Indivisible hotel receipts and appellate limits shape sales tax treatment of boarding, amenity charges, and turnover relief.

Hotel lodging and boarding receipts were treated as an indivisible service transaction, so they were not wholly outside sales tax; only the separable charges relatable to air-conditioning and telephones were excluded from taxable turnover. The appellate tribunal also could not grant relief on turnover that had not been put in dispute before the assessing authority or the Appellate Assistant Commissioner, because its jurisdiction was confined to the subject-matter already carried in appeal. The remaining taxable turnover continued to be assessable, subject to the applicable rate for the relevant year where relevant.

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Issues: (i) Whether the receipts from apartment and board charges in the hotel constituted an indivisible service transaction not liable to sales tax, save for the amount relatable to air-conditioning and telephone charges; and (ii) whether the Sales Tax Appellate Tribunal could grant relief in respect of turnover that had not been disputed before the assessing authority or the Appellate Assistant Commissioner.

Issue (i): Whether the receipts from apartment and board charges in the hotel constituted an indivisible service transaction not liable to sales tax, save for the amount relatable to air-conditioning and telephone charges.

Analysis: The decision governing hotel lodging and boarding receipts treated the transaction as one and indivisible, with meals and amenities forming part of the service rendered by the hotelier and not a separable sale of food-stuffs. That principle applied to the hotel receipts in question. The assessees had, however, themselves segregated and claimed exclusion only for the enhanced charges attributable to air-conditioning and telephones.

Conclusion: The apartment and board receipts were not wholly deductible from tax, but the amount relatable to air-conditioning and telephone charges was liable to be excluded from the taxable turnover.

Issue (ii): Whether the Sales Tax Appellate Tribunal could grant relief in respect of turnover that had not been disputed before the assessing authority or the Appellate Assistant Commissioner.

Analysis: The jurisdiction of the appellate hierarchy is confined to the subject-matter that was carried in appeal before the Appellate Assistant Commissioner. A turnover not raised before that authority cannot be treated as having been adjudicated merely because of a casual reference or argument. Since the assessees had not put the undoubted 50 per cent turnover relating to food and drinks in issue before the first appellate authority, the Tribunal could not enlarge its jurisdiction and decide that question for the first time.

Conclusion: The Tribunal had no jurisdiction to grant relief on turnover not raised before the Appellate Assistant Commissioner.

Final Conclusion: The exemption was confined to the air-conditioning and telephone charges, while the remaining taxable turnover in respect of apartment and board charges continued to be assessable, albeit at the lower rate of 2 per cent for the relevant year where applicable.

Ratio Decidendi: The appellate tribunal under the sales tax law cannot travel beyond the subject-matter placed before the first appellate authority, and a hotel's consolidated lodging and boarding receipts are not wholly exempt where only a separable amenity charge is properly deductible.

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