Merger doctrine and commercial activity test limit revisional jurisdiction over banquet charges and employee cafeteria sales.

The revisional notice was without jurisdiction for banquet charges because that item had been specifically dealt with in appeal and the assessment order had merged to that extent, so the original order no longer survived for revision. It was also invalid for cafeteria sales, as the employee cafeteria operated on a subsidised, no-profit-no-loss basis and did not amount to business activity in the commercial sense required to treat the hotel as a dealer for that turnover. The notice was, however, sustainable for cash discounts and the remaining add-back items, since those questions concerned computation and turnover and did not show patent lack of jurisdiction on the face of the notice.

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Issues: (i) Whether the suo motu revision notice was without jurisdiction in respect of banquet charges because the original assessment had merged in the appellate order; (ii) whether the hotel's cafeteria activity, carried on for employees at subsidised rates and without profit motive, constituted taxable business activity so as to attract revision under the Act; and (iii) whether the impugned notice could validly be issued in respect of cash discounts and the quantum of the amounts added back on the remaining items.

Issue (i): Whether the suo motu revision notice was without jurisdiction in respect of banquet charges because the original assessment had merged in the appellate order.

Analysis: Only the part of the assessment order that was actually carried in appeal merged in the appellate order. The banquet charges were specifically dealt with in appeal and the appellate authority affirmed the assessment on that item. Once the appellate order became operative, the original assessment ceased to subsist to that extent, and the revisional authority could not purport to revise a non-existent original order.

Conclusion: The notice was invalid and without jurisdiction insofar as it related to banquet charges.

Issue (ii): Whether the hotel's cafeteria activity, carried on for employees at subsidised rates and without profit motive, constituted taxable business activity so as to attract revision under the Act.

Analysis: The definition of dealer required carrying on the business of selling goods in a commercial sense. On the admitted facts, the cafeteria functioned as an employee amenity on a no-profit-no-loss basis. In the absence of a commercial motive, the hotel could not be treated as a dealer qua that activity, and proceedings seeking to tax that turnover lacked the basic jurisdictional foundation.

Conclusion: The notice was invalid and without jurisdiction insofar as it related to cafeteria sales.

Issue (iii): Whether the impugned notice could validly be issued in respect of cash discounts and the quantum of the amounts added back on the remaining items.

Analysis: The questions concerning cash discounts and the working of the add-back amounts involved computation and interpretation of turnover and sale price under the Act. These matters did not disclose any patent want of jurisdiction on the face of the notice and were fit for determination in revision, not for summary interference in writ jurisdiction.

Conclusion: The notice was valid in respect of cash discounts and the remaining add-back items.

Final Conclusion: The writ petition succeeded only in part: the revisional notice was quashed for banquet charges and cafeteria sales, but sustained for the other items covered by it.

Ratio Decidendi: In appellate matters, merger operates only to the extent the order appealed against is actually adjudicated, and a taxing authority lacks jurisdiction to proceed against an activity unless the assessee carries on a taxable business in a commercial sense.

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