Madras High Court
M/S.Inspired Foods vs The Commercial Tax Officer on 14 September, 2020
Author: M.S. Ramesh
Bench: M.S. Ramesh
W.P.Nos.7014 to 7018 of 2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 14.09.2020
CORAM
THE HONOURABLE MR. JUSTICE M.S. RAMESH
W.P.Nos.7014 to 7018 of 2015
and
M.P.Nos.1 to 1 of 2014
M/s.Inspired Foods
rep. by its Partner
No.6/29, Rajasekaran Street,
Mylapore,
Chennai-600 004. ..Petitioner in all W.Ps
-Vs-
The Commercial Tax Officer,
Office of the Commercial Tax Officer,
Thiruvallikeni Assessment Circle,
No.48, Pasumpon Muthuramalinga
Devar Salai,
Chennai-600 028. ..Respondent in all W.Ps
COMMON PRAYER: Writ Petitions filed under Article 226 of
Constitution of India, praying to issue a Writ of Certiorari, calling for
the records of the respondent in TIN 33120742803/2010-11, 2011-12,
2012-13, 2013-14 & 2014-15 respectively and to quash the
proceedings dated 30.01.2015 passed therein.
For Petitioner : Mr.B.Raveendran
For Respondent : Mr.R.Swarnavel, GA (T)
1
http://www.judis.nic.in
W.P.Nos.7014 to 7018 of 2015
COMMON ORDER
With the consent of both parties, the Writ Petitions are taken up today and heard through video conferencing.
2. The short point which arise in all these Writ Petitions are as to whether the Department was right in bringing the petitioners, which are Hotels, of non-star category, under the purview of Section 7(1)(a) of the Tamil Nadu Value Added Tax Act (hereinafter referred to as 'TNVAT Act'), on the ground that they have claimed the Input Tax Credit (ITC)? It is the case of the Department that since the petitioners had claimed ITC while effecting local sales of food and drinks, they would fall under Section 7(1)(a).
3. Mr.B.Raveendran, learned counsel for the petitioner would submit that the petitioner is not a Star Hotel and therefore, they would be liable to pay tax only under Section 7(1)(b) of the TNVAT Act.
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4. Mr.R.Swarnavel, learned Government Advocate, on the other hand, objected to such a submission and submitted that since the petitioner had claimed ITC, Section 7(1)(a) would be attracted and therefore, there is no infirmity in the order passed by the respondent.
5. Section 7(1)(a) and 7(1)(b) of the TNVAT Act reads as follows:
“7.Levy of taxes on food and drinks:-
(1) Notwithstanding anything contained in this Act, but subject to the provisions of this Act,-
a)every dealer shall pay tax on the sale of ready to eat un-branded foods including sweets, savouries, un-branded non-alcoholic drinks and beverages served in or catered indoors or outdoors by star hotels recognized as such by Tourism Department of the State Government or Government of India and restaurants attached to such hotels at the rate of twelve and half percent of the taxable turnover; and
b)every dealer other than those mentioned in clause (a) [whose total turnover is not less than rupees ten lakhs for a year], shall pay tax on the sale of ready to eat un-branded foods including sweets, savouries, un-branded non-
alcoholic drinks and beverages served in or 3 http://www.judis.nic.in W.P.Nos.7014 to 7018 of 2015 catered indoors or outdoors by hotels, restaurants, sweet-stalls, clubs, caterers and any other eating-houses, at the rate of four percent of the taxable turnover.
Explanation I-For the purpose of computing the total turnover under this sub-section, the purchase turnover liable to tax under Section 12 of this Act, shall be added to the sales turnover.
Explanation II-For the purpose of computing the total turnover under this sub- section, the sales turnover of all business units in a common premises sharing the common kitchen or common employees shall be added to the sales turnover of the business unit having higher turnover.”
6. Perusal of the Act clearly reveals that while Section 7(1)(a) applies to Star Hotels, Section 7(1)(b) would be made applicable for the Hotels, which are not under the Star Category . The distinction is very clear on a bare reading of the section itself. As such, the very basis on which the petitioner has been brought under the purview of Section 7(1)(a), is contrary to the provision.
4http://www.judis.nic.in W.P.Nos.7014 to 7018 of 2015
7. As rightly pointed out by the learned counsel for the petitioner, even assuming that the petitioner had wrongly claimed ITC, the only option available to the Department would be to reverse the ITC as provided under Section 27(2) of the TNVAT Act. I find such a submission to be correct and proper. As such, if the respondent was of the view that the claim of ITC has been wrongly made, the only option available is to reverse such an ITC instead of bringing them under the purview of Section 7(1)(a) of the TNVAT Act. As such, the levy of tax under Section 7(1)(b) and the consequential penalty imposed, cannot be sustained. However, if the respondent is granted an opportunity to rework the issue by taking into consideration the observations made in this order, the ends of justice could be secured.
8. In the light of the observations made in this order, the impugned orders dated 30.01.2015 passed by the respondent herein, are quashed and the matters are remanded back to the respondent for fresh consideration after giving due opportunity of personal hearing to the petitioner, as expeditiously as possible.
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9. Both the Writ Petitions, thus stands allowed. Consequently, connected Miscellaneous Petition is closed. No costs.
14.09.2020 Index:Yes Internet:Yes Order:Speaking DP To The Commercial Tax Officer, Office of the Commercial Tax Officer, Thiruvallikeni Assessment Circle, No.48, Pasumpon Muthuramalinga Devar Salai, Chennai-600 028.
6http://www.judis.nic.in W.P.Nos.7014 to 7018 of 2015 M.S.RAMESH.J, DP W.P.Nos.7014 to 7018 of 2015 and M.P.Nos.1 to 1 of 2015 14.09.2020 7 http://www.judis.nic.in