STATE OF KARNATAKA Vs. HOTEL LEELA VENTURE LIMITED

JUDGEMENT

(1.) The respondent/assessee filed returns for the assessment year 2005-06 to August 2009. The sale bills of the assessee disclose the collection of service charges at 10% on the food and beverages supplied to the customers. It is the contention of the assessee before the AO that the service charges at 10% collected is not part of the sale price of the food and beverages, but the same was collected in view of tips, which the customers normally given to the waiters and also 10% would represent the damage caused to the crockeries and other items. Therefore, it was contended that 10% of service charge collected should not be reckoned as sale price of the food and beverages. The AO held that the said amount constitutes the same price. Accordingly, the said amount has been brought under the tax. The Joint Commissioner considered pre-sale expenditure forming part and parcel of the sale price and confirmed the order of the AO. The Appellate Tribunal taken a contra view and held that the said amount collected is a post-sale expenditure and did not constitute part of sale price of food and beverages. The State aggrieved by the order of the Appellate Tribunal has filed these revision petitions. The substantial questions of law have been formulated in the memorandum of revision petitions:

(2.) In the facts and circumstances of the case, whether the Tribunal is justified in holding that the component of service charges separately indicated in the invoice and on which service tax is levied cannot be a subject-matter of taxation as far as KVAT Act, 2003 is concerned?

(3.) In the facts and circumstances of the case, whether the Tribunal is right in not applying the law declared in the judgments relied on by the revenue?