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2016 (7) TMI 1157 - HC - VAT and Sales TaxValidity of levy of VAT on services provided at restaurant / hotels - Claim of exemption - In his submission, if exemption is available to liquor shop or wine dealer, there is no reason why the restaurant or hotel where liquor is being provided/sold would be deprived of the benefit of exemption. Another contention raised by the learned Counsel for the appellant was that under Karnataka Value Added Tax Act, 2003 (herein after referred to as the Act), there is no power to levy tax on the services provided, or the extra charges levied by the bar and restaurant for the liquor being served together with the refreshments or without refreshments. Held that:- It is well settled that when the exemption is to be claimed, strict interpretation would be called for. Further, if the exemption is assailed or the exemption is denied to a particular class of the persons or the dealer, the test would be, whether there was reasonable classification made out and whether such classification is based on intelligible differentia or not. The liquor or wine is subjected to tax at a different price and different consideration to the consumer in contra distinction to a sale by a dealer to a consumer of liquor or wine in a packed form of bottle or container. Under these circumstances, the classification made by the Legislature while granting exemption cannot be said to be on irrational basis, but it can be said that the dealer of liquor or wine is not similarly situated as that of the owner of bar and restaurant with C.L.9 licence, because as we recorded earlier, the manner of sale in a packed product, that too in an intact condition as made by the manufacturer, cannot be equated, nor can be said to be similarly situated with the person who is vending liquor or wine by holding C.L.9 licence in a bar and restaurant. When we find that there is a rational classification with the intelligible differentia, this Court cannot substitute its own reason, unless the Court finds that such classification is highly irrational or there is no any intelligible differentia at all.’ In the present case, we do not find that such condition is satisfied. Therefore, the contention raised for discrimination in the grant of exemption cannot be accepted. As recorded by us herein above, what is being marketed by applying the test of common parlance, is the peg/s of the liquor or wine and not a bottle of wine or liquor in packed form. Hence, we find that applying the test of common parlance, it cannot be said that the State has indirectly tried to levy tax for the services provided or the ambience provided by the person holding C.L.9 licence for vending liquor or wine or fenny or beer. Hence, we find that the said contention also cannot be accepted. Decided against the assessee.
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