Exemption for sweetmeat sales depends on the establishment's entire business, not a narrow comparison of selected sales categories.

To determine whether an establishment is conducted primarily for the sale of sweetmeats, the taxing authority must assess the character of the entire business and not compare only counter sales with sales accompanied by service. All transactions at the premises, including takeaway sales, service of food and allied activities, must be examined to see whether takeaway sweetmeat sales substantially predominate. Service of cooked food in an eating house may, in appropriate cases, not amount to a sale at all. The broader predominance test, rather than a narrow sales comparison, governs eligibility for exemption under entry 14 of Schedule A.

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Issues: (i) Whether an establishment is conducted primarily for the sale of sweetmeats only if counter sales of sweetmeats without service preponderate over sales of sweetmeats followed by service for consumption. (ii) Whether, for deciding the availability of exemption under entry 14 of Schedule A, all transactions of the establishment, including service transactions, must be examined to determine if the establishment is primarily for the sale of sweetmeats.

Issue (i): Whether an establishment is conducted primarily for the sale of sweetmeats only if counter sales of sweetmeats without service preponderate over sales of sweetmeats followed by service for consumption.

Analysis: The expression "conducted primarily for the sale of sweetmeats" cannot be confined to a narrow comparison between sales over the counter and sales accompanied by service. The character of the establishment has to be judged from the nature of its entire business. Counter sales for takeaway are relevant, but they are not to be viewed in isolation from the other business carried on at the premises.

Conclusion: The Tribunal's narrow test was incorrect in law.

Issue (ii): Whether, for deciding the availability of exemption under entry 14 of Schedule A, all transactions of the establishment, including service transactions, must be examined to determine if the establishment is primarily for the sale of sweetmeats.

Analysis: Entry 14 denies exemption to an establishment conducted primarily for the sale of sweetmeats, confectionery, cakes, biscuits or pastries. In deciding whether that description is attracted, the taxing authority must consider all transactions at the establishment, including sales across the counter, service of food within the premises, and other allied activities, and then determine whether takeaway sweetmeat sales substantially predominate. The service of cooked food in an eating house may, in appropriate cases, not amount to a sale at all, and the nature of the business must be assessed in the light of that position.

Conclusion: The correct test requires examination of the entire business and not merely a limited comparison of particular sales; the matter was to be reconsidered on that basis.

Final Conclusion: The reference was answered by holding that the Tribunal applied an unduly narrow test, and the assessment question had to be reconsidered on the basis of the broader predominance test laid down in the judgment.

Ratio Decidendi: To determine whether an establishment is conducted primarily for the sale of sweetmeats, the authority must assess the establishment's entire business and decide whether takeaway counter sales of sweetmeats substantially predominate over all other transactions; a narrow comparison of only selected categories of sales is insufficient.

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