Andhra HC (Pre-Telangana)
Daspalla Hotels Ltd. vs Commissioner Of Commercial Taxes on 26 October, 2004
Equivalent citations: (2008)11VST830(AP)
Author: Bilal Nazki
Bench: Bilal Nazki
JUDGMENT Bilal Nazki, J.
1. Heard learned Counsel for the parties.
These four special appeals have been filed against the order of the Commissioner of Commercial Taxes. They raise similar questions of law and fact, hence, they are being disposed of by this common judgment.
2. The main question raised in these special appeals is whether the cool drinks and ice-creams sold in the hotels/restaurants, which had suffered tax at the time of first sale could be again taxed under Section 5C of the Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act").
3. It is not disputed that under Section 5 of the Act, cool drinks and icecreams are taxable as Schedule goods in terms of entry 108 and entry 110 of the First Schedule to the Act. It is also not disputed that the goods in the present cases had suffered tax under Section 5 of the Act. The contention of the learned Counsel for the appellants is that once goods suffered tax in terms of Section 5 of the Act, they could not again be made exigible to tax under Section 5C of the Act, if they were sold in a hotel.
4. Section 5C of the Act, at it stood at the relevant point of time, lays down that:
Section 5C. Tax in respect of supply of Articles of food or drink in restaurants or catering houses or hotels.--Every dealer running any restaurant or eating house or hotel (by whatever name called), who supplies, 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 shall on the total amount charged by the said dealer for such supply, pay a tax at the rate of five paise on every rupee on the aggregate of such amount realised or realisable by him during the year:
Provided that no such tax shall be levied if the total turnover of the dealer including such aggregate during the year is less than Rs. 2,00,000.
5. We are told that the amendment was carried with effect from January 1, 2000 by adding notwithstanding anything contained in Section 5 or Section 6 and whether or not the goods have suffered tax. It is submitted that the amendment itself makes it clear that the goods which had suffered tax before in terms of Section 5 of the Act, could not be taxed, and therefore, the amendment became necessary and this amendment clearly stated notwithstanding anything contained in Section 5 or Section 6 and also that whether the goods have suffered tax or not. Learned Counsel for the appellants submits that similar provision was there, which was Section 5E which relates to deemed sale of transfer of right to use any goods for any purpose. This provision was interpreted by a judgment of the division Bench of this Court reported in I.T.C. Classic Finance and Services v. Commissioner of Commercial Taxes [1995] 97 STC 330 and the court came to the conclusion that once the goods had suffered tax under Section 5, they could not be again taxed under Section 5E of the Act. Both the sections, i.e., Section 5C and Section 5E, at the relevant point of time, were similar paramateria. Section 5E of the Act, as it stood before the amendment, is also reproduced.
Section 5E. Tax on the amount realised in respect of any right to use goods.--Every dealer who transfers the right to use any goods for any purpose, whatsoever, whether or not for a specified period, to any lessee or licencee for cash, deferred payment or other valuable consideration, in the course of his business shall, on the total amount realised or realisable by him by way of payment in cash or otherwise on such transfer or transfers of the right to use such goods from the lessee or licencee, pay a tax at the rate of five paise in every rupee of the aggregate of such amount realised or realisable by him during the year:
Provided that no such tax shall be levied if the total turnover of the dealer including such aggregate is less than Rs. 1,00,000.
6. We have also been shown the judgments in TRC No. 79 of 1997, dated October 29, 1997 State of Andhra Pradesh v. Jubilee Club TRC No. 136 of 1997 dated March 9, 1998 and the judgment reported in State of Andhra Pradesh v. Urvasi Bar & Restaurant [1999] 29 APSTJ 112. This judgment referred to TRC No. 79 of 1997. Since there was no discussion in this judgment, therefore, we sent for the record of TRC No. 79 of 1997. But in TRC No. 79 of 1997 also it was stated that it was a question of fact. Therefore, there was obviously some mistake in the judgment reported in Urvasi Bar & Restaurant case [1999] 29 APSTJ 112 (AP), while it referred to TRC No. 79 of 1997. However, the court was of the opinion that Section 5-C of the Act, could not be applied for levying tax on the sale of cool drinks by the restaurants when such cool drinks already suffered tax within the State.
7. For these reasons, we find ourselves in agreement with the conclusion drawn in Urvasi Bar & Restaurant case [1999] 29 APSTJ 112 (AP).
8. Learned Government Pleader for Commercial Tax referred to State of Andhra Pradesh v. Gateway Hotel [1992] 86 STC 39 (AP), and submits that the right of recovering tax under Section 5C of the Act with respect to liquor has already been upheld by this Court in this judgment. We have gone through the judgment. The judgment is also very brief and is reproduced below:
The appellate Tribunal has taxed the sales of drinks (whether intoxicating or not) at the rate five paise in a rupee, in view of the provisions of Section 5C of the Andhra Pradesh General Sales Tax Act, 1957.
The case of the department was that the hotel was liable to pay sales tax on sales of liquors as provided in the Sixth Schedule to the Act. It will be noticed that the sixth Schedule is relatable to goods in respect of which sales tax is payable under Section 5 of the Andhra Pradesh General Sales Tax Act, and not under Section 5C thereof. In any case, there is a specific provision so far as sale of Articles of food and drink in restaurants, catering houses and hotels, etc., is concerned. Therefore, we are in agreement with the Sales Tax Appellate Tribunal that in the hotel, like the assessee, sales of intoxicants for human consumption are liable to tax at the rate of five paise in a rupee, as mentioned in Section 5C of the Andhra Pradesh General Sales Tax Act.
9. Nowhere, it is mentioned, in the judgment that the liquor had suffered tax under Section 5 of the Act and in our view, that makes all the difference. If the goods had not suffered tax under Section 5 or any other provision and they are sold in a restaurant, they would be taxable under Section 5C. But, in the present cases, it is the admitted case of the parties, that the goods sold in the restaurants had suffered tax under Section 5 of the Act. For these reasons, we feel that this judgment is not going to help the Revenue.
10. Accordingly, the special appeals are allowed to the extent of cool drinks and ice-creams and it is held that they were not taxable under Section 5C of the Act, as they had suffered tax under Section 5 of the Act.
11. Another question, which is raised, pertains to the milk purchased from unregistered dealers and sold after conversion into curd. This question has already been decided by this Court in Krishna Enterprises v. State of Andhra Pradesh [1990] 10 APSTJ 79, and controversy stands covered by this judgment. The court found that:
In this case the petitioner purchases milk. It is admitted that the milk is taxable as general goods. It is also admitted that the person from whom the petitioner purchases milk was not a registered dealer and no tax was paid by him. In such circumstances he is liable to pay the tax and it is immaterial whether he supplies to his customers milk as such or he converts milk into curd and then supplies the same to his customers.
12. The special appeals are accordingly allowed in part. No order as to costs.