TMI Blog1993 (4) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission made by these counsel is similar to the submission made before the learned Judge S. Ramalingam, J., of this Court in Writ Petition Nos. 9281 and 9282 of 1991, whose unreported decision is dated July 18, 1991* and relied on by the learned Advocate-General appearing for the Revenue. After going through the above referred to two judgments, one, of the Division Bench and another of the above referred to learned single Judge, we do not think that there is any reason for taking a different view from the respective views taken in the above referred to two judgments on the above referred to two main submissions made before us. 3.. It is well-known that after State of Himachal Pradesh v. Associated Hotels of India Ltd. [1972] 29 STC 474 (SC) (judgment dated January 4, 1972), Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC) (judgment dated September 7, 1978), and Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212 (SC) (judgment dated December 21, 1979), the Constitution (Forty-sixth Amendment) Act, 1982, which came into force on February 2, 1983, introduced the definition of the term "tax on the sale or purchase of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of property, in the abovesaid hotel transaction since the dominant idea therein was one of service only. 4.. After [1972] 29 STC 474 (State of Himachal Pradesh v. Associated Hotels of India Ltd.) in [1978] 42 STC 386 [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi], the Supreme Court held that there was no distinction between a case of meals supplied to resident in hotel and those served to customers in restaurants and that service of meals in a hotel or restaurant did not constitute sale of food for the purpose of levy of sales tax, but the said transaction must be regarded as rendering of a service in the satisfaction of human being or ministering to a bodily want. Then in [1980] 45 STC 212 [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi] (which is the judgment in the review petition), the Supreme Court also pointed out that apart from the fact that the supply of meals must be regarded as ministering to the bodily want of human beings, there was no right to the customers to take away any eatable served and that also was relevant in determining that it was not a sale, since that shows that no title of property was transferred. 5.. However, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-clause (vi) came into force from the said date February 2, 1983. 7.. Now, the first main submission of the abovesaid counsel appearing in the abovesaid writ petitions, which consists of different parts, is as follows: Despite the abovesaid constitutional amendment and the abovesaid subsequent statutory amendment to the Act, there cannot be a levy of sales tax on the abovesaid supply of food and drinks by the petitioners' hotels/restaurants/eating houses, since there is no charging section in the Act, authorising such levy on the above said supply of food and drinks. Further according to the said counsel, the abovesaid constitutional amendment extended the meaning of the term "sale" so as to include, among other transactions, "transfer of property in goods ..... involved in the execution of a works contract" and even "transfer of the right to use any goods" with reference to the abovesaid two transactions when the abovesaid Tamil Nadu Act 28 of 1984 was passed, apart from including these two transactions in the term "sale" under the abovesaid section 2(n), the Legislature also introduced one additional charging section, viz., section 3-A in the Act, levying tax on the abovesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumscribed when the State Legislature has defined 'sale' in consonance with the clear and unambiguous definition given in sub-clause (f) of clause (29A) of article 366 of the Constitution. The Constitution which is supreme, gives an inclusive definition to 'sale' enabling the States to levy tax on the 'sale or purchase of goods' in clause (29A) of article 366. Sub-clause (f) of clause (29A) specifically enables the State Legislature to levy 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, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made (emphasis* supplied). In view of this, we are unable to agree with the learned counsel for the petitioner that entry 54 in List II of the Seventh Schedule to the Constitution and the definition of 'sale' in the Sale of Goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to "third contention", dealt with in [1990] 76 STC 427 (Mad.) (Damodarasamy Naidu Bros. v. State of Tamil Nadu) the recent decision (dated December 23, 1992) of another Division Bench of this Court [to which one of us (Raju, J.) was a party] reported in [1993] 88 STC 289 (Larsen and Toubro Limited v. State of Tamil Nadu) has thrown new light in the matter while dealing with the abovesaid article 366(29-A)(b) of the Constitution of India and section 2(n)(ii) of the Act in regard to works contract, after taking into account the Supreme Court decisions Builders Association of India v. Union of India [1989] 73 STC 370. Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 204 and Builders' Association of India v. State of Karnataka [1993] 88 STC 248 and that the same reasoning could be applied to the present cases of the abovesaid supply of food and drinks in hotels, etc., also and that, therefore, there being two elements, viz., (1) supply of food and drinks, and (2) service, in the present cases also, the attempt to tax the entire turnover without a guideline to separate the service portion is illegal. (He also points out that earlier in [1972] 29 STC 474 (State of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement of this Act, in pursuance of any such provision,(a) the said expression shall be deemed to include, and shall be deemed always to have included, a tax (hereafter in this section referred to as 'the aforesaid 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) for cash, deferred payment or other valuable consideration; and (b) every transaction by way of supply of the nature referred to in clause (a) made before such commencement shall be deemed to be, and shall be deemed always to have been, a transaction by way of sale, with respect to which the person making such supply is the seller and the person to whom such supply is made, is the purchaser, and notwithstanding any judgment, decree or order of any court, Tribunal or authority, no law which was passed or made before such commencement and which imposed or authorised the imposition of, or purported to impose or authorise the imposition of, the aforesaid tax shall be deemed to be invalid or ever to have been invalid on the ground merely that the legislature or other authority p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognised by Tourism Department, Government of India, whether such articles are meant to be consumed in the premises or outside." No doubt, the said entry was substituted by the following entry, by Tamil Nadu Act 4 of 1982 with effect from June 15, 1981: "Articles of food and drink other than those specified elsewhere in this Schedule, sold to customers in hotels, classified or approved by the Department of Tourism, Government of India." No doubt this substituted entry was struck down as unconstitutional by this Court in Sangu Chakra Hotels Private Limited v. State of Tamil Nadu [1985] 60 STC 125 [judgment dated January 21, 1985, that is, before the above referred to [1986] 63 STC 18 (Mad.) (Sree Annapoorna v. State of Tamil Nadu) was decided]. But [1985] 60 STC 125 (Sangu Chakra Hotels Private Limited v. State of Tamil Nadu) has been subsequently reversed by the Supreme Court in Kerala Hotel Restaurant Association v. State of Kerala [1990] 77 STC 253 (judgment dated February 21, 1990) holding that the said substituted entry 150 was intra vires the Constitution. The said entry 150 was no doubt subsequently omitted pursuant to a notification with effect from March 23, 1987. