Exempt turnover cannot enter a special assessment base merely because liquor is sold within the same hotel business.

The hotel and foreign liquor activities were treated as one business because the accounts and commercial setup were common, so the Tribunal's finding of separate businesses was unsustainable. However, turnover of foreign liquor could not be included in the taxable base under rule 90 because exempt goods remain outside assessment merely because they are sold in the same premises as taxable hotel . Assessment had therefore to be confined to the hotel turnover alone. The governing principle was that exempt turnover cannot be pulled into a special assessment formula absent clear statutory authority.

---

---

Issues: (i) Whether the foreign liquor business and the hotel business were separate businesses; (ii) whether the turnover of foreign liquor business could be excluded from the dealer's turnover for assessment under rule 90.

Issue (i): Whether the foreign liquor business and the hotel business were separate businesses.

Analysis: The turnover records and surrounding circumstances showed common accounts and a common commercial set-up for the hotel and liquor activities. On that material, the separation found by the Tribunal was not sustainable.

Conclusion: The foreign liquor business and the hotel business were not separate businesses; the issue was answered in favour of the revenue.

Issue (ii): Whether the turnover of foreign liquor business could be excluded from the dealer's turnover for assessment under rule 90.

Analysis: Rule 90 applied to hotel-type establishments, but the assessment base could not include turnover of goods exempt from sales tax under section 6. Foreign liquor, being covered by the exemption notification, could not be brought into the taxable turnover by the special assessment formula merely because it was sold in the hotel premises.

Conclusion: The turnover of foreign liquor business had to be excluded from the dealer's turnover for assessment under rule 90; the issue was answered in favour of the assessee.

Final Conclusion: The reference was answered by holding that the hotel and liquor activities were one business, but the liquor turnover was not includible for computing tax under the special assessment rule, so assessment had to be confined to the hotel turnover alone.

Ratio Decidendi: Turnover of exempt goods cannot be included in the taxable base under a special assessment provision merely because the sale is carried on in the same establishment as taxable business.

---