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2019 Supreme(Mad) 485
IN THE HIGH COURT OF JUDICATURE AT MADRAS
T.S. SIVAGNANAM, V. BHAVANI SUBBAROYAN, JJ.
Sodexo Food Solutions India Private Limited [formerly known as Radhakrishna Hospitality Services Pvt. Ltd) – Appellant
Versus
State of Tamil Nadu, Rep. by the Deputy Commissioner (CT), Chennai (Central) Division – Respondent
Tax Case (Revision) Nos. 14 & 15 of 2013 & M.P.Nos. 1 & 1 of 2013
Decided on : 30-04-2019
For the Petitioner:R. Raghavan Assisted by N. Murali, Advocates.
For the Respondent: Mohammed Shaffiq, Special Government Pleader (Taxes).
Headnote:
Tax Case Revisions - Scope of Section 3-D of TNGST Act - Summary of Acts and Sections: Section 3-D of TNGST Act - The court analyzed the scope of Section 3-D of the TNGST Act, emphasizing the place of sale and the conditions for concessional tax rates. The court also discussed the effect of the amendment made to Section 3-D with respect to caterers and the retrospective application of the amendment. The court further examined the impact of clarifications issued by the Department and the relevance of definitions from other enactments. The court's decision was based on the interpretation of the statutory provisions and legal principles established in relevant case laws.
Fact of the Case:
The assessee, a hospitality service provider, contested the assessment of tax at 8% on the taxable turnover under the TNGST Act. The dispute centered around the applicability of Section 3-D of the TNGST Act to the sale of food and drinks by the assessee to various establishments.
Finding of the Court:
The court held that the assessee did not qualify for the concessional tax rate under Section 3-D(1) of the TNGST Act as the first point of sale of food and drinks did not occur in establishments specified in the provision. The court also determined that the amended Section 3-D of the TNGST Act did not apply retrospectively to the case. Additionally, the court dismissed the relevance of clarifications issued by the Department and the applicability of definitions from other enactments. The court's decision was based on the interpretation of the statutory provisions and legal principles established in relevant case laws.
Issues: Scope of Section 3-D of TNGST Act, Effect of Amendment, Relevance of Clarifications, Applicability of Definitions from Other Enactments
Ratio Decidendi: The crucial aspect for entitlement to the benefit of Section 3-D(1) of the TNGST Act is the taxable event, emphasizing the place of sale and the conditions for concessional tax rates. The court also determined the retrospective application of the amendment made to Section 3-D and dismissed the relevance of clarifications issued by the Department and the applicability of definitions from other enactments.
Final Decision: The tax case revisions were dismissed, and the substantial questions of law framed for consideration were answered against the petitioner/assessee.
T.S. Sivagnanam, J.
(Common Prayer: Tax Case (Revisions) filed under Section 38 of the Tamil Nadu General Sales Tax Act (TNGST Act), 1959 against the order of the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai dated 25.08.2012 in S.T.A.Nos.308/2007 and 309/2007 for the assessment years 2001-2002 and 2000-2001.
These tax case revisions filed by the petitioner/assessee under Section 38 of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) are directed against the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai in S.T.A.Nos.308/2007 and 309/2007 dated 25.08.2012.
2. These revisions were admitted on 28.03.2013 on the following substantial questions of law:
“1. Is not the Tribunal in error in assessing the petitioner as a caterer and therefore, are not covered by Section 3D before 01.04.2002?
2. Is the Tribunal not in error in not appreciating that the petitioner is one selling food and drinks at “any other eating house” as referred in Section 3D as the said expression “any other eating house” will include all eating houses other than those covered by item 20 Part-C First Schedule to TNGST Act, 1959?
3. Is not the Appellate Tribunal wrong in concluding that after 01.04.2002, as the caterer is specifically included, therefore, excluded prior to 01.04.2002 when apparently caterer has been included within Section 3-D ibid as a matter of abundant caution so that,caterer are not held to be outside the scope of expression “any other eating house”?
4. Is not amendment to Section 3D effective from 01.04.2003, clarificatory?
3. The assessment under the TNGST Act for the assessment years 2000-2001 and 2001-2002 was completed by the Assessing Officer vide order dated 31.12.2004. Aggrieved by the same, the assessee preferred appeals before the Appellate Assistant Commissioner (CT)-III, Chennai in A.P.Nos.110 and 111 of 2005. The appeals were partly allowed and certain issues were remanded to the Assessing Officer for fresh decision by an order dated 01.06.2005. Aggrieved by the same, the State preferred appeals before the Tribunal in S.T.A.Nos.308 and 309 of 2007 which were allowed by order dated 25.08.2012. Challenging the same, the assessee has filed these tax case revisions.
4. The assessee formerly known as M/s.Ramakrishna Hospitality Services Pvt. Ltd. rendering various types of hospitality services for establishments and during the relevant assessment years had dealt with foods and drinks. The assessments were completed by the Assessing Officer by levying tax at 8% on the taxable turnover. The reason assigned by the Assessing Officer was that the separation of taxable turnover and exempted turnover are only artificial bifurcation of the total receipts related to the supply of food and drinks and the full and complete set of audited statement having not been furnished, assessed the entire taxable turnover at 8%. The appellate authority had set aside the assessment orders on the ground that the assessee has engaged in catering sales in guest houses of various industrial establishments and they have not only done catering sales but also housekeeping, cleaning, etc. and therefore held that the assessment orders required to be modified. The State on appeal before the Tribunal contended that Section 3-D of the TNGST Act, 1959 covers the food and drinks served by the hotels, restaurants, sweet stalls and any other eating houses. The assessee had not run any hotels, restaurants or sweet stalls or any other eating houses and the activities of the assessee are not like the activities carried on in hotels, restaurants, sweet stalls and other eating houses. Further, it was contended that the assessee had supplied food and drinks to various establishments and the price was paid by the establishments only and not by the individual persons who consumed the food items. Further, it was contended that the assessee is a caterer and not running any hotels, restaurants or sweet stalls and hence, they are
