TMI Blog1993 (3) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... rinks are served at the table in respect of which price charged includes what the petitioner terms as service charges. According to the petitioner this service charge should be excluded from the levy of sales tax because in this second category of sales, the dominant object is to render service of supplying the articles (food and drinks) and not the sale of food articles. This contention was not accepted by the Revenue and the Appellate Tribunal. The petitioner also challenges the levy of purchase tax on the turnover pertaining to fuel, i.e., levy of purchase tax on the kerosene and diesel purchased by the petitioner, on the ground that the said goods have already suffered taxes even prior to the purchases by the petitioner. Dr. Krishna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under entry 54 of List II of Seventh Schedule. The Supreme Court also held that article 286 governed and operated on such a transaction also. It was also pointed out by the Supreme Court that a transfer of property in goods under sub-clause (b) of clause (29-A) is deemed to be a sale of the goods involved in the execution of works contract by the person making the transfer and a purchase of those goods by the person to whom such transfer is made. The object of the definition introduced by clause (29-A) was to enlarge the scope of "tax on sale or purchase of goods wherever it occurs in the Constitution so that it may include within its scope the transfer, delivery, or supply of goods that may take place under any of the transactions referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the substance of the transaction, to find out as to whether there was a sale of goods involved in the supply of food or drinks in a hotel. If the substance of the transaction evidenced by its dominant object is the sale of food, then the supply of food certainly would be a sale which can be taxed. That was the position even under the pre-amendment period. The purpose of amending the Constitution by introducing clause (29-A) referred above was to enable the States to levy taxes in respect of the sale of goods involved in a transaction while rendering service. In other words, the purpose was to neutralise the effect of the first judgment rendered in the Northern India Caterers (India) Ltd. case [1978] 42 STC 386 (SC). The amendment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the petitioner is based on the fact that whenever eatables and drinks are received by the customer at the counter, a lower rate of price is charged. It is only when the customer expects the food articles to be served at *Reported in [1993] 89 STC 535 (Kar). the table he is charged more and this clearly, according to the petitioner, establishes that the customer was interested in having services rendered to him for which he would pay an extra charge. As observed by the Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212 (SC); AIR 1980 SC 674 it is necessary to note that where food is supplied in eating house and/or restaurant and it is established on the facts that the substance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the posh surroundings are provided by the hotelier to attract the customers who are attracted primarily by the articles supplied. No doubt, customers prefer a hotel with better service and good surroundings but these factors have only contributory value by creating an atmosphere under which the customer could enjoy the eatables and the drinks. The observations of Justice Krishna Iyer in second Northern India Caterer's case [1980] 45 STC 212 (SC); AIR 1980 SC 674 is relevant in this context. At page 219 of STC (679 of AIR), the learned Judge observed thus: "........Myriad situations, where the transaction is a sale of a meal, or item to eat or part of a package of service plus must not be governed by standard rule. In mere restaurant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The contention of the petitioner therefore fails. Re: Purchase tax on kerosene and diesel: According to the learned counsel for the petitioner these are controlled commodities. The petitioner purchased these commodities from hawkers and petrol bunks. Earlier those hawkers or petrol bunks necessarily must have purchased these articles from dealers who must have paid tax at the sale point. Since the goods are controlled commodities a presumption should be drawn that these goods have already suffered taxes earlier. G. Subramanya Reddy and Co. v. Karnataka Appellate Tribunal [1985] 59 STC 84 (Kar) was cited by the learned counsel for the petitioner. In the said case the assessee was a dealer in empty bottles which he had purchased from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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