TaxTMI 
TaxTMI 
2013 (11) TMI 1817
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....lf, tennis, squash, billiards, badminton, etc., to its members. The Catering Department of Respondent No. 1 provides catering services to the members and occasionally to their guests. By order dated 21.11.1990, Appellant No. 2 called upon Respondent No. 1 to make an application for grant of licence Under Section 394 of the Act for the eating house. The latter submitted the application on 24.11.1990. Thereafter, Senior Sanitary Inspector of Appellant No. 1 sent communication dated 3.12.1990 to Respondent No. 2 requiring him to submit various documents including NOCs from Assistant Engineer (Buildings and Facilities) and Executive Engineer (Buildings Proposals). In compliance of that letter, Respondent No. 2 furnished some of the documents. However, nothing appears to have been done for the next two years. 3. In May 1993, Respondent No. 1 approached Appellant No. 2 for grant of No Objection Certificate for the eating house and permission to keep L.P. Gas Cylinders. Appellant No. 2 gave 'No Objection' for carrying out the trade of eating house and for L.P. Gas as fuel subject to the following conditions: (1) The internal roads, passages in the premises and complex ....
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....rigade Officer alongwith the requirements of this department within 14 (fourteen) days from the date of receipt of this letter. If you fail to carry out the same within specified time, necessary action Under Section 394 of Bombay Municipal Corporation Act will be initiated against you which please note. 1) The internal roads, passages, in the premises and complex of club shall be maintained free from obstructions. 2) Entrances, Exists, passages in both the Restaurants shall be maintained free from obstructions. 3) The existing four cabins housing gas cylinders of (i) 12 Nos. each of 50 kgs., (ii) 18 Nos. each of 19.2 kgs., (iii) 15 Nos. each of 50 kgs., (iv) 8 Nos. each of 19.2 kgs., shall be of brick masonry/R.C.C. and as per the plan signed in taken of approval. 4) The Gas installation shall be maintained as per "Industrial and Commercial use of L.P. Gas Rules" and got tested once in year by gas dealer or any competent authority of Inventory to that effect shall be maintained. 5) The gas cabins shall be kept under lock and key. 6) Smoking, cooking, heating, use of naked light shall be prohibited near the gas cabins. 7....
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....ot less than 2.440 mt (8 feet) on any side. The third room to be used as store room shall not be less than 1/3rd of the total area of the dining room and kitchen upto the maximum of 9.2903 sq. mt. (100 sq. ft.), the height of all these room shall be as required under the Building Bye-laws of the Bombay Municipal Corporation, i.e. 3.050 mt. (10 feet) (c) where only ready-made articles of food are served. There shall be at least two rooms, one of which shall be used for storing ready-made articles of food and the other as a service room. None of the rooms shall be less than 9.2903 sq. mt. (100 sq. ft.) each in floor area and no less than 2.440 mt. (8 ft.) on any side. The third room to be used as store room shall not be less than 1/3rd of the total area of the dining room and kitchen upto the 9.2903sq. mt. (100 sq. ft.). The height of all these rooms shall be as required under the Building Bye-laws of the Bombay Municipal Corporation i.e. 3.050 mt. (10 feet) (2) All the rooms shall be well-lighted and well-ventilated naturally or with the aid of artificial means and the cook room and the dining room especially shall have "thorough ventilation." (3) The wall....
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....ter and in such manner as will be directed by the Municipal Health Authorities. (9) All copper and brass cooking utensils shall be tinned as often as necessary or at least once in two months. (10) No person suffering from any contagious or infectious disease shall be employed on the premises in any capacity. (11) The room used for cooking shall be adequately separated from the room used for eating. All cooking operations including the preparation of bhajias or similar artificial shall be carried out in cooking room only by using kerosene oil stoves, gas or electrical as fuel and fuel of any other kind shall never be used therein. (12) No "Panshop" or other structure shall be put up or allowed to be put at the entrance in such manner so as to encroach on the space or to obstruct light and ventilation of the Eating House. (13) The entire premises of Eating House and all appliance used therein shall at all times be kept in a scrupulously clean and sanitary condition and any practice which may lead to the food being contaminated shall not be employed or permitted to be employed in the storage, handling, preparation or serving of food. ....
