DEPUTY COMMISSIONER COMMERCIAL TAXES COIMBATORE DIVISION COIMBATORE Vs. MANAGER IN CHARGE OF THE CANTEEN A B T PREMISES

JUDGEMENT

(1.) THE point that arises for consideration in these tax cases relates to the assessability of certain turnover in a canteen run by three companies, M/s. A. B. T. (P.) Ltd. , M/s. Anamalai Engineering Co. and M/s. Gounder & Co. THE three companies are sister concerns. THE preassessment notice was issued to the manager of the canteen, proposing to assess the canteen sales. It was contended on behalf of the assessee that the canteen sales are exempt from the levy of tax under G. O. Press No. 2238, Revenue, dated 1st September, 1964. Though the assessment years are different, the same question arises now in respect of all the assessment years. THE assessing officer and the appellate authority rejected this claim of exemption of the ground that the Government Order invoked by them applies only to canteens run by individual employers, who are under a statutory obligation, but not to a case where it was run by three different companies jointly for their employees. On a further appeal, the tribunal held that though the assessee was not entitled to the benefit of the government Order, still the turnover is not liable to tax, as the sales of food and drinks in the canteen were not in the course of business of the three companies, who were running the canteen. This revision petition has been filed by the revenue challenging this view of the Tribunal.

(2.) THE view of the Tribunal that the sales were not in the course of the business of the respective companies and that, therefore, not liable to tax, is clearly wrong in view of the decision of the Supreme Court in state of Tamil Nadu v. Burmah Shell Company Limited. But the learned counsel for the assessee sought to sustain the exemption of the turnover from tax allowed by the Tribunal on the ground that the sales are clearly covered by the exemption granted under G. O. Press No. 2238, Revenue, dated 1st September, 1964, and the view of the Tribunal that the Government Order is not applicable is not correct. Before we consider the scope of the Government Order, it is necessary to set out certain facts relating to this canteen. THEre are about 556 employees in M/s. A. B. T. (P.) Ltd. 367 in M/s. Anamalai Engineering Co. and 17 workers in M/s. Gounder & Co. In every one of the assessment years in question more than 25 per cent. of the expenses were met by the employers and this expenditure was contributed at the ratio of 58 per cent. , 39 per cent. and 2 per cent. respectively, which is approximately the ratio of the employees employed in each one of the companies. M/s. A. B. T. (P.) Ltd. is under the statutory obligation to run a canteen under rule 16 of the Madras Motor transport Workers Rules, 1965, and M/s. Anamalai Engineering Co. is under a statutory obligation to run a canteen under rule 65 of the Madras Factories rules. But M/s. Gounder & Co. is not under any statutory obligation to run a canteen. THE canteen was run by the three companies without any motive for profit on a "no-profit and no-loss basis". It was only intended to provide canteen facilities to the employees of these three sister concerns and not a canteen run for general public.