STATE OF KERALA Vs. TAJ GARDEN RETREAT

JUDGEMENT

(1.) THESE tax revision cases are filed by the State of Kerala represented by the Deputy Commissioner of Law, Commercial Taxes, Ernakulam against the order of the Appellate Tribunal. T. R. C. No. 412 of 2000 relates to the assessment year 1993-94, T. R. C. No. 457 relates to the assessment year 1996-97, T. R. C. No. 458 relates to the assessment year 1994-95 and T. R. C. No. 460 relates to the assessment year 1995-96 respectively. The Appellate Tribunal disposed of the matter by a common judgment rendered in the above four cases. The respondent-assessee is a new hotel started at Kumarakom. For all these years in question the assessee had only a beer parlour licence issued in form No. F. L. 13 under the Foreign Liquor Rules, 1982. The assessee was not a star hotel and also did not have a bar licence (F. L. 3) during these years. Only subsequently with effect from April 1, 1998 the assessee has got a star status and obtained F. L. 3 licence. Hence, during the period in question the assessee had only F. L. 13 licence and that does not mean as a star hotel. The question arises for consideration is as to whether the assessee could be assessed to tax treating as a bar attached hotel. The assessee obtained a license and paid licence fee as contemplated under section 5b of the Kerala General Sales Tax Act, 1963. According to the assessee, it is not a bar attached hotel or a star hotel and hence the cooked food manufactured and supplied by it is not assessable to tax, as it is exempted as per entry 12 of the Third Schedule to the Kerala General Sales Tax Act read with section 9 of the said Act. The assessee filed an annual return disclosing their total turnover and claiming exemption. The assessing officer accepted the return filed by the assessee and allowed the exemption claimed finding that there is no taxable turnover for the assessment years in question. Subsequently, the Deputy Commissioner of Commercial Taxes, Kottayam by his order dated October 23, 1999 suo motu revised the assessment for the years from 1993-94 to 1996-97 taking the view that beer is classified under entries 53 and 54 of the First Schedule to the Kerala General Sales Tax Act, 1963 and thus fall within the status of a bar attached hotel for the purpose of levy of tax under the Kerala General Sales Tax Act. According to him, cooked food including beverages not falling entries 53 and 54 of the First Schedule to Kerala General Sales Tax Act served in bar attached hotels are classified under entry 40 of the First Schedule to Kerala General Sales Tax Act and liable to tax 8 per cent at the point of first sale in the State. Accordingly, a proposal was made to set aside the assessment orders and notice was issued. After hearing the objections, the said proposal was confirmed by the aforesaid order. The assessee subsequently contended in their objection that the Taj Garden Retreat Hotel was started with six rooms in the year 1993 and that the hotel was not a Star Hotel nor a Bar license was given; but only obtained a licence for a beer and wine parlour which was given to Kerala Tourism Development Corporation and joint sector hotels. This hotel has a Government of Kerala participation and hence they were given a beer parlour licence. According to the assessee, this is not a bar licence and they could not sell any Indian made foreign liquor, brandy, whisky, etc. , which are sold in bar hotel. It was their contention that the hotel was not a bar attached hotel and hence it was not liable for payment of tax under entry 40 of the First Schedule. However, after April 1, 1998 the assessee has obtained a bar licence and remitting such tax in terms of the entry 40 of the First Schedule. The revisional authority found that the assessee was holding only a beer parlour licence during the relevant period. It is also found that the assessee sold beer in their hotel during the relevant period. But, according to him, beer is an Indian made foreign liquor for the purpose of levy of sales tax by virtue of the explanatory note to entry 53 of the First Schedule to the Kerala General Sales Tax Act as it stood at the relevant time. In this view, he held that the assessee-hotel is a "bar attached hotel" for the purpose of levy of tax under the Kerala General Sales Tax Act. Accordingly, the assessment orders were set aside and the case was remanded to the assessing authority for being redone according to law.

(2.) THE assessee appealed to the Sales Tax Appellate Tribunal. THE Tribunal in the order dated May 22, 2000 disposing of the four appeals, T. A. Nos. 339, 340, 341 and 342 of 1999 held that the licence fee paid by the assessee under section 5b to cover liability for sale of cooked food and beverages accepted by the assessing officer is in strict compliance of the statutory provision. THE Tribunal also found that the beer licence in favour of the assessee has no relevance so far as the liability to tax on cooked food and beverages under item 40 of the First Schedule is concerned. A bar licence (F. L. 3) to sell very variety of liquor is a necessary pre-requisite to call a hotel "bar attached". Since the assessee had obtained F. L. 3 licence only with effect from April 1, 1998 the assessee cannot be treated as a bar attached hotel prior to April 1, 1998. THE Tribunal also found after going through the licence F. L. 3 issued under the Foreign Liquor Rules, 1982 that the said licence alone provides for sale of every kind of foreign liquor which can be sold to residents in the hotels and to guests or to casual visitors eating in the hotel and that this is the only licence for sale of liquor in a hotel or restaurant. In the result, the appeals were allowed and the order of the Deputy Commissioner is set aside. Challenging the finding of the Tribunal and the decision rendered thereon, these revisions have been filed.

(3.) THE cost of liquor shall be billed along with the cost of meals. THE cost of liquor shall be shown separately in the bill and the duplicate copies thereof shall be retained for inspection by the Officers of the Excise Department. "