Madras High Court
M/S.V.G.P.Golden Beach Resorts ... vs The Secretary on 24 June, 2022
W.P. No.40358 of 2006
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 24.06.2022
CORAM
THE HONOURABLE MR.JUSTICE R.MAHADEVAN
and
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
W.P. No.40358 of 2006
and
M.P.No.1 of 2006
M/s.V.G.P.Golden Beach Resorts Ltd.,
Injambakkam,
Chennai 600 041. ...Petitioner
v.
1.The Secretary,
Tamil Nadu Sales Tax Appellate Tribunal (AB)
City Civil Court Building,
Second Floor,
Chennai 600 104.
2.The Commercial Tax Officer,
Thiruvanmiyur Assessment Circle,
Chennai 600 018. ...Respondents
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
1/9
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W.P. No.40358 of 2006
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.
For Petitioner : Mr.V.Sundareswaran
For Respondents : Mr.V.Prashanth Kiran
Government Advocate
ORDER
(Order of the Court was made by MOHAMMED SHAFFIQ, J.)
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
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W.P. No.40358 of 2006
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
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W.P. No.40358 of 2006
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
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W.P. No.40358 of 2006
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;
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W.P. No.40358 of 2006
(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.
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W.P. No.40358 of 2006
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 consideration, 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.
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W.P. No.40358 of 2006
10.Accordingly, this writ petition stands disposed of. No Costs.
Consequently connected miscellaneous petition is closed.
(R.M.D., J.) (M.S.Q., J.)
24.06.2022
Speaking (or) Non Speaking Order
Index : Yes/ No
Internet: Yes/No
smn
To
1. The Secretary,
Tamilnadu Sales Tax Appellate Tribunal ( AB)
City Civil Court Building,
Second Floor,
Chennai 600 104.
2. The Commercial Tax Officer,
Thiruvanmiyur Assessment Circle,
Chennai 600 018.
https://www.mhc.tn.gov.in/judis
W.P. No.40358 of 2006
R.MAHADEVAN, J.
and
MOHAMMED SHAFFIQ, J.
smn
W.P. No.40358 of 2006
and
M.P.No.1 of 2006
24.06.2022
https://www.mhc.tn.gov.in/judis
