Hotel's Soda & Water Taxed at 20% Not 6%: Kerala Sales Tax Act Interpretation

The court held that soda and mineral water sold by a star hotel are to be taxed at twenty percent under entry 87 of the Kerala General Sales Tax Act, 1963, rather than six percent under entry 40. The court emphasized that aerated water and mineral water fall under entry 87, distinct from beverages covered under entry 40. The court confirmed that similar establishments selling soda and cola are subject to a twenty percent tax rate. Additionally, the court dismissed the assessment of purchase turnover of ice from unregistered dealers under section 5A, following a precedent set in a prior case.

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Issues:
1. Whether soda and mineral water sold by a star hotel are to be taxed at six percent under entry 40 or twenty percent under entry 87 of the First Schedule to the Kerala General Sales Tax Act, 1963.
2. Assessment of purchase turnover of ice from unregistered dealers under section 5A.

Analysis:
1. The first issue pertains to the correct tax rate applicable to soda and mineral water sold by a star hotel. The petitioner argued that aerated water and soda should be taxed at six percent under entry 40 as they are beverages. However, the court held that aerated water and mineral water fall under entry 87, attracting a tax rate of twenty percent. The court emphasized that entry 40 covers beverages like coffee, tea, and fruit juice, while items like bottled soft drinks and mineral water are specifically mentioned in entry 87. Referring to a previous case, the court confirmed that soda and cola sold in similar establishments attract a twenty percent tax rate. Consequently, the court upheld the Tribunal's decision on taxing soda and mineral water at twenty percent and dismissed the case on this issue.

2. The second issue involves the assessment of the purchase turnover of ice from unregistered dealers under section 5A. The court relied on a previous decision in State of Kerala v. Cochin Shipyard Limited, which addressed a similar matter. Following the precedent set in that case, the court dismissed the present case concerning the assessment of purchase turnover of ice from unregistered dealers under section 5A.

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