1951 (9) TMI 30 - HC - VAT and Sales Tax

Summary

Issues:
- Assessment of taxable turnover and penalties imposed on the applicants
- Interpretation of the term "cooked food" for exemption under the Sales Tax Act
- Whether sales of tea, coffee, etc. are exempt under the Act
- Application of penalties under Section 12(3A) of the Act

Analysis:
The judgment by the Bombay High Court involved two applications for revision of orders by the Collector of Sales Tax regarding assessment and penalties imposed on the applicants. The applicants operated a stall at a railway station serving tea and refreshments to the public. The Sales Tax Officer assessed their taxable turnover for two periods and imposed penalties for underpayment of tax. The Assistant Collector and the Collector reduced the penalties, leading the applicants to seek revision by the Tribunal.

The main contention was whether the applicants were entitled to exemption for sales of food and drinks at the railway station under the Sales Tax Act. The interpretation of the term "cooked food" was crucial for determining the scope of exemption. The Tribunal analyzed various definitions of "food" and concluded that it referred to solid food that can be masticated and swallowed, such as biscuits and cakes, excluding liquid items like tea and coffee. The presence of the word "eaten" in the Act indicated the intention to cover only solid food.

Moreover, the Tribunal considered the area leased to the applicants within the station premises and concluded that the sales of cooked food served to passengers on the platform or in the train were exempt under the Act. The judgment clarified that the term "cooked food" referred to items prepared by the action of heat, like biscuits and cakes, which were wholly exempt from tax.

Regarding the penalties imposed under Section 12(3A) of the Act, the Tribunal held that since the provision came into force after the submission of returns by the applicants, the penalties could not be applied retrospectively. The judgment emphasized that penalties should be imposed only for willful withholding of tax payments and suggested a review of penalty imposition criteria by the Sales Tax Authorities.

In conclusion, the Tribunal modified the orders by deleting the penalties and fully exempting the sales of solid refreshments served by the applicants. The cases were remanded to the Sales Tax Officer for reassessment of tax figures in accordance with the judgment, without any penalties.