Composition scheme eligibility for banquet food receipts survives where service forms part of the same hotel and restaurant business.

Banquet receipts from food supplied by a hotelier-cum-restaurateur within the same premises were treated as part of the existing hotel and restaurant business, not as a separate catering activity. Because the food came from the same kitchen and no separate hall charge was levied, the turnover remained eligible for the composition scheme under the Karnataka Sales Tax Act, 1957. The authorities' bifurcation of the receipts and attempt to apply higher tax to the banquet turnover were held unsustainable.

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Issues: Whether banquet receipts of a hotelier cum restaurateur supplying food within the same premises could be taxed outside the composition scheme under section 17(4) of the Karnataka Sales Tax Act, 1957, and separately subjected to higher tax by bifurcating the receipts.

Analysis: The petitioner's business was found to be hotel and restaurant business, with the banquet hall forming part of the same premises and food being supplied from the same kitchen without separate charge for the hall. The Act did not define "hotelier", "restaurateur" or "caterer", and the words were understood in their ordinary sense. On that basis, the business of supplying food in the banquet hall was treated as part of the existing hotel and restaurant activity and not as a distinct catering business outside the composition scheme. The authorities were therefore held unjustified in splitting the receipts and denying the benefit of composition on the banquet turnover.

Conclusion: The banquet receipts were held to fall within section 17(4) of the Karnataka Sales Tax Act, 1957, and the bifurcation of turnover and the higher taxation adopted by the authorities were unsustainable.

Ratio Decidendi: Where a hotelier or restaurateur supplies food within the same business premises as part of the hotel or restaurant activity, such receipts do not cease to be eligible for the composition scheme merely because the food is served in a banquet hall.

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