Exemption for cooked food in a non-bar-attached restaurant extends to sales beside a foreign liquor shop.

Cooked food sold in a restaurant attached to a foreign liquor shop was held exempt from sales tax under the Third Schedule and the relevant notification. The exemption for cooked food served in hotels or restaurants applied where the restaurant was not a bar-attached restaurant, and the assessee was separately running a foreign liquor shop without supplying liquor in the restaurant. The turnover of cooked food was also found to be below the prescribed limit. On that basis, the cooked food sales were not liable to tax and the revision was correctly dismissed.

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Issues: Whether the turnover from sale of cooked food in the restaurant attached to the assessee's foreign liquor shop was exempt from sales tax under entry 12 of the Third Schedule to the Kerala General Sales Tax Act, 1963 and S.R.O. No. 1003/91.

Analysis: Entry 12 of the Third Schedule granted exemption for cooked food served in a hotel or restaurant only up to the prescribed turnover limit. S.R.O. No. 1003/91, issued under section 10 of the Act, extended a broader exemption to sale or service of cooked food and beverages in hotels and restaurants other than bar attached or star hotels and restaurants. The assessee was not the holder of an FL3 licence and was carrying on a foreign liquor shop separately from a small restaurant; the restaurant was not shown to be a bar attached restaurant, and no liquor was supplied there. The Tribunal also found that the turnover of cooked food was below rupees five lakhs.

Conclusion: The cooked food turnover was exempt and could not be brought to tax. The revision was correctly dismissed.

Final Conclusion: The exemption under the statutory schedule and the notification applied to the restaurant turnover, so the assessment could not include the cooked food sales.

Ratio Decidendi: A restaurant attached to a foreign liquor shop is not, by that fact alone, a bar attached restaurant, and where the applicable notification grants exemption to non-bar attached hotels and restaurants, the turnover of cooked food sold there is not liable to sales tax.

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