Court rules cooked food sale to air companies not exempt under Notification; specific establishments only eligible.

The High Court of Kerala ruled that the sale of cooked food to air companies for service in aircrafts does not qualify for exemption under Notification S.R.O. No. 1003 of 1991. The court clarified that the exemption applies only to cooked food sold or served in specified establishments, excluding sales to air companies. The court emphasized that the notification is not a charging provision but an exemption notification subject to defined conditions. Consequently, the court overturned the Tribunal's decision and reinstated the assessments, denying the respondent's entitlement to exemption for selling cooked food to air companies.

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Issues:
Interpretation of Notification S.R.O. No. 1003 of 1991 for exemption on cooked food sold or served in specific establishments.

Analysis:
The High Court of Kerala examined the issue raised in the Sales Tax Revision cases regarding the entitlement of cooked food supplied or sold to air companies for service in aircrafts to exemption under Notification S.R.O. No. 1003 of 1991. The State contended that cooked food is only exempt when sold or served in specific establishments, excluding bar attached or star hotels and restaurants. The court analyzed the notification, which grants exemption to cooked food subject to certain conditions. The exemption applies to cooked food and beverages not falling under specific categories, sold or served in hotels and restaurants other than bar attached or star hotels. The court clarified that the exemption is available only when the commodity is sold or served in the specified establishments, as per the conditions outlined in the notification.

The court emphasized that the notification does not grant exemption to cooked food sold anywhere other than the designated establishments. Therefore, the sale of cooked food to air companies for service in aircrafts does not qualify for exemption under the notification. The court rejected the respondent's argument that the notification should be interpreted as a charging provision, highlighting that it is an exemption notification issued under section 10 of the Act for specific commodities subject to defined conditions. The court concluded that the respondent, engaged in selling cooked food to air companies, is not entitled to exemption as per the notification's provisions.

Additionally, the court addressed the respondent's reliance on the Financial Act of 2004, which introduced a specific tax rate for the sale of cooked food and beverages to air line services. The court clarified that prior to the introduction of the specific tax rate, if a commodity is not exempt and not covered by any specific entry in the Schedule, the tax rate provided under the residuary entry applies. Consequently, the court allowed the Sales Tax Revision cases by overturning the Tribunal's decision and reinstating the assessments, as the sale of cooked food to air companies did not qualify for exemption under the notification.

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