GOVINDSHRAM HOTEL Vs. STATE OF GUJARAT

JUDGEMENT

(1.) A short question of construction of entry 14 of Schedule A to the Bombay Sales Tax Act, 1959, arises on this reference. The applicants carry on business of running a hotel and in the course of such business they serve cooked food and non-alcoholic drinks for consumption in the hotel and they also enter into catering contracts under which they serve cooked food and non-alcoholic drinks at their customers' premises through their servants for consumption there. On 2nd January, 1960, the applicants served through their servants fifty plates of refreshments consisting of pendas, bananas, wafers and tea at a price not exceeding rupee one for each person in pursuance of an order placed by A. V. Parekh Institute for consumption at the premises of the Institute. The applicants then applied to the Deputy Commissioner of Sales Tax under section 52 for determination of the question whether any tax was payable on the sales of refreshments made to A. V. Parekh Institute. The applicants contended that the sales were covered by entry 14 of Schedule A and were, therefore, exempt from tax, but this contention was negatived by the Deputy Commissioner of Sales Tax. The applicants, therefore, preferred an appeal to the Tribunal but the Tribunal also took the same view and held that entry 14 of Schedule A exempted sale of cooked food and non-alcoholic drinks only when they were served in the hotel premises or immediately outside or within a reasonable distance of the hotel premises and service inside other private premises could not be regarded as service "outside" the hotel premises within the meaning of entry 14 of Schedule A. The Tribunal accordingly confirmed the order of the Deputy Commissioner of Sales Tax. This view of the Tribunal is now challenged before us in the present reference.

(2.) THE determination of the question submitted for our opinion turns on the true interpretation of entry 14 of Schedule A. THE question becomes relevant because under section 5 no tax is payable on the sales of any goods specified in Schedule A and if the refreshments sold by the applicants to A. V. Parekh Institute fall within entry 14 of Schedule A the sales would be exempt from tax. Entry 14 of Schedule A as it stood at the material time was in the following :- "SCHEDULE - a ----------------------------------------------------------------- Serial Description of goods Conditions and No. exemptions subject to which exemption is granted ----------------------------------------------------------------- (1) (2) (3) ----------------------------------------------------------------- Cooked food and non-alcoholic drinks served at one time at a price of not more than one rupee per person, for consumption at or outside any eating house, restaurant, hotel, refreshment room or boarding establishment which is not a shop or establishment conducted primarily for the sale of sweetmeats, confectionery, cakes, biscuits or pastries. -----------------------------------------------------------------

(3.) IN order to arrive at a proper interpretation of entry 14 of Schedule A, it is, therefore, necessary to consider how the matter stood immediately before the enactment of entry 14 of Schedule A, what the mischief was for which the old law did not provide and the remedy provided by entry 14 of Schedule A to cure that mischief. Prior to the coming into force of the Bombay Sales Tax Act, 1959, the law relating to sales tax which was in force was the Bombay Sales Tax Act, 1953, and the entry in that Act corresponding to entry 14 of Schedule A was entry 22 of Schedule A which was in the following terms :- "SCHEDULE - a ----------------------------------------------------------------- Serial Description of goods Conditions and exemptions No. subject to which exemption has been granted ----------------------------------------------------------------- 11 Food and non-alcoholic Except when the cost of food drinks consumed at a hotel, and drinks consumed at one restaurant, refreshment time by one person exceeds room, eating house or other rupee one." place where such food and drinks are served. -----------------------------------------------------------------