Madras High Court
M/S.Ramanuja Hotels (P) Ltd vs The Commercial Tax Officer on 19 May, 2020
Author: C.Saravanan
Bench: C.Saravanan
W.P.Nos.26721 to 26723 & 26726 to 26728/2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on: 17.02.2020
Pronounced on : 19.05.2020
CORAM:
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.Nos.26721 to 26723 and 26726 to 26728 of 2016
and
connected miscellaneous petitions
W.P.No.26721 of 2016
M/s.Ramanuja Hotels (P) Ltd.,
rep. By its Managing Director K.Natarajan,
No.115, Palaghat Road,
Pollachi – 642 001,
Coimbatore District .... Petitioner
Versus
The Commercial Tax Officer,
Pollachi (West), Assessment Circle,
Pollachi. ..Respondent
Prayer in W.P.No.26721 of 2017: Writ Petition filed under Article 226 of
the Constitution of India praying to issue Writ of Certiorari, calling for the
records relating to the order dated 27.06.2016 on the file of the respondent
made in respect of TIN No.33482242419 for assessment year and to quash
the same.
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W.P.Nos.26721 to 26723 & 26726 to 26728/2016
For Petitioner : Mr.Hari Radha Krishnan
For Respondents : Mr. A.N.R.Jayaprathap,
standing counsel
COMMON O R D E R
I have heard the learned counsel for the petitioner and the respondent at length. I have perused affidavit, counteraffidavit and also the impugned orders and the connected documents filed along with these writ petitions and the additional typed set of documents and case-laws filed with the petitioner.
2.By this common order all the 6 writ petitions are being disposed. The petitioner has impugned 6 different assessment orders all dated27/06/2016 passed by the respondent for the following assessment years:-
(i) 2009-10;
(ii) 2010-11;
(iii) 2011-12;
(iv) 2012-13;
(v) 2013-14; and
(vi) 2014-15.
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3. By the impugned orders, the respondent has confirmed demand of tax on the petitioner at 12.5% for the assessment year 2009-2010 to 2011- 2012 and at 14.5% for the assessment year 2012-2013 to 2014- 2015 under Section 7(1)(a) of the Act.
4. Earlier separate re-assessment orders dated 2.7.2014 were passed for assessment year 2009-2010 to 2011-2012 wherein the tax paid under Section 7(1)(b) was accepted.
5. However, even before the communication of the aforesaid assessment orders dated 2.7.2014 to the petitioner, recovery notice dated 10.9.2014 was served on the petitioner.
6. Under these circumstances the recovery notice dated 10.9.2014 was challenged before this court in W.P.No. 26298 of 2014. By an order dated 31.10.2014, the recovery proceedings initiated vide a notice dated 10.9.2014 was quashed as the respective assessment orders dated 2.7.2014 were dispatched only on 17.9.2014 only after the issue of the recovery 3/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 notice dated 10.9.2014.
7. While quashing the aforesaid recovery notice dated 10.9.2014, liberty was given to the petitioner to challenge the assessment orders in the manner known to law.
8. Pursuant to the aforesaid order of this court in W.P.No.26298 of 2014, fresh notices were issued for all the 6 assessment years which have culminated in the impugned order. The impugned orders are confined to the petitioner’s registration in TIN No. 3382242419.
9. It is the case of the petitioner that the petitioner started a hotel business and obtained a registration in TIN No. 3382242419 from the respondent on 19.5.2008 for sale of food in the restaurant to cater to the demand of the transit passengers as the hotel was centrally located in the busy area right opposite the Pollachi Muffusil Bus Stand in a cluster location having several shops, private concerns and government offices in the vicinity.
10. It is submitted that the petitioner later also obtained a separate 4/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 registration in TIN No. 3321224280 for the bar attached to the Hotel for lodging with 34 rooms on 13.06.2011.
11.For running the aforesaid hotel with 34 rooms, the petitioner also obtained a separate Star Classification Order on 12.11.2009 which was to be in force for a period of 5 years subject to the condition that the management of the hotel should at all times comply with all the statutory regulations and conditions for classification/3 classification of the hotels and other terms and conditions to be introduced by the Department of Tourism, India Tourism (Chennai), Southern Regional Office, Chennai 600002.
