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M/S. V.G.P. Golden Beach Resorts Ltd., Chennai v/s The Secretary & Another

    W.P. No. 40358 of 2006 & M.P. No. 1 of 2006
    Decided On, 24 June 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MR. JUSTICE R. MAHADEVAN & THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ
    For the Petitioner: V. Sundareswaran, Advocate. For the Respondents: V. Prashanth Kiran, Government Advocate.


Judgment Text
(Prayer: This writ petition is filed under Article 226 of the Constitution of India praying to issue a writ of Certiorarified Mandamus to call for the records of the first respondent in T.A.No.119/04, quash the impugned proceedings dated 11.11.2005 and further direct the second respondent to grant exemption on the entire turnover of the petitioner relating to the assessment year TNGST 1996-97 in view of the statutory exemption conferred to the petitioner under item 48 of the Third Schedule of the Tamil Nadu General Sales Tax Act, 1959 as amended by Tamil Nadu General Sales Tax Act (Amendment Act, 1995 (Act No.10 of 1995) reported in (1995) 98 STC 1.)

Mohammed Shaffiq, J.

1. The present writ petition is filed against the order dated 11.11.2005 passed by the Tamil Nadu Sales Tax Appellate Tribunal in T.A.No.119 of 2004 insofar as it affirmed the orders of the Assessing Authority as well as the first Appellate Authority, levying tax on the sales of food and drinks, in particular, ice cream effected by the petitioner.

2. According to the learned counsel for the petitioner, originally, the petitioner was a Star Hotel, but they were not renewed from the year 1989 and consequently, they no longer enjoyed the status of Star Hotel; and that, the Tamil Nadu General Sales Tax Act, 1959 provides exemption for the sales of the food and drinks in a hotel or restaurant other than the star hotel recognised by the Tourism Department. However, all the authorities below had proceeded with the assessment proceedings relating to the assessment year 1996-97 and concluded the same against the petitioner on the premise that they are Star Hotel. Therefore, the learned counsel submitted that the failure on the part of the respondent authorities in considering the actual status of the petitioner, vitiates the entire proceedings initiated against them and hence, the orders passed by the authorities below imposing tax liability on the petitioner, will have to be set aside.

3. On the contrary, the learned Government Advocate appearing for the respondents submitted that the petitioner did not maintain opening and closing stock details in respect of sales of ice cream and hence, the assessing officer arrived at the estimated sales of ice cream from the books entries relating to the purchase turnover, after adding nominal gross profit. Besides this, the assessing officer levied additional sales tax for the period from 01.04.1996 to 31.07.1996 and penalty for the difference between tax paid as per the return of income and tax assessed. After examining the document placed before the same, the appellate authorities rightly confirmed the levy of tax and additional sales tax; and the levy of penalty alone was modified by the Tamil Nadu Sales Tax Appellate Tribunal. Thus, according to the learned counsel, the orders passed by the authorities below do not call for any interference by this court.

4. Heard the learned counsel for the petitioner and the learned Government Advocate appearing for the respondents and also perused the materials available on record.

5. The challenge made by the petitioner is mainly on the ground that during the relevant assessment year viz., 1996-97, the sale of food and drinks was governed by the Entries 48 and 48 A of the III Schedule to the Tamil Nadu General Sales Tax Act, 1959, in terms of which, they are exempted from payment of sales tax, as they no longer enjoyed the status of star hotel with effect from 01.04.1989. In this regard, a reliance was placed on the certificate dated 05.02.2004 issued by the Tourism Department, wherein, it was stated as follows:

“This is to state that M/s V.G.P. Golden Beach Resort Limited, Injambakkam Chennai 600 041 have not applied to this office for classification of their resort. They have not been issued any star classification since 01.04.1989.”

6. On the other hand, it is the stand of the respondent authorities that there was omission of sales details pertaining to ice cream and hence, the assessing officer made additions after making estimation from the purchase turnover and determined the tax liability against the petitioner, which was also affirmed by the appellate authorities.

7. At this juncture, it would be relevant to extract the relevant Entries, based on which, the petitioner claimed exemption from payment of sales tax and the same read as under:

“48. Food and drinks falling under item 9 of PART-C of the First Schedule, sold by-

(i) any hotel other than a Star Hotel recognised as such by the Tourism Department of the State Government or the Government of India;

(ii) any restaurant other than those attached to such Star Hotels;

(iii) any other eating house; Substituted by Act No.39 of 1997 w.e.f 01.04.1997 as under:- Food and drinks (falling under item 20 of Part-C of the First Schedule) sold by –

(i) any hotel other than a Star Hotel recognised as such by the Tourism Department of the State Government or the Government of India;

(ii) any restaurant other than those attached to such Star Hotels;

(iii) any other eating house;

(iv) any sweet stall whose total turnover does not exceed twenty-five lakhs of rupees per annum."

48-A. Food and drinks falling under item 9 of PART-C of the First Schedule, sold by-

(i) any Star Hotel recognised as such by the Tourism Department of the State Government or the Government of India.

(ii) any restaurant attached to such Star Hotels;

(iii) any Sweet Stall whose total turnover does not exceed three lakhs of rupees per annum Substituted by Act No.37 of 1996 w.e.f 17.07.96 as under:-

Food and drinks (falling under item 20 of PART-C of the First Schedule), sold by-

(i) any Star Hotel recognised as such by the Tourism Department of the State Government or the Government of India;

(ii) any restaurant attached to such Star Hotels. whose total turnover does not exceed three lakhs of rupees per annum."

A reading of the above Entries would make it clear that food and drinks falling under Entries 9 and 20 of Part-C of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 and sold by any hotel other than the Star Hotel or Restaurant attached to such Star Hotel, was to exempt from the sales tax. Further, it is evident from the certificate issued by the Tourism Department dated 05.02.2004, the star status of the petitioner was not renewed from 01.04.1989.

8. Thus, the combined appreciation of both the factors as referred to above, would lead to an irresistible conclusion that before passing the orders, the authorities below did not examine the status of the petitioner, whether it is a Star Hotel or a Restaurant attached to the Star Hotel, which has a direct and material bearing on the liability of the petitioner. On this ground alone, the same are liable to be set aside and the matter is remanded to the assessing officer for fresh consideratio

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n, in the opinion of this court. 9. In such view of the matter, the orders passed by the authorities below are set aside and the matter is remanded to the Assessing Officer, who shall examine the status of the petitioner as to whether it is a Star Hotel or Restaurant attached to the Star Hotel and decide the tax liability or otherwise on the sale of food and drinks effected by the petitioner and also decide the appropriate rate of tax on the sale of food and drinks including ice creams, applicable, if any. It is left open to the assessing officer to make a fresh assessment including the Best Judgment Assessment, if the circumstances warrant. 10. Accordingly, this writ petition stands disposed of. No Costs. Consequently connected miscellaneous petition is closed.
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