Dominant object test and burden of proof govern tax treatment of hotel supplies and prior taxation claims.

The dominant object test determines whether food and drinks supplied by a hotel are taxable as sales or can be treated as a service component. Under Article 366(29-A)(f), table service does not by itself justify exclusion of turnover where the real commercial object remains supply of eatables and drinks and service is merely incidental. The document also states that avoidance of purchase tax on kerosene and diesel depends on proof that the goods had already suffered tax; the burden remains on the assessee under Section 6A of the Karnataka Sales Tax Act, 1957, and a statutory presumption is not displaced merely because the commodities are controlled goods.

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Issues: (i) Whether the service charge component in the price charged for food and drinks served at the table could be excluded from sales tax on the footing that the dominant object was rendering of service and not sale of food articles; (ii) Whether purchase tax on kerosene and diesel could be avoided on the ground that those controlled commodities were presumed to have already suffered tax earlier.

Issue (i): Whether the service charge component in the price charged for food and drinks served at the table could be excluded from sales tax on the footing that the dominant object was rendering of service and not sale of food articles.

Analysis: The applicable principle was the dominant object test, under which the substance of the transaction must be ascertained to determine whether the real nature of the dealing is sale of food or rendering of service. The constitutional scheme after Article 366(29-A)(f) did not curtail the State's power in a case where the supply of food and drinks remains the real commercial object and services are merely incidental. A hotelier cannot claim exclusion of turnover merely because table service attracts a higher price. On the facts, the material did not show that customers visited the hotel primarily for service rather than for the supply of eatables and drinks.

Conclusion: The claim for exclusion of the alleged service charge from taxable turnover was rejected and this issue was decided against the assessee.

Issue (ii): Whether purchase tax on kerosene and diesel could be avoided on the ground that those controlled commodities were presumed to have already suffered tax earlier.

Analysis: Liability to avoid purchase tax depended on proof that the goods had already suffered tax under the Act. The burden remained on the assessee under Section 6A of the Karnataka Sales Tax Act, 1957, and the statutory presumption under Section 6A(2) was not displaced merely because the goods were controlled commodities. No sufficient proof was produced to establish prior taxation.

Conclusion: The challenge to purchase tax failed and this issue was decided against the assessee.

Final Conclusion: The revision petition failed in entirety, and the assessment was left undisturbed.

Ratio Decidendi: Where food and drink supplied by a hotel are taxable on the basis of their commercial substance, table service does not by itself justify bifurcation or exclusion of a service component unless the assessee proves that rendering of service was the dominant object of the transaction; similarly, an assessee seeking to avoid purchase tax must affirmatively prove prior tax incidence when the statute places the burden on it.

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