Dhabawala exemption under sales tax notification upheld where informal food service kept the business within dhaba character.

Cooked food sold by a dhabawala was treated as exempt from sales tax under the relevant notification issued under section 12 of the M.P. General Sales Tax Act, 1958. The Court held that the assessee's establishment retained the essential character of a dhaba because it served katcha bhojan in thalis, used mainly Indian-style seating, and did not sell sweetmeats on a scale that would make it a restaurant. Incidental features such as chairs, newspapers, towels, or occasional festival sweets did not alter that character. The reference was answered in favour of the assessee and the exemption applied.

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Issues: Whether the assessee was a dhabawala and whether the cooked food sold by him was exempt from sales tax under the relevant exemption notifications.

Analysis: The notification issued under section 12 of the M.P. General Sales Tax Act, 1958 exempted cooked food sold by specified classes of vendors, including dhabawalas. On the facts found, the assessee served katcha bhojan in thalis, maintained mainly Indian-style seating, and did not sell sweetmeats on a scale that would convert the establishment into a restaurant. Incidental facilities such as chairs, newspapers, towels, or occasional sweets on festivals did not alter the essential character of the business.

Conclusion: The assessee was correctly treated as a dhabawala and the sale of cooked food was exempt under the notification.

Final Conclusion: The reference was answered in favour of the assessee and the department failed on the question referred.

Ratio Decidendi: An establishment remains within the exempt category of a dhabawala if its essential character is that of a dhaba serving cooked food in a predominantly informal and Indian-style manner, and incidental restaurant-like features do not by themselves defeat the exemption.

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