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....s name. (reproduced from the appeal paper book) 6. While the issue relating to compliance of the conditions enumerated in the two letters dated 4.11.1993 was pending, Appellant No. 2 sent demand notice dated 14.1.1994 to Respondent No. 2 for payment of Rs. 2,70,915 as licence fees. The Respondents paid the amount, but after expiry of the period specified in notice dated 14.1.1994. This prompted Appellant No. 2 to send notice dated 23.6.1994 to Respondent No. 1 for payment of additional amount of Rs. 1,04,756.25. Respondent No. 2 sent reply dated 27.6.1994 citing the opinion of a law firm that the club is not required to obtain eating house licence under the Act because food and beverages are not served for any profit or gain. The Appellant did not accept this assertion and demanded Rs. 1,21,715.65 towards compounding fee. 7. Respondent No. 1 and two of its office bearers challenged the demand notice before the Bombay High Court in Writ Petition No. 2199/1999 primarily on the ground that catering facilities being provided to its members were incidental to their main activities and the same are exclusively meant for the members and not for the public. 8. In the writ....
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....bers. The learned Single Judge, therefore, did not decide that question in that petition. In our opinion, therefore, the submission made on behalf of the Corporation that the question that arises for consideration in this petition is already decided by the judgment of the learned Single Judge in Writ petition No. 1413 of 1982 which was disposed of by order dated 20.1.1986, cannot be accepted. In our opinion, in view of the law laid down by the Division Bench in the case Sohrab Vakil (Lt. Col.) and Anr. v. B.G. Pimple and Anr. referred to above, this petition has to succeed. 10. We have heard Shri Atul Y. Chitale, learned senior counsel for the Appellants and Shri T.R. Andhyarujina, learned senior counsel for Respondent Nos. 1 to 3. The Act is divided into 25 Chapters. Chapters IX to XV except Chapter XII contain provisions which are regulatory in nature and are meant for the benefit of public at large. Chapter IX contains provisions for construction of drains and cleaning thereof, connection of the drains of private streets with municipal drains, disposal of sewage, construction of water-closets, privies, urinals, etc. and inspection thereof. Chapter X contains provisions for re....
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....all not be kept without a licence in or upon any premises Part IV Trades or processes or operations connected with trades which shall not be carried on or allowed to be carried on upon any premises without a licence. Keeping an eating house or catering establishment. The expression 'eating-house' has been defined in Section 3(ff) in the following words: 3(ff) - eating-house means any "premises to which the public are admitted and where any kind of food is prepared or supplied for consumption on the premises for the profit or gain of any person owning or having an interest in or managing such premises. 12. The provisions contained in various chapters of the Act referred to hereinabove are meant for maintaining public hygiene, health and safety and also for preventing dangers to life, health and property. Schedule 'M', which is part of Section 394, specifies the articles which cannot be kept in or upon any premises without a licence. Part IV of the schedule specifies trades or processes or operations connected with trades, which cannot be carried on or allowed to be carried on any premises without a licence. These include keep....
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....lies and insects. Sanitary bins or dustbins are also required to be provided and sweeping of floors has to be done. There is a prohibition against employment of any person suffering from contagious or infectious disease. The premises of eating house have to be regularly cleaned to avoid contamination and any practice which may lead to contamination shall not be employed or permitted to be employed in the storage, handling, preparation or serving of food. Broken, cracked or chipped articles of crockery and utensils cannot be used in the eating house either for preparation of foodstuffs or for serving them. The management is duty bound to take all measures to have the premises of eating house treated for insecticides. No article of food which is adulterated, unwholesome or unfit for human consumption can be kept or sold or exposed for sale in the eating house. These conditions are meant for ensuring that the premises where the food is prepared and supplied are kept clean, adequately ventilated and appropriate measures are taken by those in control of the premises and quality of food is maintained to ensure that there is no compromise with the health and safety of the people. 13. I....
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....ereto. In exercise of the powers vested in it under the 2006 Act, the Food Safety and Standards Authority of India made multiple Regulations including the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011 (for short, 'the Regulations'). Regulation 2.1 and 2.2 makes the obtaining of licence mandatory for commencement of any food business. Part II of Schedule IV of the Regulations prescribes general requirements of hygienic and sanitary practices to be followed by all food business operators applying for licence. Part V. of Schedule IV of the Regulations prescribes the specific hygienic and sanitary practices to be followed by food business operators engaged in catering/food service establishments. Relevant portions of these two parts are extracted below: SCHEDULE IV PART-II GENERAL REQUIREMENTS ON HYGIENIC AND SANITARY PRACTICES TO BE FOLLOWED BY ALL FOOD BUSINESS OPERATORS APPLYING FOR LICENSE. The establishment in which food is being handled, processed, manufactured, packed, stored, and distributed by the food business operator and the persons handling them should conform to the sanitary and hygienic r....
