Exempt turnover for canteen food sales must be excluded from total business turnover under the taxing notification.

A taxing notification granting exemption for canteen sales of food and drinks was construed to apply to the turnover attributable to those specified sales, subject to the prescribed limit, rather than to the co-operative society's entire business turnover. The exempt sales had to be identified and deducted from the dealer's total turnover for sales tax purposes, and not clubbed with unrelated business receipts. On that construction, the canteen operated as a separate exempt activity for the limited purpose of the notification, and recovery proceedings based on inclusion of those sales could not be sustained.

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Issues: Whether the sale of food and drinks in the canteen attached to the co-operative society was entitled to exemption under the relevant Government notification, and whether such sales were to be excluded from the assessee's total turnover for the purpose of levy of sales tax.

Analysis: The notification applicable to the case was construed as granting exemption in respect of the sale of food and drinks by the canteen, subject to the prescribed turnover limit. The language of the later notification indicated that the exemption turned on the turnover attributable to the canteen sales of food and drinks, and not on the entire turnover of the society's main business. The earlier notification and the cited precedent supported the view that the exempt sales had to be identified and deducted from the total turnover, rather than being aggregated with the assessee's other business turnover. On that construction, the canteen formed a separate exempt activity for the limited purpose of the notification.

Conclusion: The canteen sales of food and drinks were eligible for exemption, and the recovery proceedings could not be sustained.

Ratio Decidendi: Where a taxing notification grants exemption for specified sales subject to a turnover limit, the exempt turnover is to be identified with the sales covered by the notification and excluded from the dealer's total turnover, rather than clubbing it with turnover from unrelated business activities.

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