CASINO HOTEL Vs. STATE OF KERALA

JUDGEMENT

(1.) THE first question raised is whether the tribunal is correct in confirming the assessment of soda and mineral water at twenty per cent under Entry 87 of 1st Schedule to the KGST Act as against six per cent claimed by petitioner under Entry 40 of 1st Schedule. Petitioner is a star hotel and is liable to pay tax on cooked food and beverages at the point of first sale at six per cent as provided under Entry 40 of 1st Schedule to the KGST act. In order to appreciate the contentions raised, the relevant Entry is extracted hereunder: 40. Cooked food including beverages not falling under entries 53 and 54 of this Schedule sold or served in bar attached hotels and/or star hotels/restaurants. At the point of first sale in the State by a dealer who is liable to tax under Sec. 56%

(2.) THE question is whether Soda which is aerated water and mineral water sold by petitioner which are also beverages, attract tax at six per cent under Entry 40 or twenty per cent under Entry 87 of 1st Schedule. Counsel for petitioner contended that aerated water and soda are also beverages and, therefore, when those items are sold in star hotels or bar attached hotels and restaurants, rate of tax can be only six per cent. We are unable to accept this contention because, aerated water and mineral water are specifically covered by Entry 87 of 1st Schedule which attracts tax at twenty per cent. THE point of levy is first sale by a dealer who is liable to tax under Section 5. A hotel is also a dealer which is liable to pay tax at the point of first sale on these commodities. THE items of beverages referred to in Entry 40 are not beverages specifically mentioned elsewhere in the 1st Schedule to the Act. In other words, beverages normally made in hotels, like, coffee, tea, fruit juice, etc. are the items referred as beverages in Entry 40. So far as the items of beverages, like bottled soft drinks, mineral water or soda, rate of tax is at the appropriate rate mentioned in Entry 87 and a hotel/restaurant referred to in Entry 40 buying such items from registered dealers and making re-sales will be entitled to second sale exemption. A Full Bench of this Court in Lazarus alosius v. State of Kerala (2005 (2) KLT 604), held that soda and cola sold in bar attached hotels attracts tax at twenty per cent. We do not think the case can be any different so far as mineral water also is concerned. We, therefore, uphold the order of the tribunal confirming the assessment of soda and mineral water under Entry 87 of 1st Schedule to the KGST Act and dismiss the S. T. Rev. Case on this issue.