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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the approval or recognition granted by the Department of Tourism to the lessor hotel could be treated as automatically available to the lessee so as to attract item 150 of the First Schedule and sustain the tax assessments.
Analysis: Item 150 applied only to articles of food and drink sold to customers in hotels classified or approved by the Department of Tourism, Government of India. The assessee-hotel had not itself applied for, or obtained, such approval. The lessor hotel and the assessee were separate legal entities, and the lease of the premises, fixtures and fittings did not transfer the tourism approval. The approval criteria were personal to the institution that obtained recognition and depended upon its own standards and compliance. Since the original hotel had discontinued business, the approval could not be treated as surviving in favour of the lessee merely because the business was carried on in the same premises.
Conclusion: The tourism approval did not automatically extend to the assessee, item 150 was not attracted, and the assessments were unsustainable.
Final Conclusion: The revision order was set aside and the appellate order granting relief to the assessee was restored, resulting in allowance of the appeals.
Ratio Decidendi: Approval or classification granted to a hotel under the sales tax entry is personal to the entity to whom it is granted and does not transfer automatically to a different legal entity on lease of the hotel premises.
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