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of <h1>Court allows appeal, restores orders for assessment years, clarifies exemption notification term</h1> <h3>Shakthi Hill Resorts Pvt. Ltd. Versus Additional Commissioner of Commercial Taxes, Zone-I, Bangalore</h3> Shakthi Hill Resorts Pvt. Ltd. Versus Additional Commissioner of Commercial Taxes, Zone-I, Bangalore - [2007] 5 VST 412 (Kar) Issues Involved:1. Justification of revisional authority's initiation under section 22-A.2. Interpretation of the term 'drink' in the context of the tourism policy.3. Reliance on entries of the Second Schedule to define 'drink'.4. Sustainability of the revisional authority's order.Issue-wise Detailed Analysis:1. Justification of Revisional Authority's Initiation Under Section 22-A:The appellant challenged the revisional authority's initiation of proceedings under section 22-A, arguing that the requirements of that section were not satisfied. The court noted that the revisional authority invoked suo motu revisional powers under section 22-A(1) of the Karnataka Sales Tax Act, 1957, to cancel the first appellate authority's order and restore the assessing authority's decision for the assessment years 1998-99 and 1999-2000.2. Interpretation of the Term 'Drink' in the Context of the Tourism Policy:The core issue was whether the term 'drink' in the tourism policy and the implementing notification included alcoholic beverages. The appellant argued that the term 'drink' encompassed both alcoholic and non-alcoholic beverages, relying on the tourism policy and the certificate issued by the Director of Tourism. The court examined the tourism policy, which aimed to promote tourism and provided 100% exemption from sales tax for new tourism units on 'food and drinks'. The court emphasized that the policy did not restrict the exemption to non-alcoholic beverages. It was noted that the term 'drink' in common parlance includes both alcoholic and non-alcoholic beverages.3. Reliance on Entries of the Second Schedule to Define 'Drink':The revisional authority had relied on entries in the Second Schedule of the Act, which separately categorized liquor and food with non-alcoholic drinks, to conclude that 'drinks' in the notification referred only to non-alcoholic beverages. The court rejected this reasoning, stating that the entries in the Second Schedule were meant for tax categorization and did not define the terms for the purpose of exemptions. The court cited precedents to assert that exemption notifications should be interpreted based on their plain language and not by importing definitions from other contexts.4. Sustainability of the Revisional Authority's Order:The court found that the revisional authority's interpretation was flawed and not supported by the language of the exemption notification or the tourism policy. The notification dated December 30, 1993, exempted sales tax on 'food and drinks' without distinguishing between alcoholic and non-alcoholic beverages. The court concluded that the term 'drinks' in the notification included alcoholic beverages, thus the appellant was entitled to the exemption claimed.Conclusion:The court allowed the appeal, set aside the revisional authority's order, and restored the first appellate authority's orders for the assessment years 1998-99 and 1999-2000. The judgment reinforced that the term 'drinks' in the exemption notification included both alcoholic and non-alcoholic beverages, granting the appellant the claimed tax exemption.
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