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, viz., sections 3-A and 3-B. But, the present case does not require a separate charging section. 12A. Then, coming to the other submission of the learned counsel that even assuming that no such separate charging section is necessary after the said constitutional amendment, without a guideline to separate the service portion from the supply of food and drinks, the attempt to tax the entire turnover is illegal, the learned counsel, as already indicated, very much relies on the above referred to [1993] 88 STC 289 (Mad.) (Larsen and Toubro Limited v. State of Tamil Nadu). We have already pointed out how actually this point also was met in [1990] 76 STC 427 (Mad.) (Damodarasamy Naidu Bros. v. State of Tamil Nadu) itself. But, according to Mr. V. Ramachandran, [1990] 76 STC 427 (Mad.) (Damodarasamy Naidu Bros. v. State of Tamil Nadu) requires reconsideration in view of the abovesaid decision in [1993] 88 STC 289 (Mad.) (Larsen Toubro Limited v. State of Tamil Nadu) which took into account three earlier Supreme Court decisions reported in [1989] 73 STC 370 (Builders Association of India v. Union of India), [1993] 88 STC 204 (Gannon Dunkerley Co. v. State of Rajasthan) and [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in the execution of the works contract and it is such transfer, that is deemed to be a sale of those goods. But, in so far as the abovesaid sub-clause (f) and the corresponding section 2(n)(vi) of the Act, the tax could be on the "supply" of those food or drinks, whether the said supply is by way of or as part of any service or in any other manner whatsoever, and the said "supply" itself is deemed to be "sale" of those goods. In the former case since the terminology used is "transfer of property in goods" necessarily the value of the labour involved in the execution of the works contract therein has to be excluded and the tax could be only on the value of the goods whose property or title has been transferred, but, in the latter case, the tax is on the "supply" of food or drink. In this latter case, even though the said supply may be by way of or as part of any service, the total consideration for the said "supply" itself could be taxed and there is no necessity to exclude anything from the said total consideration on the ground that service part of it has also got some value. In this connection, we may point out once again the above extracted observation of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r than those falling under the First Schedule, to any hotel, restaurant, sweet stall or any other eating house, whose total turnover does not exceed Rs. 18,25,000 per annum. This notification came into force on April 1, 1990. In the above context, the submission is that in view of the cancellation of the notification dated March 25, 1989, the notification dated June 10, 1987 granting total exemption on the sale of food and drinks by any hotel, restaurant, sweet stall or any other eating house has been revived and thereby the petitioners are entitled to exemption on the sale of food and drinks from March 31, 1987 till March 31, 1990. 14.. This revival theory propounded by the learned counsel for the petitioners was negatived by S. Ramalingam, J., in the abovesaid decision, after dealing with the said question elaborately. The learned Judge observed that similar question came up for consideration in Indian Express Newspapers (Bombay) Private Ltd. v. Union of India AIR 1986 SC 515 and after quoting in extenso the relevant observations in the said Supreme Court decision, he came to the conclusion that the said decision of the Supreme Court was clear authority for the proposition that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Legislatures with the enactment of the Constitution (Forty-sixth Amendment) Act, 1982. When such be the position of law, should there be any necessity for the States to introduce any fresh or separate provision as such to bring to levy the class of transactions covered by sub-clause (f) of clause (29-A) of article 366 of the Constitution of India after the Constitution (Forty-sixth Amendment) Act, 1982. In my view, it is not absolutely necessary; nor could it be said to be necessitated on grounds of expediency as well. 3.. The fact that some of the State Legislatures including the State of Tamil Nadu got a separate provision introduced in their respective State enactments distinctly to provide for levy of sales tax on the works contract, by means of a separate charging provision is no reason or justification for the contention that a separate charging section should have been introduced after the Constitution (Forty-sixth Amendment) Act, 1982, to subject transactions covered by article 366(29-A)(f) to sales tax under the State law. As a matter of fact, some of the State laws have not introduced any separate or fresh charging provision even in respect of levy of sales tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, even 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. The element of supply by way of or any part of service which prior to the Constitution (Forty-sixth Amendment) Act, 1982, entitled the transaction of such a nature to stand out of the normal concept of sale has lost its significance in the sense that it no longer constituted an attribute or element enabling the exclusion of such transactions from out of the concept of sale for purposes of levy of sales tax. Whether the supply or service is for cash or for deferred payment or other valuable consideration, such supply effected though as part of any service in a hotel or restaurant shall be deemed to be a sale and with the said deeming and expanded concept of sale there is hardly any room or scope for making any difference between supply by way of sale or a supply as part of any service. There is absolutely no need for making any provision to bifurcate the so-called service element and charges said to have been i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
