Sales tax on catering changed after the Forty-sixth Amendment, requiring fresh assessment under the amended constitutional position.

The earlier view that supplying meals in an eating-house or restaurant was not a sale was later clarified to apply only where services were incidental and the substance of the transaction was food sale. After the Constitution (Forty-sixth Amendment) Act, 1982 altered the constitutional position, the prior High Court order exempting railway catering from sales tax could not stand on the earlier legal basis. The matter therefore required reconsideration under the amended law, and the taxing authority was directed to re-examine the assessment afresh in accordance with law.

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Issues: Whether the earlier High Court order exempting railway catering from sales tax survived in view of the changed constitutional position after the Forty-sixth Amendment, and whether the matter required fresh assessment.

Analysis: The earlier view that service of meals in an eating-house or restaurant did not amount to a sale had been clarified to mean that where the substance of the transaction is a sale of food and services are merely incidental, sales tax would be attracted. The legal position was thereafter altered by the Constitution (Forty-sixth Amendment) Act, 1982, which necessitated reconsideration of the matter on the basis of the amended law. In that situation, the High Court order founded on the earlier position could not stand, and the assessment had to be re-examined by the taxing authority.

Conclusion: The review applications were allowed, the High Court order was set aside, and the matter was remanded for fresh assessment in accordance with law.

Final Conclusion: The revenue succeeded in reopening the matter, and the tax liability was directed to be determined afresh on the amended legal basis.

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