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TMI Blog2021 (9) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... Department by holding that the Petitioner is a hotel and does not fall under Clause 27 of the ineligibility list of IPR-1989 and is entitled to sales tax exemption under Entry 30-FFFF in terms of the Finance Department Notification dated 16th August, 1990. Whether in the facts and circumstances of the case, disallowance of the case, disallowance of claim of first point sale of cold-drinks and IMFL U/s. 5(2) (A) (a) read with Section 8 of the Act is sustainable in law? - HELD THAT:- It is not in dispute that the Petitioner is not the first seller in respect of cold drinks. It has produced the invoices to show from whom it has purchased the soft drinks. The Tribunal appears to have rejected these invoices only because the seller was not a registered dealer. But the Tribunal has for the AYs 1993-94 and 1996-97accepted that the cold drinks have suffered tax at the first point of sale and that irrespective of the sellers of such cold drinks not being registered dealers themselves, the cold drinks cannot be made exigible again to sales tax. This appears position also flows from a reading of Section 8 read with Explanation (1) to Section 5 (2) (A) (a) of the OST Act. Reliance pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Entry 30-FFFF vide Finance Department Notification dated 16.08.1990? (ii) Whether in the facts and circumstances of the case, disallowance of the case, disallowance of claim of first point sale of cold-drinks and IMFL U/s. 5(2) (A) (a) read with Section 8 of the Act is sustainable in law? 4. It must be was mentioned here that on 28th January, 2010 this Court stayed the re-assessment pursuant to the notice dated 12th January, 2010 issued to the Petitioner by the STO asking that books of account for the period of 1995-1996 be produced pursuant to the impugned order of the Tribunal. 5. The background facts are that the Petitioner is a hotelier carrying on the business of providing lodging accommodation and manufacture and sale of food, drinks etc. The Petitioner is a registered dealer under the OST Act. The Petitioner it also registered as a small-scale Industry (SSI) by the District Industries Centre, (DIC) Cuttack. It claims to be eligible for sales tax exemption under the Industrial Policy Resolution, 1989 (IPR-1989). The Industry Department issued a Registration Certificate dated 19th April, 1988 in its favour showing the date of commencement of production as 19th F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Empowered Committee, the Petitioner was held to be entitled to sales tax exemption. However, the 7th State Level Empowered Committee at a meeting held on 30th April, 1996 reversed its earlier decision. This decision was communicated by the Director, DIC to the STO on 25th January, 1997. The ACST held that the Petitioner was thus entitled to exemption at least till 30th April, 1996. As regards purchase or sale of soft drinks, IMFL and cigarettes, which were not manufactured or processed by the Petitioner, it was held that the Petitioner was entitled to sales tax incentive. Thus, only such deductions as were usually available in respect of such goods as first point tax paid goods were allowed. As a result, the amount payable under the assessment order was reduced to ₹ 37,860/-. The excess tax paid was asked to be refunded. 9. Aggrieved to the extent of its other claims relating to sale of IMFL and cold drinks, the Petitioner filed S.A. No.350 of 1999-2000 in the Tribunal. Aggrieved to the extent that the tax payable was reduced to ₹ 39,600/- the Department filed S.A. No.352 of 1999-2000. 10. Both the appeals were disposed of by a common order of the Full Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 27 of the ineligible list was apparent from the deposition made by the General Manager, DIC before the STO on 14th November, 1996 pursuant to a summons issued to him under Section 21 of the OST Act. Mr. Sahoo relied on the decision in Vadilal Chemicals Ltd. v. State of Andhra Pradesh (2005) 5 RC 295 in the Supreme Court disapproved of the sales tax authorities disregarding the exemption certificate issued by a DIC. 15. On the second issue, Mr. Sahoo points out that the Petitioner purchased IMFL in bottles and sold it in the Hotel s Bar by way of pegs in loose quantity for consumption. There was obviously a wide gap between the purchase value and the sales price. The purchase of IMFL having been subjected to sales tax in the State of Orissa and there being no dispute that it had suffered sales tax, the subsequent sale of IMFL at a higher price cannot be subject to further levy of tax under the OST Act. Likewise for the sale of cold drinks, there was no controversy that the Petitioner was not their first seller and that they had already suffered sales tax. The purchase bills in this regard had been produced before the STO. Therefore, these too were not exigible to sales ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal in its orders dated 7th January 2008, 21st November 2007 and 21st May 2007 for the AYs 1993-94, 1994-95 and 1996-1997 respectively. In each of the aforementioned orders, passed after the impugned order was passed by the Tribunal on 4th September 2006 for AY 1995-96, the Tribunal has noted that in terms of the above exemption certificate, the Petitioner was exempt from paying sales tax on its finished products i.e. cooked food and beverages for a period of seven years from 1st December 1989 till 30th November, 1996. The AY 1995-96, with which the present revision petition is concerned is covered in this period. 21. In each of the orders for the aforementioned three AYs, the Tribunal has accepted the finding of the ACST that hotel is different from guest house and restaurant and that the eligibility certificate issued by the DIC cannot be nullified by the Department and cannot be withdrawn on the basis of subsequent resolution of the State Level Empowered Committee dated 30th April 1996. The Tribunal has consistently held that cooked food served in the restaurant of the dealer who is a hotelier is entitled for tax exemption under Serial No.30-FFFF of tax exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the soft drinks. The Tribunal appears to have rejected these invoices only because the seller was not a registered dealer. But the Tribunal has for the AYs 1993-94 and 1996-97accepted that the cold drinks have suffered tax at the first point of sale and that irrespective of the sellers of such cold drinks not being registered dealers themselves, the cold drinks cannot be made exigible again to sales tax. This appears position also flows from a reading of Section 8 read with Explanation (1) to Section 5 (2) (A) (a) of the OST Act. 27. In this context Mr. Sahoo is right in placing reliance on Govindan and Company v. State of Tamil Nadu, (1975) 35 STC 50 , where the Madras High Court held that to claim benefit of tax on the ground that the sales effected by the Assessees were second sales, they need not show that their sellers had in fact paid the tax at the first point. It was enough for them to show that the earlier sales were taxable sales and the tax was really payable by their sellers. This decision of the Madras High Court has been affirmed by the Supreme Court in St ate of Tamil Nadu v. Raman Company (1974) 33 STC 1. Likewise in State of Tamil Nadu v. Chamundeswari, ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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