TMI Blog1988 (12) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... 86, the date on which it was introduced into the schedule by a notification issued by the State Government in exercise of its power under section 40 of the Act. The petitioners are challenging the constitutional validity of the said entry on the ground that it is violative of article 14, and also on the ground that it constitutes an unreasonable restriction on their fundamental right to carry on their occupation, trade, or business. Since the facts and contentions in all the writ petitions are identical, it would be sufficient if we refer to the facts in W.P. No. 18586 of 1987. This writ petition is filed by the Rajahmundry Sweetmeat Shops Association", an association of all the sweetmeat shop holders of Rajahmundry Town, and also by an individual sweetmeat shop owner who is figuring as the 2nd petitioner. The 1st petitioner is said to have been registered under the Societies Registration Act. The members of the 1st petitioner-association are said to be petty businessmen who sell their items in small sheds or shops. Their turnover is less than Rs. 2 lakhs in a year. Prior to the introduction of entry 129-A the petitioners were governed by section 5(1) of the Act, and since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2) and have been deprived of the said benefit, namely, exemption. Section 5-C reads as follows: "5-C. Tax in respect of supply of articles of food or drink in restaurants or catering houses or hotels.-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) where such supply or service is for cash, deferred payment or other valuable consideration, shall on the total amount charged by the said dealer for such supply, pay a tax at the rate of five 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.)" According to this section, a dealer running a restaurant or eating house, or a hotel, who supplies food or other articles for human consumption "by way of or as part of any service or in any other manner whatsoever" is liable to pay tax at the rate of 5 paise on eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l protection that all transactions, properties, objects or persons of the same genus must be affected by it or none at all. If the classification is rational, the legislature is free to choose objects of taxation, impose different rates, exempt classes of property from taxation, subject different classes of property to tax in different ways and adopt different modes of assessment. A taxing statute may contravene article 14 of the Constitution if it seeks to impose on the same class of property, persons, transactions or occupations similarly situate, incidence of taxation, which leads to obvious inequality. A taxing statute is not, therefore, exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions, occupations or objects........" It is unnecessary to multiply the authorities on this score. Keeping the above principles in mind, let us examine the complaint of the petitioners. The first question is whether the petitioners and the dealers running restaurants, eating houses, or hotels are similarly situated. The only answer can be, they are not. The petitioners are in the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture could have done that; but, it is not permissible for the court, in the name of article 14, to direct the legislature to make such a provision. For that matter, every article mentioned in any of the entries in the First Schedule, attracts tax at the prescribed rate, notwithstanding the fact that the total turnover of the dealer does not exceed Rs. 2 lakhs. The petitioners are not the only persons in that situation. just because dealers running hotels, etc., are given a certain benefit by section 5-C, it is not possible for this court to direct the extension of the said benefit to all other dealers selling goods mentioned in any of the entries in the First Schedule. Mr. Ratnakar then contended that the benefit of section 5-C is available to a dealer running a restaurant, eating house, or a hotel not only if he supplies the food and other articles for human consumption "by way of or as part of any service", but also where he supplies the same "in any other manner whatsoever". Counsel says that where a dealer running a restaurant sells the eatables prepared by him without rendering any service, even then he would be entitled to the benefit of section 5-C, because of the words "i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Forty-sixth Amendment to the Constitution. The clause defines "tax on the sale or purchase of goods" as including, inter alia, "(f) a tax on the supply, 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), where such supply or service, is for cash, deferred payment or other valuable consideration". Even such supply or service was treated as "sale" by the said clause. It must also be remembered that the said clause was introduced by the Forty-sixth Amendment in view of the judgment of the Supreme Court in Northern India Caterers (India) Ltd. [1980] 45 STC 212, where it was held that service of a meal or other food, whether in a hotel or restaurant, does not constitute a sale of food for the purpose of levy of sales tax, but must be regarded as the rendering of a service in the satisfaction of a human need or ministering to the bodily want of human beings. Having regard to the said context and legislative history, the service element cannot be ignored or excluded from section 5-C. It is evident that where it is found that there is no service element, it would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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