12.The petitioner also obtained a certificate of registration under the provisions of the Tamil Nadu Tax on Luxuries in Hotel and Lodging Houses Act, 1981 from the respondent for running the aforesaid hotel for lodging purposes. This registration was obtained on 30.10.2008 and that the petitioner has been filing separate returns.
13.The petitioner submits that it was filing separate VAT returns under TIN No. 3382242419 for the sale of food/non-alcoholic beverages in the restaurants and a separate VAT return in TIN No. 33212242810 for sale 5/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 of food and beverages in its One Star hotel service for the guest staying in its 34 rooms and for the services offered in its bar attached to the said One star hotel.
14.It is submitted that both the businesses are separate verticals and there is no scope for intermingling of the turnovers. It is further submitted there is also no scope for levying tax at higher rate under Section 7(1)(a) of the Tamil Nadu VAT Act, 2006 on the sale of food/non-alcoholic beverages in the restaurants for which the petitioner had obtained TIN No. 3382242419. It is submitted that the petitioner had correctly determined tax at 2% and later at 4% under Section 7(1)(b) of the Tamil Nadu VAT Act ,2006.
15.It is further submitted that notices 26.3.2012 were issued for the assessment years 2009-2010 to 2011-2012. These notices sought to treat the sale of food /beverages from the premises registered with TIN No. 3382242419 under Section 7(1)(a) of the Tamil Nadu VAT Act, 2006 as sale by One Star hotel and therefore demanded a differential tax from the petitioner at 12.5%.
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16.The petitioner also replied to the same by its replies dated .05.2012. Meanwhile, separate assessment orders 23.5.2012 came to be passed for these three assessment year in TIN No. 3382242419 in Form L. These assessment orders accepted the returns filed by the petitioner.
17.However, the respondent thereafter proceeded to issue a demand notice dated 10.9.2014 which was challenged in W.P .No. 26298 of 2014 which culminated in the issue of order dated 31.10.2014 of this court as mentioned above.
18.The learned counsel for the petitioner submits that the hotel business which was started during May 2008 was different from the One Star category services provided by the petitioner with a bar.
19.It is therefore submitted that it was not open for the respondent to infer that the petitioner was vending food as One Star Hotel from the premises for which it had obtained a separate registration in TIN No. 3382242419 in May, 2008.
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20.The learned counsel for the petitioner relied on the following decisions of this court:-
(i)Hotel Shakthi (Restaurants) versus CTO, order dated 8.6.2016 in W.P.No. 26512-14 of 2014;
(ii)JK M Graphics Solutions Private Limited versus CTO, order dated 1.3.2017 in W.P.No. 105 of 2016;
(iii) Cadbury India Limited versus Asst Commissioner (CT) Fast-
Track Assessment Circle in W.P.No. (2012)1 VST130 (Mad).
21.The learned counsel for the respondent submits that the question of change of opinion under TNVAT Act, 2006 is in existence with the provisions has it is framed. He submits that under Section 22 of the TNVAT Act, 2006 the relevant period and thereafter with effect from 19.06.2012 there is a merely deemed assessment and the Assessing Officer accepts the return filed by a registration deemed and passed an assessment order and thereafter, the powers are vested of the assessing officer to reopen the assessment under Section 22 of the TNVAT Act.
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22.In case of escaped turnover and wrongly availment of input tax credit he submits that the manner in which the TNVAT Act, 2006 has been framed does not allow the registration dealer to invoke the doctrine of change of opinion and therefore submits that the decision of this Court in the case of Cadbury India Ltd Vs. Assistant Commissioner (CT), Fast Track Assessment Circle IV, Chennai.
23.On behalf of the respondent, it was submitted that that the enforcement officials visited the petitioner’s demise on 7.4.2014 and 12.12.2014 and based on the inspection carried out and a report dated 12.3.2015 of the Commercial Tax Officer, Group II, Pollachi the petitioner was generated.
24.Pursuant to aforesaid report, the petitioner was issued with notices dated 14.1.2016 which called upon the petitioner to file its objection.
