HINDUSTAN STEEL LIMITED Vs. STATE OF ORISSA

JUDGEMENT

(1.) AT the instance of the assessee, the Member, Sales Tax Tribunal has referred the following question under Section 24 (1) of the Orissa Sales Tax Acf, 1947 (hereinafter referred to as the 'Act') for determination of this Court:

(2.) THESE references relate to the assessment for the year 1968 -69. The assessee, M/s. Hindustan Steel Limited, Rourkela, is a registered dealer carrying on business in the manufacture and sale of steel and other products. In course of assessment for the year 1968 -69, the assessing officer included Rs. 7, 94, 167. 81 being the sale proceeds of the workers' canteen, Rs. 4.05, 226. 38 being the sale proceeds of unserviceable materials of the A. C. A. Stores, Rs. 36, 778. 89 being the sale proceeds of the Rourkela Guest House and Rs. 18, 223.71 being the sale proceeds of horticultural products in the gross and taxable turnovers of the assessee as these sales had n t been reflected in the returns submitted by the assessee. Accordingly, the assessing officer advanced additional tax demand of Rs. 56,226.31. The assessee preferred an appeal before the Assistant Commissioner of Sales Tax. At the hearing of the first appeal, the assessee did not press its objection with regard to inclusion of the gross sale turnover of the sale proceeds of the Rourkela Guest House and horticultural products. It confined its objection to the remaining two items of sale and urged that it did not carry on any business in running the canteen for the welfare of the employees and that sale of unserviceable materials was also not its business. The first appellate authority held that the gross sale turnover of the workers' canteen was not exigible to tax as running of the workers' canteen was a welfare activity of the assessee, but the gross sale turnover of unserviceable materials had been rightly included in the gross and taxable turnovers as the assessee carried on business in unserviceable materials and collected sales tax from the purchasing dealers. Accordingly, the first appellate authority reduced the additional tax demand to Rs. 16,517.91. Against this order of the first appellate authority the Department filed an appeal before the Tribunal challenging the finding of the first appellate authority that running of the workers' canteen by the assessee was not its business. The assessee also filed an appeal challenging the finding that the assessee was carrying on business in unserviceable materials. The two appeals were heard analogously and disposed of by the Tribunal by its order dated 30. 11. 77. On consideration, the Tribunal inter aha held that the gross turnovers of the workers' canteen and of unserviceable materials were both exigible to tax. Thereafter, the assessee filed two reference applications under Section 24 (1) of the Act before the Tribunal praying for reference of the following three questions of law to this Court for its opinion:

(3.) IN the present case, as observed by the Tribunal in para -9 of its appellate judgment, since November, 1960, the assessee has been running a workers' canteen where food, drinks, snacks, tea, coffee etc., are sold. In view of the authoritative decisions of the Supreme Court referred to above, in the present case it was incumbent on the taxing authority to ascertain and determine whether supply of food, drinks, snacks, tea, coffee etc., in the workers' canteen was a part of rendering of service or whether the substance of the transaction, evidenced by its dominant object, was sale of food and the rendering of services was merely incidental. This important aspect of the law has not at all been considered by the Tribunal and without a finding on the point it would not be possible to determine the liability of the assessee under the Act in respect of the sales in the workers canteen.