NARANGA HOTELS PRIVATE LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner, which is a private limited company, is engaged in the business of hoteliering and has two hotels, the Ambassador Hotel at Bombay and the Ajanta Ambassador Hotel at aurangabad. The hotels of the petitioner are having status of "four star" and there are restaurants forming part of the said hotels.

(2.) BY this petition under article 226, the petitioner questions the authority of the State to levy sales tax in respect of food and beverages supplied or served in the hotels/restaurants of the petitioner. The petitioner challenges the validity of the Forty-sixth Amendment to the constitution and the relevant entries in the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the said Act") imposing sales tax on the food articles supplied in the hotel, restaurant, etc.

(3.) THE sales tax was being levied upon sales of food articles in hotel/restaurant right since the inception of the Sales Tax Act in the then State of Bombay and also in the State of Maharashtra. The concept of levy of sales tax on food served and supplied in hotel/restaurant existed even under the old Bombay Sales Tax Act, 1946. So far as, the levy of sales tax on the aforesaid basis under the said Act was as per entry 70 of Schedule "c" up to June 30, 1981. By an amendment to the said Act, Schedule "c" was amended on and from July 1, 1981 and the tax on food served in hotels and restaurants was levied under entry 22, which reads as follow :