Composition scheme eligibility turns on whether restaurant purchases are business-use items, not stock-in-trade.

A restaurant business purchasing sealing machines, PP cups and similar items from outside the State for use in operations could not be denied the composition scheme merely because those inter-State purchases attracted the relevant rule prohibition. Items bought as equipment and consumables for running the restaurant, and not for regular sale, were not goods held in stock. Applying that principle, the court treated the purchases as business-use items rather than stock-in-trade, so the assessee remained entitled to the composition scheme and the revision petition failed.

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Issues: Whether an assessee running a restaurant and purchasing sealing machines, PP cups and similar items from outside the State for use in its business could be denied the benefit of composition scheme on the ground that such inter-State purchases attracted the prohibition contained in the applicable rules.

Analysis: The respondent was engaged in the business of sale of food and beverages and had purchased the items in question as equipment and consumables for running its business, not as goods dealt with in the regular course of sale. The earlier decision relied upon had held that articles used in the restaurant for its functioning, and not sold by the assessee, could not be treated as goods held in stock. On the same reasoning, the inter-State purchases made for use in the business could not be characterised as goods held in stock so as to disentitle the assessee from the composition scheme.

Conclusion: The question was answered in favour of the assessee, and the revision petition failed.

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