Deemed sale of hotel food and drinks under the Forty-sixth Amendment sustains sales tax without service bifurcation.

After the Forty-sixth Amendment, supply of food and drinks in hotels, restaurants and eating houses is treated as a deemed sale under Article 366(29A)(f), and the Tamil Nadu General Sales Tax Act, 1959 was read consistently with that constitutional expansion, so the levy of sales tax was sustained. Section 3 was considered sufficient to support the tax, and no separate charging provision or bifurcation of a service element was required because the entire transaction fell within the expanded concept of sale. The cancellation of a later exemption notification did not revive an earlier superseded exemption notification in the absence of express revival.

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Issues: (i) Whether the supply of food and drinks in hotels, restaurants and eating houses was exigible to sales tax under the Tamil Nadu General Sales Tax Act, 1959 after the Constitution (Forty-sixth Amendment) Act, 1982 and the corresponding amendment to the State Act. (ii) Whether a separate charging section or a bifurcation of the service element was necessary before such levy could be sustained. (iii) Whether the cancellation of a later exemption notification revived an earlier exemption notification.

Issue (i): Whether the supply of food and drinks in hotels, restaurants and eating houses was exigible to sales tax under the Tamil Nadu General Sales Tax Act, 1959 after the Constitution (Forty-sixth Amendment) Act, 1982 and the corresponding amendment to the State Act.

Analysis: The constitutional amendment inserted Article 366(29A)(f) of the Constitution of India, expanding the concept of tax on the sale or purchase of goods to include supply of food and drinks for consideration, whether as part of service or otherwise. The State amendment to section 2(n)(vi) of the Tamil Nadu General Sales Tax Act, 1959 brought the definition of sale into line with that constitutional enlargement. The pre-amendment decisions treating such supply as a service transaction were held not to govern the post-amendment position, and the validation provision in section 6(1) of the Constitution (Forty-sixth Amendment) Act, 1982 supported the existing State levy.

Conclusion: The supply of food and drinks was exigible to sales tax.

Issue (ii): Whether a separate charging section or a bifurcation of the service element was necessary before such levy could be sustained.

Analysis: Section 3 of the Tamil Nadu General Sales Tax Act, 1959 was held sufficient to support the levy once the definition of sale stood expanded. The deeming language of Article 366(29A)(f) treated the entire supply transaction as a sale, so there was no requirement to carve out or exclude a service component. The reasoning adopted distinguished works contract cases, where the constitutional text and statutory setting differed, and held that those authorities did not control transactions covered by Article 366(29A)(f).

Conclusion: No separate charging section or service bifurcation was required.

Issue (iii): Whether the cancellation of a later exemption notification revived an earlier exemption notification.

Analysis: The earlier exemption notification had been superseded by a later notification restricting the exemption. The later notification was subsequently cancelled prospectively, but that did not revive the earlier notification. The reasoning applied the principle that supersession is not undone merely because the later instrument is withdrawn or cancelled, unless there is an express revival.

Conclusion: The earlier exemption notification was not revived.

Final Conclusion: The batch of writ petitions failed on all substantive grounds, and the sales tax levy on the disputed hotel and restaurant supplies was sustained.

Ratio Decidendi: After the Forty-sixth Amendment, supply of food and drinks for consideration in a hotel or restaurant is a deemed sale under Article 366(29A)(f), and the ordinary charging provision of the State sales tax law is sufficient to levy tax without excluding any notional service component or requiring a fresh charging section.

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