Restaurant supply exemption under constitutional amendment continued until the State law came into force for food and drink taxation.

Section 6(2)(a) of the Constitution of India (Forty-sixth Amendment) Act, 1982 exempted restaurant supplies of food-stuffs made between 7 September 1978 and the commencement of the amending Act where no tax had been collected because such levy was then unavailable. The assessee, an unregistered dealer that did not collect tax on the relevant supplies, was held entitled to that protection. The validation of tax on food and drink supplies was followed by the State amendment coming into force on 7 April 1984, and the exemption under the Forty-sixth Amendment was treated as continuing until that State legislation took effect.

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Issues: Whether the assessee was entitled to the benefit of exemption under section 6(2) of the Constitution of India (Forty-sixth Amendment) Act, 1982 in respect of supplies of food-stuffs made in a restaurant where no tax had been collected.

Analysis: Section 6(2)(a) of the Constitution of India (Forty-sixth Amendment) Act, 1982 granted exemption for supplies made by a restaurant or eating house between 7 September 1978 and the commencement of the amending Act, if tax had not been collected on the ground that no such tax could then have been levied or collected. The assessee was found to be an unregistered dealer and to have not collected any tax on the supplies made during the relevant years. The constitutional amendment validating tax on supply of food and drinks was followed by the State amendment, which came into force on 7 April 1984, and the benefit under the Forty-sixth Amendment was held to continue up to the date of the State legislation.

Conclusion: The exemption applied and the question was answered against the Revenue and in favour of the assessee.

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