HOTEL OBEROI MOUNTVIEW Vs. ASSESSING AUTHORITY U T

JUDGEMENT

(1.) WHETHER the Commissioner empowered to exercise suo moto powers of revision Under Section 21 of the Punjab General Sales Tax Act, 1940 (for short the Act) could act on an application filed by an assessee is the short but interesting question of law which arises for determination in this Sales Tax Reference made by the Sales Tax Tribunal, Punjab on a mandamus issued by this Court Under Section 22 (3) of the Act.

(2.) FACTS giving rise to this reference are that M/s. Hotel Oberoi Mountview, Chandigarh (now defunct and hereinafter referred to as the assessee) was registered as a Hotel and Restaurant under the Act and had been carrying on its business as such. As part of its business as a hotelier, the assessee received guests to whom, besides furnishing lodgings it also provided several other amenities such as bath with hot and cold running water, linen, meals during fixed hours etc. The bill given to the guests was an all-inclusive one i. e. a fixed amount for the stay in the hotel for each day and did not specify different items of each of the facilities that were provided. The Assessing Authority, Union Territory, Chandigarh charged Sales Tax by bifurcating the. contract and the fixed amount charged for board and lodging for the purpose of taxing that part of the amount which according to the Assessing Authority represented the sale of good to the customers. Such assessments were made for the assessment year 1953-54 upto 1961-62. It was contended by the assessee that the business of the Hotel was mainly of providing boarding and lodging to its resident customers who stayed there and enjoyed all the amenities provided by the Hotel and in return a comprehensive and all inclusive charge was being made from them and that there was no agreement for the sale or purchase of food when the same was supplied to the customers in the form of meals. In other words what was argued was that the contract between the assessee and the customers was an indivisible one and the Assessing Authority could not tax the same by bifurcating-it. These contentions were not accepted by the Assessing Authority. The assessee did not file an appeal against any of the assessment orders. In January, 1972 the "apex Court in The State of Himachal Pradesh and Ors. v. Associated Hotels of India Ltd. , 29 S. T. C. 474 held that the transaction of receiving a customer in the hotel to stay was" essentially one and indivisible and the same could not be split up into two parts, one of service and the other of sale of food-stuffs and not could the sale of food-stuffs be brought to tax in respect of meals served to the quests in the Hotel. It was observed that such a contract was essentially one of service by the hotelier in the performance of which and as a part of the amenities incidental to the service, the hotelier served meals at fixed hours. After this judgment was delivered the assessee filed applications in regard to each of the assessment years before the Commissioner with a request to exercise his suo-moto powers Under Section 21 of the Act and revise the orders of the Assessing Authority as according to the assessee the order charging tax on food-stuffs by bifurcating the indivisible contract was an illegality committed by the Assessing Authority. The Department opposed the applications it being contended that the Commissioner could not exercise his powers Under Section 21 of the Act on an application made before it by the assessee. It was also contended by the departmental representatives that before the amendment of Section 21 by Act 7 of 1967 the Commissioner could exercise the power of revision on his own motion or even on an application made to him for taking action Under Section 21 but after the amendment the words" or on an application made to him" had been deleted and, therefore, the Commissioner had no option but to dismiss the application filed by the assessee. The Commissioner upheld the preliminary objection raised by the departmental representative and dismissed the application holding as under : " I agree with the contention of the representative of the Department that this Court cannot legally take action Under Section 21 of the amended Act on the basis of application made before it. The application is, therefore, dismissed. " Feeling aggrieved by the order passed by the Commissioner the assessee filed revision petitions in respect of the assessment years 1953-54 to 1961-62 before the Sales Tax Tribunal, Chandigarh. All the revision petitions were heard and disposed of by an order dated August 18, 1980 whereby the same were dismissed and the order of the Commissioner declining to act on an application filed by the assessee affirmed. Thereafter on a mandamus issued by this Court Under Section 22 (3) of the Act, the Tribunal has referred the following question of law for the opinion of this Court :

(3.) IN view of the aforesaid discussion, we answer the question referred to as under : It is open to an assessee or even to the Department to bring to the notice of the Commissioner any relevant information and if the Commissioner is of the opinion that the information is such which warrants initiation of action Under Section 21 he may proceed of his own motion to examine the legality or propriety of any order or proceedings taken by any authority subordinate to him.