Double taxation barred for goods already taxed under section 5, but milk converted to curd remained taxable.

Cool drinks and ice-creams already taxed under section 5 of the Andhra Pradesh General Sales Tax Act, 1957, could not be subjected to a further levy under section 5C merely because they were sold in hotels or restaurants; the double levy was therefore disallowed. Milk purchased from unregistered dealers and converted into curd remained taxable, because the goods had not suffered tax at the point of purchase and the conversion did not remove the liability. The result was that the assessee succeeded only on the section 5C levy for cool drinks and ice-creams, while the challenge to tax on milk converted into curd failed.

---

---

Issues: (i) whether cool drinks and ice-creams sold in hotels and restaurants, which had already suffered tax under section 5, could again be taxed under section 5C of the Andhra Pradesh General Sales Tax Act, 1957; (ii) whether milk purchased from unregistered dealers and converted into curd for sale remained taxable.

Issue (i): whether cool drinks and ice-creams sold in hotels and restaurants, which had already suffered tax under section 5, could again be taxed under section 5C of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The statutory scheme treated cool drinks and ice-creams as taxable goods under section 5. Section 5C was invoked to levy a further tax on supply of articles of food or drink in restaurants, hotels, and catering houses. The Court distinguished earlier authority relating to liquor because, on the facts there, it was not shown that the goods had already suffered tax under section 5. In the present cases, it was an admitted position that the goods had already borne tax under section 5 before their sale in hotels or restaurants. On that basis, section 5C could not be applied to impose a second levy on the same goods.

Conclusion: The question was answered in favour of the assessee. Cool drinks and ice-creams were not taxable again under section 5C after having already suffered tax under section 5.

Issue (ii): whether milk purchased from unregistered dealers and converted into curd for sale remained taxable.

Analysis: The issue was covered by earlier binding authority holding that where milk was purchased from a non-registered dealer and no tax had been paid at the point of purchase, the subsequent sale of milk or curd did not take the transaction outside the tax net. The conversion of milk into curd did not alter the liability when the initial purchase was from an unregistered dealer and the goods had not suffered tax.

Conclusion: The question was answered against the assessee. Milk purchased from unregistered dealers and sold after conversion into curd remained taxable.

Final Conclusion: The appeals succeeded only to the extent of the levy on cool drinks and ice-creams, while the challenge relating to milk converted into curd failed, leaving the decision partly in favour of the assessee.

Ratio Decidendi: Goods that have already suffered tax under section 5 cannot be subjected to a further levy under section 5C on their sale in hotels or restaurants, but where the goods have not suffered tax at the point of purchase from an unregistered dealer, subsequent sale after conversion does not avoid tax liability.

---