turnover of snacks, coffee and tea, the tax was levied at the rate of four per cent and insofar as ice cream business is concerned, the tax was levied at the rate of 12.5 per cent. Being aggrieved by the said order, the appellants preferred appeals before the first appellate authority and the first appellate authority set aside the order passed by the assessing authority under section 39(1) of the Act and held that the appellants had to pay the composite tax only at the rate of four per cent. The revisional authority set aside the said order only on the ground that the turnover in ice cream is at 96 per cent and coffee, tea and snacks is at four per cent and held that main business of the dealer is the ice cream pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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