TaxTMI 
TaxTMI 
1977 (12) TMI 131
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....nover of Rs. 4,33,92,691.69 in respect of the head office and Rs. 17,85,165.32 in respect of the branch office, totalling Rs. 4,51,77,857.01 and ascertained the proposed taxable turnover as Rs. 35,65,984.08 for both the head office and the branch office. After considering the assessee's objections, the assessing officer allowed exemption on a turnover of Rs. 4,33,92,691.69 in respect of the head office and Rs. 18,17,940.46 in respect of the branch office, totalling Rs. 4,52,10,632.15 and determined the taxable turnover in respect of both the head office and the branch office as Rs. 35,33,208.94. Subsequently, the assessing officer noticed that sales turnover to the extent of Rs. 1,51,727.00 inclusive of canteen sales turnover of Rs. 1,09,619.00 had escaped assessment and he proposed to levy tax thereon at 3 per cent and issued the necessary notice calling upon the assessee to file its objections. The assessing officer considered the assessee's objections and confirmed his proposal to levy tax at 3 per cent on the canteen sales of Rs. 1,09,619.00 under section 16 of the Tamil Nadu General Sales Tax Act on the ground that the assessee had not proved that it had subsidised 25 per cent....
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....nder G.O. Ms. No. 2238 (Revenue) dated 1st September, 1964, there was no investigation by the assessing officer in the case which came up before Ramaprasada Rao, J., whether the requirements of that order were satisfied or not. That G.O., issued in exercising powers under section 17, "exempts with effect on and from 1st September, 1964, the tax payable under the said Act on the sales by all canteens run by an employer or by the employees on co-operative basis on behalf of the employer under a statutory obligation, without profit-motive, provided that the employer subsidises at least 25 per cent of the total expenses incurred in running the canteen." Ramaprasada Rao, J., has observed in his judgment that the G.O. "has several limbs on the proof of which only the dealer concerned could secure an exemption under it. Firstly, the canteen should be run by an employer himself. In that case, there is no difficulty at all. Secondly, such a canteen may be run by its employees on a co-operative basis on behalf of the employer, who is under a statutory obligation to maintain such a canteen, provided however such a canteen is run without profit-motive and provided also that the employer subsi....
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....e, the sales in the canteen were exigible to tax. It was further contended in the memorandum of grounds of appeal that the canteen itself was run by the assessee and, therefore, the entire expenses were subsidised and the computation of 25 per cent subsidy made by the assessing officer is not correct. The Appellate Assistant Commissioner had not dealt with this question of subsidy. Perhaps it was not pressed before him. But following the Supreme Court's decision in the Burmah Shell Company's case[1973] 31 S.T.C. 426 (S.C.)., the Appellate Assistant Commissioner upheld the order of the assessing officer refusing exemption. Before the Tribunal it was contended by the assessee that the lower authorities were not justified in adopting the provisions of the Government Order dated 1st September, 1964, regarding subsidy to the canteen run by the management and that computation of the 25 per cent was also not proper. It does not appear to have been contended for the assessee before the Appellate Assistant Commissioner and the Tribunal that the assessing officer was wrong in holding that there was no proof that the assessee subsidised at least 25 per cent of the expenses incurred for runnin....
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.... be an activity, though commercial ex facie is exemptable under G.O. No. 2238, Revenue, dated 1st September, 1964. It is common ground that this canteen is set up under the provisions of the Factories Act of 1948. The complaint is that, though the canteen claimed expressly an exemption from the payment of sales tax on the return of such sales by the petitioner-canteen in the light of the G.O. above, the respondent in each of the years has proceeded to assess the petitioner in the usual course and such an assessment is therefore illegal and opposed to law and the provisions of the statute. The further contention of the petitioner is that the activity in question not being essentially commercial as the sales were effected in order to subserve the interests of the workers of the parent company and that the sales, even if they do not come within the purview of the G.O. as above, are not liable to be caught in the net of taxation since they are not sales either understood popularly or statutorily under the Madras General Sales Tax Act. The petitioner, without availing himself of the alternative remedy of an appeal against the final orders of assessment has come to this court, as, accord....
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..... Secondly, such a canteen may be run by its employees on a co-operative basis on behalf of the employer, who is under a statutory obligation to maintain such a canteen, provided however such a canteen is run without profit-motive and provided also that the employer subsidises at least twenty-five per cent of the total expenses incurred in the normal running of the canteen. The canteen referred to here is undoubtedly one whose purpose is to provide an amenity to the employees in a factory and to subserve their interests. This is indeed a welfare measure. The Factories Act of 1948 compels a management to open such a canteen so that it could serve the needs of the employees. As already stated, such a canteen can either be run by the employer or by the employees. In the instant case, it is not run by the employer. The employees are running the same, but, according to them, without profitmotive. Even then they would not be entitled to the exemption unless they satisfy the last but the important limb of the provision granting such exemption, namely, that the employer should subsidise 25 per cent of their total expenses as provided therein. Though the petitioner expressly sought exempti....