25.It is submitted that the notices were received by the petitioner on 21.1.2016. Though petitioner asked for time for filing objection, the 9/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 petitioner did not file any reply and therefore the respondent waited till 7.6.2016 and therefore the respondent proceeded to pass the impugned orders.
26.It is submitted that the impugned order was received by the petitioner on 29.6.2016. It is further submitted that instead of preferring appeals, the petitioner had filed applications before the authority under section 84 of the Tamil Nadu Value Added Tax Act, 2006 and on 28.7.2016 these applications were rejected by the assessing officer and thereafter the petitioner has been issued with the demand notice dated 27.7.2016.It is submitted that the writ petition has no merits and is liable to be dismissed.
27.Before me, apart from placing reliance on the 3 decisions, a copy of letter dated 24.3.2003 of the Government of India Department of Tourism; ( H&R Division) has been filed by the learned Counsel for the Petitioner. The said letter contains a detailed Guidelines for certifying a hotel under the Star Category.
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28.The real question in these writ petitioner is whether the restaurant of the petitioner was part of its One Star service and whether separate registration in 2011 for the running a Bar will have any bearing on the assessment made in the impugned orders?
29.It is noticed that the petitioner originally obtained registration on 19.5.2008 of the restaurant. Thereafter, the petitioner obtained a separate registration on 13.10.2008 for providing lodging rooms and connected services under the provisions of the Tamil Nadu tax on Luxuries In Hotels And Lodging Houses Act, 1981.
30.Thereafter, the petitioner also obtained One Star Classification Order on 12.11.2009. On 13.6.2011, the petitioner obtained a separate registration for running the bar in the first floor of the same building. According to the petitioner there is no connect between the restaurant and the bar/room services provided by the petitioner.
31.As per the guidelines of the Government of India Department of 11/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 Tourism dated 24.3.2003 for One Star classification/certificate, the petitioner was required to comply with the following requirements:-
CHECKLIST FOR 1* 2 3* 4* 5*/5* Comments
FACILITIES & * D
SERVICES
Public Areas
A lounge or seating in N N N N N Size would depend on check in
the lobby area pattern. There should be at least
one telephone no higher than 24''
from floor level in 5/5D*
......................
......................
Food & Beverage N N N N N This may be room service or a
self-making
Early morning beverage
service
Dining Room serving N N N N N Meal times to be displayed.
Breakfast & Dinner Service to start by 7 am and finish
no earlier than 10 pm. Minimum
one hour per meal service. Break
Continental.
1* hotel without dining room must
offer service in rooms.
Multi cuisine restaurant D D N N N
on premises
Speciality restaurant D N N
24 hours coffee shop D N N
Full service of all 3 N N N
meals in Dining room
A cooked breakfast be N N N N
available
Room service of full N N In 1* & 2* this is necessary if no
meals Dining room 3* must offer light
(pre-plated) meals
Room Service of N N If permitted by local law
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W.P.Nos.26721 to 26723 & 26726 to 26728/2016 alcoholic beverages Crockery & Glassware N N N N N Plastic ware accepted in pool area unchipped Cutlery to be at least N N N N N Plastic ware accepted in pool area stainless steel Silverware N Bar N N If permitted by local laws Kitchens Refrigerator with deep N N N N N Capacity based on size of F&B freeze service Segregated storage of N N N N N Meats & fish in freezers, meat, fish and vegetables must be separate.
vegetables
Tiled walls, non-slip N N N N N
floors
Head covering for N N N N N
production staff
Daily germicidal N N N N N
cleaning of floors
Clean utensils N N N N N
Six monthly medical N N N N N
checks for production
staff
All food grade N N N N N
equipment, containers
Ventilation system N N N N N
First-aid training for all N N N N N
kitchen staff
Drinking water N N N N N Water treated with UV + filtration
is accepted.
Garbage to be N N N N N To encourage recycling wet
segregated – wet and dry garbage area to be airconditioned
for 3* & 5*D
Receiving and stores to N N N N N
be clean and distinct
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32.Alphabet “N indicates “necessary” while alphabet “D” desirable. Petitioner is also required to have a minimum of 1 Dining room for serving all meals and as a One Star Hotel, it is not mandatory for the petitioner to provide room service.
