STATE OF ORISSA Vs. HOTEL RAJMAHAL

JUDGEMENT

(1.) THESE are three references made under section 24 (1) of the Orissa Sales Tax Act (hereinafter referred to as the "act") at the instance of the State of Orissa by the Additional Sales Tax Tribunal and the following common questions have been referred for opinion of the court :

(2.) THE assessee is a partnership business of a hotel run in the name and style of Hotel Rajmahal at Bhubaneswar. It has three partners, namely, Sudhir, Sunil and Ashok, and the firm is a registered dealer under the Act. As shown in the statement of facts, the hotel serves meals, tea, tiffin and drinks. Foreign liquor is also sold open and served within the hotel premises to customers. As it appears one licence for foreign liquor has been issued in the name of a single partner. The periods with which these applications are concerned are 1964-65, 1965-66 and 1966-67. Assessment for the last of these years has been made under section 12 (2) of the Act, while for the first two years, assessment has been completed under section 12 (8) of the Act. S. J. C. No. 101 of 1973 relates to last of these years, while S. J. C. Nos. 33 and 34 of 1974 are respectively for the years 1964-65 and 1965-66. According to the assessee, the hotel business was run in the name and style of Rajmahal while the liquor business was run in the name and style of "flora". The hotel belonged to the firm while the liquor business belonged to Sudhir alone. The Sales Tax Officer, however, came to find that the hotel and the liquor business was one and the assessee's stand that they were two separate businesses run in the same premises was negatived. As assessments of the business of the assessee were completed by application of rule 90 of the Orissa Sales Tax Rules, the turnover of both the business was put together for determining the quantum.

(3.) THE Sales Tax Officer referred to the evidence at length and also noticed the conduct of parties. Apart from the fact that liquor was being served in an open condition to customers within the hotel, the Sales Tax Officer had further found that one common account was maintained and the profit and loss statement of the business covered the turnover of the hotel as also of the liquor business. According to the Sales Tax Officer, nothing turned on the feature that the licensee was one partner. In fact, under the Excise law, a partnership firm cannot be a licensee. It has already been indicated by the Supreme Court that where a licence is granted to one partner and he admits others into the business, there is no illegality committed and public policy is in no way affected. This appears to have been done in the case. The reasoning given by the Tribunal to disturb the finding of both the forums below in regard to unity or separation of the two businesses is not at all cogent. In fact, Mr. Bhattacharya for the assessee conceded before us that in view of the common set of accounts and the other materials on record, it is difficult for him to support the finding reached by the Tribunal that the two businesses had no unity between them. In view of the concession which appears to be well-founded, without indulging in further discussion, we would hold on the first question referred to us in favour of the revenue, namely : The Member, Additional Sales Tax Tribunal, was not right in holding that the foreign liquor business and hotel business are separate business from each other.