Constitutional amendment and sales tax: hotel and restaurant food supplies were not taxable under the State Act until it was separately amended.

The Forty-sixth Constitutional Amendment enlarged the constitutional concept of sale to cover supply of food or drinks as part of service, but it did not by itself amend section 2(o) of the Rajasthan Sales Tax Act, 1954. As a result, before the State amendment effective from 1 April 1987, the Act did not authorise sales tax on such hotel or restaurant supplies for the period 3 February 1983 to 31 March 1987. Refund claims for tax paid during that period depended on section 23-B and required an enquiry into whether the tax had actually been recovered from customers; refund was not automatic and would be denied if the tax had been passed on.

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Issues: (i) Whether the Forty-sixth Constitutional Amendment automatically amended section 2(o) of the Rajasthan Sales Tax Act, 1954 so as to include supply of food or drinks by way of or as part of service in a hotel or restaurant for the period from 3 February 1983 to 31 March 1987; (ii) whether the tax paid for that period was refundable, and on what basis.

Issue (i): Whether the Forty-sixth Constitutional Amendment automatically amended section 2(o) of the Rajasthan Sales Tax Act, 1954 so as to include supply of food or drinks by way of or as part of service in a hotel or restaurant for the period from 3 February 1983 to 31 March 1987.

Analysis: Clause (29A)(f) of Article 366 of the Constitution of India enlarged the constitutional meaning of tax on the sale or purchase of goods and conferred legislative competence on the State Legislature to levy tax on supplies of food or drink made as part of service. However, the constitutional amendment did not by itself rewrite the definition of sale in the State Act. Section 2(o), as it stood until its amendment from 1 April 1987, did not include such supply within sale. The validation provision in section 6 of the Constitution (Forty-sixth Amendment) Act, 1982 did not assist where the State law itself, as then framed, did not authorise the levy.

Conclusion: The constitutional amendment did not automatically amend section 2(o) of the Rajasthan Sales Tax Act, 1954, and no sales tax was leviable on such supplies for the period 3 February 1983 to 31 March 1987.

Issue (ii): Whether the tax paid for that period was refundable, and on what basis.

Analysis: Refund under section 23-B of the Rajasthan Sales Tax Act, 1954 depended on whether the tax had actually been recovered from customers. In the absence of definite material on that question, the Court declined to grant an unconditional refund and directed an enquiry by the assessing authority. If the tax had not been collected from customers, refund would follow; if it had been collected, refund would not be payable to the petitioner.

Conclusion: Refund was not finally granted outright and was left to be determined after enquiry under section 23-B of the Rajasthan Sales Tax Act, 1954.

Final Conclusion: The assessee succeeded on the question of taxability for the relevant period, but the refund claim was made contingent upon enquiry into whether the tax had been recovered from customers.

Ratio Decidendi: A constitutional amendment enlarging legislative competence does not by itself amend the charging definition in a State sales tax statute unless the statute is independently amended to authorise the levy.

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