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....ll now consider whether the High Court was right in taking the view that the expression 'eating house' is not applicable to a club. The main reason which prompted the High Court to take that view is that predominant activity of the club is to provide sporting facilities to the members and the catering facilities are ancillary. The other reason given by the High Court is that the food articles are supplied to the members and not to outsiders except when they come to the club as guests of the members and that the catering services are not made available to the members with the object of making profit or gain. 18. In our view, both the aforesaid reasons are incorrect. A cursory reading of the definition of the expression 'eating house' may support the conclusion of the High Court because general public is not allowed entry in the premises of the club and, in the first blush, it appears that food is not supplied for consumption on the premises for profit or gain. However, if we apply purposive interpretation, then it becomes clear that the catering department of the club which prepares and serves/supplies food to members of the club is covered by the definition of th....
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....y be said to be "gain, benefit or advantage", but "gain, benefit or advantage" does not necessarily mean only "profit". Union League Club v. Jhonson, 115 P.2d 425, 426, 18 Cal. 2d 275. A "vendor engaged in the business of selling tangible personal property", so as to be liable for sales tax, is one who commences, conducts or commences, conducts, or continues in the activity of selling tangible personal property, with the object of gain, benefit, or advantage, either direct or indirect, irrespective of whether sales are made for "profit", since one may engage in a business activity with an object of "gain, benefit, or advantage" and not necessarily for "profit". Gen. Code, Section 5546-1 et seq., 116 Ohio Laws, Pt. 2, p. 323. "Profit" may be "gain, benefit, or advantage", but "gain, benefit, or advantage" does not necessarily mean only "profit". State ex rel. City Loan and Savings Co. of Wapakoneta v. Zcllner, 13 N.E.2d 235, 238, 133 Ohio St. 263. 20. In Re: Arthur Average Association for British Foreign and Colonia Ships, exp. Hargrove and Co. (1875) LR 10 Ch App 545 in at 546, 547, Jessel MR held that "Gain" is not restricted to pecuniary or commercial profits, it incl....
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....nt' occurring in the relevant entry in Part IV of Schedule. 24. In Narayan Gopal Karadkar v. Hanumant Ramrao Palkar (1969) Maharashtra Law Journal 728, a learned Single Judge of the Bombay High Court considered the question whether running of a canteen by Railwaymen's Cooperative Society at Lonawala without a licence constituted an offence. Initially, the Society had obtained a licence for conducting the canteen but the same was not renewed for a number of years. Therefore, the Borough Municipality sanctioned prosecution of the Manager of the Canteen Under Sections 172 read with Section 61(1)(b)(ii) of the Bombay Municipal Boroughs Act, 1925. Judicial Magistrate, First Class, Vadgaon (Mawal) acquitted the accused. The appeal filed by the Appellant was allowed by the learned Single Judge of the High Court. After noticing the relevant provisions, the learned Judge observed: It is in pursuance of these provisions that the Borough Municipality of Lonavala has framed its rules and by-laws for licensing and regulating the places for use of hotels, eating houses, tea or coffee shops and restaurants within the Municipal Borough and in Part I, which contains definitions,....
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.... a catering establishment does include any canteen, whether conducted for the purpose of earning profits or not. If we examine the rules and by-laws, it is clear that the object with which they have been framed is to promote and preserve sanitation and public health and to prevent the spread of disease within the municipal limits and if that was the object, it is difficult to see how canteens conducted on no loss and no profit basis could be excluded from the definition of a "catering establishment". It is as much necessary to preserve cleanliness, and public health in commercial establishments as in the establishments conducted by co-operative societies like the one in this case. In this connection, the following passage appearing at pages 58 and 59 of Maxwell on the Interpretation of Statutes, 1962 edn., may be quoted with advantage: It is in the interpretation of general words and phrases that the principle of strictly adapting the meaning to the particular subject-matter with reference to which the words are used finds its most frequent application. However wide in the abstract, they are more or less elastic and admit of restriction or expansion to suit the subject-matter. W....