33.The registration granted to the petitioner by the Ministry of Tourism, Department of Tourism on 12.11.2009 was subject to petitioner complying with all the regulatory conditions for classification/to classification of hotels and other terms and conditions to be introduced by the Department from time to time.
34.There is no clarity as to whether separate kitchen and dining area existed for provision of One Star Hotel Service by the petitioner independent of the restaurant with the kitchen for which the petitioner had obtained registration earlier on 19.05.2008 vide TIN No.3382242419. 14/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016
35.In my view, if the petitioner had shown the kitchen meant for the restaurant for obtaining One Star registration/classification order on 12.11.2009, certainly the petitioner would be liable to pay tax in terms of section 7(1)(a) even if the petitioner did not actually intend to treat it as a part of its One Star Hotel business/service.
36.On the other hand, if the petitioner had a separate kitchen and a separate dinning area for serving food to the guest staying in the rooms based for which the aforesaid One Star classification was obtained on 12.11.2009, the respondent would not be justified in clubbing the turnovers to demand tax under section 7(1)(a) of the Act.
37.The finding of the respondent in the impugned orders that the services in the restaurant and the bar were interlinked with each other remains unsubstantiated.
38.In my view, there are sufficient indications to the effect that after 2011, the Commercial Tax Department also wanted to treat the service 15/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 provided by the petitioner to its guest staying in its hotel rooms/visiting the bar under One Star service and the food served in the restaurant differently from 2011. However, in absence of proper’s discussion on factsin the impugned order and adequate materials before me, I am unable to give a categorical finding on the same.
39.Therefore, I’m inclined to set aside the impugned order and remit the case back to the respondent to pass afresh order.
40.The respondent may obtain necessary information from the Department of Tourism, India Tourism, Anna Salai as to whether One Star classification obtained by the petitioner vide order dated 12.11.2009 was on the strength of the aforesaid restaurant and kitchen or whether a separate kitchen and a separate dinning area existed for serving food to the guest who stay temporarily in the rooms and therefore the service provided to the said guest including sales of food to their guest alone qualified for being taxed under Section 7(1)(a) of the TN VAT Act 2006. A copy of any information which may be obtained by the respondent from 16/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 Department of Tourism, India Tourism, Anna Salai shall be served on the petitioner before passing final orders. The petitioner may also produce such documents and evidence to establish its defence.
41.As per rule 5 (a) of the Tamil Nadu Value Added Tax Rules, 2007,a registered dealer who intends to open a new branch has to file an application before the registering authority to amend the registration along with proof of payment of fees as a specified in sub-section (1) of section 39 within 30 days from the date of opening of the branch and get his registration amended accordingly.
42.The fact that two separate registration were granted to the petitioner by the respondent Commercial Tax Department under the provisions of the Tamil Nadu VAT Act, 2006, gives an indication that the Commercial Tax Department has also tacitly accepted the fact that the petitioner was providing two services ie after June, 2011 though the petitioner is required to possess only one registration under TN VAT Act, 2006.
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43.In the light of the above discussion, I pass the following order:-
i. impugned orders are set aside and the cases are remitted back to the respondent to pass fresh orders for the respective assessment year within a period of 6 months from date of receipt of this order;
ii. before passing fresh order, the respondent may obtain necessary information from the Department of Tourism, Anna Salai and furnish a copy of the same to the petitioner regarding the basis on which the One Star Classification/certification dated 12.11.2009 was issued to the petitioner; iii. petitioner may also independently furnish such informations that may be required to substantiate its defence; iv. before passing fresh orders in the remand proceedings, petitioner shall also be heard, through video conferenceing, if the situations so warrant on account of continuance of Covid19 pandemic..
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44.These writ petitions stand disposed of with the above observations. Connected miscellaneous applications are closed. No costs.
19.05.2020 Arul Index :Yes/No Internet: Yes/No To The Commercial Tax Officer, Pollachi (West), Assessment Circle, Pollachi.
19/20 http://www.judis.nic.in W.P.Nos.26721 to 26723 & 26726 to 26728/2016 C.SARAVANAN.J. Arul W.P.Nos.26721 to 26723 and 26726 to 26728 of 2016 19.05.2020 20/20 http://www.judis.nic.in