Telangana High Court
The Sales Tax Appellate Tribunal vs M/S.Taj Residency Presently Taj ... on 7 October, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO
Tax Revision Case No.273 of 2009
ORDER:(per Hon'ble Sri Justice P.SAM KOSHY) The instant Tax Revision Case has been filed by the petitioner- State under Section 22(1) read with Rule 10 of the Andhra Pradesh General Sales Tax Act, 1957( for short "the Act") assailing the order dated 01.06.2009 in Tribunal Appeal No.178 of 2004, passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, at Hyderabad (for short, 'the Tribunal').
2. Heard Mr. T. Chaitanya Kiran, learned Assistant Government Pleader, appearing on behalf of Mr. Swaroop Oorilla, learned Special Government Pleader for State Tax, for the petitioner.
3. Vide the impugned order, the Tribunal allowed the appeal preferred by the respondent herein and set aside the order passed by the Appellate Deputy Commissioner (CT), Punjagutta Division, Hyderabad, for the Assessment Years 1998-99 (APGST).
4. The question of law which came up for consideration before the Tribunal was whether the food articles supplied by the respondent- 2 Assessee to the Indian Airlines would be taxable under Section 5 or Section 5C of the Act.
5. Section 5 of the Act for ready reference is being reproduced as under, viz., "Section 5 - Levy of tax on sales or purchases of goods (1) Save as otherwise provided in this Act every dealer shall pay tax under this Act for each year on every rupee of his turnover of sales or purchases of goods in each year irrespective of the quantum of his turnover at the rates of tax and at the points of levy specified in the Schedules.
(3) For the purpose of this section and the other provisions of this Act, the turnover which a dealer shall be liable to pay tax shall be determined after making such deductions from his total turnover, and in such manner as may be prescribed. (4) The taxes under this section shall be assessed, levied and collected in such manner, as may be prescribed.
Provided that -
(i) in respect of the same transaction, the buyer or the seller but not both, as determined by such rules as may be prescribed, shall be taxed.
(ii) where a dealer has been taxed in respect of the purchase of any goods, in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him."
6. Further, Section 5C of the Act is also reproduced for ready reference, viz., "Section 5C - Tax in respect of supply of articles of food or drink in restaurants or catering houses or hotels Notwithstanding anything contained in Section 5 or Section 6, 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) and whether or not such goods have suffered tax under the Act. where such supply or service is for cash, deferred payment or other valuable consideration 3 shall on the total amount charged by the said dealer for such supply, pay a tax at the rate of eight 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."
7. The Entry under I Schedule which attracts Section 5 is Entry 129 which refers to articles of food and drinks, and which attracts 5% up till 08.07.1983 and 9% from 01.04.1995.
8. A plain reading of Section 5 (referred supra) would go to show that the said section was there since inception of the Act and Section 5C has been subsequently enacted w.e.f. 02.02.1983 and which stood amended from 31.12.1999. A plain reading of Section 5C gives a clear intention of the law makers that the said Section had been inserted to provide certain incentives to the people running restaurants, catering service or hoteliers where articles of food and drinks are provided. Whereas, subsequent to the insertion of Section 5C, the provision of Section 5 and Entry 129 of I Schedule gets restricted to business establishments which do not fall under the category of either a hotel, restaurant or a catering service provider.
9. In the instant case, undoubtedly the respondent is a hotelier and also runs a restaurant. There is no dispute so far as the respondent supplying food and drinks to the Indian Airlines for in-flight catering. In the said circumstance, irrespective of the nature/status and 4 capacity of the purchaser of food articles, if the food is being sold or being provided on certain consideration by a restaurant, a hotelier or even by a catering service provider, it is the provision of Section 5C that would get attracted and not Section 5.
10. Recently, this Bench had an occasion of deciding a Tax Revision Case preferred by the State Government, i.e., Tax Revision Case No.14 of 2007, decided on 21.08.2023, under an identical factual circumstances of the case, had upheld the decision of the Tribunal in holding that the food articles supplied by the respondent-Hotelier to the Indian Airlines is to be one which would attract the provisions of Section 5C and not Section 5.
11. The factual matrix in the instant case also is almost identical in nature.
12. For ready reference, if we look into the findings given by the Tribunal we find that the Tribunal had elaborately discussed about the provisions of Section 5 so also Section 5C and had also gone further to hold that, when statutes are unambiguous a Government Memo issued in between cannot be permitted to override the statutory provision.
13. Given the said fact and circumstance of the case, more particularly, the reasons that have been assigned by the Tribunal in 5 the course of passing of the impugned order, dated 01.06.2009, we do not find any good ground available for interdicting the impugned order passed by the Tribunal.
14. The Tax Revision Case, therefore, being devoid of merits deserves to be and is accordingly dismissed. Consequently, the question of law stands answered against the petitioner-State by holding that the sale of food and drink articles by an Hotelier, a restaurant or by a catering service provider would attract VAT tax in terms of Section 5C and not under Entry 129 of I Schedule read with Section 5 of the Act. No costs.
Miscellaneous petitions, pending if any, shall stand closed.
__________________ P.SAM KOSHY, J _______________________________ SUDDALA CHALAPATHI RAO, J 07.10.2025 Nvl