SRI PRABHUDAYAL AGRAWALLA Vs. ORISSA SALES TAX TRIBUNAL

JUDGEMENT

(1.) REFERENCE has been made to a larger Bench to consider the scope and ambit of section 6 (2) of the Constitution (Forty-sixth Amendment) Act, 1982, vis-a-vis, the Orissa Sales Tax Act, 1947. The former Act is hereinafter referred to as "the Amendment Act" and the latter as "the Act". In essence the dispute is when the taxable event is supply of eating materials in a restaurant, or eating house or in a place not being a restaurant, where such supply or service was for cash, deferred payment or valuable consideration for the period at any time on or after 7th day of September, 1978 and before 2nd February, 1983, in a given case, where the assessee had not collected tax from the buyer, whether he shall be exempted from tax in view of section 6 (2) (a) of the Constitution (Forty-sixth Amendment) Act, 1982 or exigibility of tax shall be dependent on dominant object of the assessee while supplying articles of food for cash or deferred payment. Consequentially it has to he adjudicated whether the taxing authorities are required to investigate as to whether the supply of food for cash or deferred payment by the assessee in question at the relevant time was a package of service or was sale of food, service being incidental when the assessee raised such a question.

(2.) THE historical background of levy of tax on supply of food-stuff and service of meals and various decisions on the point need reference. Whether service of meals to casual visitors in a restaurant, a lodging house where meals are provided, when the charges are lump sum per meal or charged along with the services for the entire day had come up for consideration before the apex Court from time to time (sic ). In State of Himachal Pradesh v. Associated Hotels of India Ltd. [1972] 29 STC 474 (SC) the question that arose was whether the supply of food to the residents of a hotel, constituted "sale" for the purpose of levy of sales tax and whether it was legally permissible for the Revenue to split up the transaction into two parts, namely, one of service and the other of sale of food-stuffs in order to tax sale of food. Their Lordships were of the opinion that the transaction between a hotelier and a visitor to a hotel was essentially one of service in performance of which, as part of the amenities incidental to that service, the hotelier serves meals and, therefore, does not come within the definition of "sale". Following that principle it was reiterated in the subsequent decision in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC); AIR 1978 SC 1591, which reads thus :

(3.) ACCORDING to the assessee for the period for which exemption has been granted under section 6 (2) (a) of the Amendment Act, the assessing authorities are required only to find out whether the assessee had collected sales tax during the relevant period or not, the burden being on the assessee to prove that he had not collected it. The authorities are not required to find out the dominant object of the assessee regarding the supply of such food-stuff, that is, whether the supply of such food articles during the relevant period was in lieu of package of service or was intended to he sale of food-stuffs, service being incidental. Reliance is placed on a decision in Shri Krishna Enterprises v. State of Andhra Pradesh [1990] 76 STC. 67 (SC), in which their Lordships remitted the matter to the assessing authorities directing to give opportunity to the assessees to establish that they come within the exemption clause of section 6 of the Constitution (Forty-sixth Amendment) Act, 1982.