Separate taxation of alcoholic liquor excludes its turnover from food and drinks turnover under sales tax law.

Section 3-D of the Tamil Nadu General Sales Tax Act was treated as operating alongside the statutory definition of total turnover, but alcoholic liquor sold in a hotel could not be merged into the turnover of food and drinks because goods separately taxed under other schedule entries remain outside that category. The court also noted that liquor sales were independently taxable under the relevant schedule entries, and the record did not establish tax payment at the applicable rates. The impugned assessment was set aside and the matter remitted for fresh determination of the liquor tax liability on the available records.

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Issues: (i) Whether, for the purpose of Section 3-D of the Tamil Nadu General Sales Tax Act, 1959, the turnover of alcoholic liquor sold in a hotel is includible in the total turnover of food and drinks. (ii) Whether the petitioner remained liable to tax on the sale of alcoholic liquor under the Sixth Schedule and, if so, the assessment required re-determination.

Issue (i): Whether, for the purpose of Section 3-D of the Tamil Nadu General Sales Tax Act, 1959, the turnover of alcoholic liquor sold in a hotel is includible in the total turnover of food and drinks.

Analysis: Section 3-D was treated as an exception to the general charging provision and the expression "total turnover" was read with the statutory definition in Section 2(q), which covers the aggregate turnover in all goods, whether or not any part of it is liable to tax. At the same time, the Court noted that the entry taxing "food and drinks" did not extend to goods separately taxable under other schedules. On that footing, alcoholic liquor sales could not be merged into the turnover of food and drinks under Section 3-D.

Conclusion: The liquor turnover was not includible in the taxable turnover of food and drinks under Section 3-D.

Issue (ii): Whether the petitioner remained liable to tax on the sale of alcoholic liquor under the Sixth Schedule and, if so, the assessment required re-determination.

Analysis: The Court held that alcoholic liquor sold in the hotel was independently taxable under the relevant First Schedule and Sixth Schedule entries for the periods in question. It further found that the record did not establish payment of tax on liquor sold from the bar at the applicable rates. Accordingly, the authorities had not examined the matter from the correct angle and the tax liability on locally procured liquor required fresh consideration on the available records.

Conclusion: The petitioner remained liable to tax on such liquor sales, and the assessment had to be re-determined.

Final Conclusion: The impugned order was set aside and the matter was sent back to the assessing authority for fresh determination of the tax liability on alcoholic liquor sales, while rejecting inclusion of such liquor turnover in the food and drinks turnover under Section 3-D.

Ratio Decidendi: Where a statute separately taxes a commodity under specific schedule entries, its turnover cannot be merged into the turnover of a different taxable category merely because the general charging provision speaks of total turnover; nevertheless, the separate tax liability on that commodity must still be assessed according to the applicable schedule.

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