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2021 (4) TMI 510 - HC - VAT and Sales TaxLevy of higher rate of Tax on Restaurant as applicable on Hotels - Period for determination of interest liability - Bondafide belief - Violation of principles of natural justice - assessing officer pointed out that after issuing pre-revision notices, the objections of the assessee were received - HELD THAT:- Personal hearing was held on 18.12.2015. On the said date the petitioner's representative appeared and his statement was also recorded in writing by the assessing officer. Only thereafter the impugned orders were passed on 06.01.2016. Thus, the principles of natural justice were complied with in the instant case. Whether the respondent erred in applying Section 7(1)(a) of the Act? - HELD THAT:- Since Rainbow Restaurant is carrying on its business in the very same premises, the assessing authority rightly held that it is a restaurant attached to a star hotel and therefore, Section 7(1)(a) of the Act will apply. Section 7(1)(a) of the Act states that the higher rate of tax will be levied not only on the star hotel recognized by the Government but also on the restaurant attached to such star hotel. The expression “attach” has been defined in Black's Law Dictionary as to annex, bind or fasten. If something is part of another, it is said to be attached (Oxford Advanced Learner's Dictionary, New 9th Edition). “Attached to” connotes something different from mere ownership - If the petitioner has been carrying on its business at a place distinct from that of the Star Hotel, then, Section 7(1)(a) of the Act cannot be invoked at all. But the petitioner – restaurant is in the very same building owned by the Star Hotel, namely, Rathna Residency. Therefore, the assessing authority was justified in holding that the petitioner is a restaurant attached to a Star Hotel and therefore would fall within the sweep of Section 7(1)(a) of the Act. The respondent is not justified in levying interest from the original assessment year - the star hotel itself was selling the items mentioned in Section 7(1)(a) of the Act. But in the case on hand, Rathna Residency is not the petitioner before this Court. It is only Rainbow Restaurant that is the petitioner before this Court. Rainbow Restaurant is contending that it cannot be considered as “a restaurant attached to a star hotel”. Thus the petitioner was under a bonefide impression that they are not liable to pay tax at a higher rate. Therefore, as per Section 42 of the Act, only from the date on which the petitioner's liability is quantified, the question of paying tax would arise. Petition allowed.
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