2022 (12) TMI 307 - HC - VAT and Sales Tax

Court sets aside order, remits case for tax re-determination on liquor sale rates. Petitioner to provide records.

Tvl. National Hotel, Represented by its Partner, Thiru E. Viswarajan, Bangalore Road, Salem Versus The Commercial Tax Officer, Leigh Bazaar Circle, Salem, The Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore.

The court set aside the impugned order and remitted the case to the original authority for re-determination of the tax liability on the sale of alcoholic ... Validity of assessment order - inclusion of the turnover of liquor sold in the petitioner's hotel while computing taxable turnover for the purpose of Section 3-D of the Tamil Nadu General Sales Tax Act, 1959 - typographical mistake or not - Whether the expression “total turnover” for the purpose of Section 3-D of the TNGST Act, 1959 would include the turnover of alcoholic liquor sold in the hotel of the petitioner along with other food items? HELD THAT:- A reading of Section 3-D of the TNGST Act, 1959 as it stood during the period in dispute makes it clear that it is an exception to Section 3(1) of the TNGST Act, 1959. As per Sub-Section (1) to Section 3-D of the TNGST Act, 1959, every dealer whose whose total turnover is not less than Rs.25,00,000/- for the year on the sale of food and drinks in Hotels, Restaurants, Sweet Stalls and any other eating houses other than those falling under item 20 of Part-C of the I Schedule, was required to pay tax at the rate specified in Part-A of the IX Schedule. The petitioner is liable to pay tax only on “foods and drinks” in terms of Entry in Sl.No.20 of Part-C of the Fist Schedule to the TNGST Act, 1959 at 8%. Entry in Sl.No.20 of Part-C of the Fist Schedule to the TNGST Act, 1959 does not include goods specified elsewhere in the other Schedules as is evident from a reading of Entry in Sl.No.20 in Part- C of the Fist Schedule to the TNGST Act, 1959 as the expression used is “other than those falling elsewhere under the Schedule”. Therefore, if alcoholic liquor is liable to tax in any other Schedules, then the turnover of alcoholic liquor cannot be included in the turnover of “food and drinks” at 8% in terms of Entry in Sl.No.20 of Part-C of the First Schedule to the TNGST Act, 1959. The facts on record do not reveal that the petitioner has paid tax on alcoholic liquors sold in its return at 30% for the period between 17.07.1996 and 26.03.1998, at 40% for the period between 27.03.1998 and 11.11.1999 and at 50% for the period between 12.11.1999 and 31.11.2001 as specified in the Sixth Schedule to the TNGST Act, 1959 - Prima facie the petitioner appears to have evaded tax on sale of alcoholic liquor sold which were manufactured in the State at the rate specified in the Sixth Schedule. As both the Appellate Assistant Commissioner and second respondent Appellate Tribunal have failed to look into the same, we are of the view that the petitioner is liable to pay tax. We however accept the contention of the petitioner that the petitioner is not required to include the turnover relating to the sale of alcoholic liquor sold in its restaurant into the turnover of foods and drinks as sale of alcoholic liquor are separately liable to tax as specified in the Part I & J and Part J & K of the First Schedule and Sixth Schedule to the TNGST Act, 1959. At the same time, the petitioner is required to pay tax on the sale of alcoholic liquor sold in its restaurant in terms of the Sixth Schedule to the TNGST Act, 1959. The case remitted back to the original authority namely, Commercial Tax Officer / the first respondent, for re-determination of the tax liability of the petitioner on sale of alcoholic liquor at the rate specified in the Sixth Schedule to the TNGST Act for the alcoholic liquor purchased within the State of Tamil Nadu, within a period of six months from the date of receipt of a copy of this order - petition allowed by way of remand. Issues Involved:1. Inclusion of turnover of liquor sold in the hotel while computing taxable turnover under Section 3-D of the Tamil Nadu General Sales Tax Act, 1959.2. Correctness of the assessment years 1997-1998 and 1998-1999.3. Liability to penalty under Section 12(3)(b) of the TNGST Act, 1959.4. Typographical error in filing the writ petition for the assessment year 2000-2001.5. Definition and scope of 'total turnover' under the TNGST Act, 1959.6. Applicability of tax rates under different schedules of the TNGST Act, 1959 for alcoholic liquors.Issue-wise Detailed Analysis:1. Inclusion of Turnover of Liquor Sold in the Hotel:The Tribunal included the turnover of liquor sold in the petitioner's hotel while computing taxable turnover for the purpose of Section 3-D of the TNGST Act, 1959. The Tribunal stated that 'the liability to tax under section 3D of the TNGST Act on the sales turnover of relating to goods other than Food and Drinks,' and specifically mentioned that sales of IMFL (Indian Made Foreign Liquor) should be included in the turnover.2. Correctness of the Assessment Years 1997-1998 and 1998-1999:The Tribunal found the first appellate authority's order incorrect for the assessment years 1997-1998 and 1998-1999. The order of the first appellate authority, which had set aside the assessment, was reversed, and the Tribunal restored the orders of the Assessing Authority for these years. The Tribunal cited the decision in 6 TNCTJ 191, which upheld the validity of Section 3-D of the TNGST Act, emphasizing that the total turnover includes all sales irrespective of whether the goods have already suffered tax.3. Liability to Penalty under Section 12(3)(b) of the TNGST Act, 1959:The petitioner argued against the penalty under Section 12(3)(b) of the TNGST Act, citing the Division Bench decision in Appollo Saline Pharmaceuticals (P) Ltd. Vs. Commercial Tax Officer (FAC). However, the respondents maintained that the petitioner was liable for penalty due to the failure to include the turnover of alcoholic liquor in the taxable turnover.4. Typographical Error in Filing the Writ Petition for the Assessment Year 2000-2001:The court noted a typographical error in the filing of W.P.No.39537 of 2006 against the order passed in C.T.S.A.No.162 of 2004 for the assessment year 2000-2001. The petitioner should have filed against the order passed in C.T.S.A.No.171 of 2004 for the assessment year 1998-1999. The court decided to proceed with the issue as the decision would apply equally to both assessment years.5. Definition and Scope of 'Total Turnover' under the TNGST Act, 1959:The court examined the definition of 'total turnover' under Section 2(q) of the TNGST Act, which includes the aggregate turnover in all goods of a dealer at all places of business in the State, regardless of whether the turnover is liable to tax. The court concluded that even if the sale of alcoholic liquor was exempted as a second sale, it should be included in the total turnover for the purpose of Section 3-D.6. Applicability of Tax Rates under Different Schedules of the TNGST Act, 1959 for Alcoholic Liquors:The court analyzed the tax rates under different schedules for alcoholic liquors. It noted that alcoholic liquors were taxable under Part I & J of the First Schedule during 17.07.1996 to 26.03.1998 and later under Part J & K during 27.03.1998 to 11.11.1999. The court found that the sale of alcoholic liquors should not be included in the turnover of 'food and drinks' under Section 3-D, as they were separately taxed under different schedules. However, the petitioner was liable to pay tax on the sale of alcoholic liquors manufactured in the State at specified rates under the Sixth Schedule.Conclusion:The court set aside the impugned order and remitted the case to the original authority for re-determination of the tax liability on the sale of alcoholic liquor at the rates specified in the Sixth Schedule. The petitioner was instructed to produce records to substantiate its case regarding the sale of locally procured and manufactured alcoholic liquor. The writ petitions were disposed of by way of remand with no costs.