IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 2ND JULY 2009 / 11TH ASHADHA 1931 ST.Rev..No. 371 of 2003() ------------------------- TA.32/2003 of COMMR.KERALA AGR.IT & STAT,TVM. .................... REVISION PETITIONER/ASSESSEE/APPELLANT: ----------------------------------------------------------- M/S. KERALA TOURISM DEVELOPMENT CORPORATION LTD., THIRUVANANTHAPURAM REPRESENTED BY ITS MANAGING DIRECTOR DR.K. ELANKOVAN. BY ADV. SMT.S.K.DEVI SRI.M.RAJ MOHAN SRI.SANTHOSH P.ABRAHAM SRI.FRANKUR D.JAYAN SMT.DEEPSUR D.JAYAN SRI.K.P.PRADEEP (PAYYANNUR) SRI.SHANMUGHAM D. JAYAN SMT.P.K.MAYA DEVI RESPONDENT(S): --------------- STATE OF KERALA, REPRESENTED BY ITS FINANCE SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. BY SPL. G.P. SRI.VINOD CHANDRAN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 02/07/2009, ALONG WITH STRV NO.372 OF 2003 & STRV NO.5 OF 2004, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR, V.K.MOHANAN & C.K.ABDUL REHIM, JJ. .................................................................... S.T. Rev. Nos.371 & 372 of 2003 & 5 of 2004 .................................................................... Dated this the 2nd day of July, 2009. ORDER Ramachandran Nair, J. The Kerala Tourism Development Corporation Ltd., a Government of Kerala undertaking, is the petitioner in the three connected revision cases which pertain to the sales tax assessments of the company for the years 1988-89, 1989-90 and 1990-91. Besides running several hotels, the petitioner has way side restaurants supplying food and beverages. The company has a single registration under the KGST Act with Branch registrations at all the sales outlets including the restaurants on road side. In the original sales tax assessments for the above years, the petitioner claimed exemption from payment of sales tax on cooked food and beverages in respect of certain restaurants, the turnover of which was less than Rs.20 lakhs. Even though the claim was allowed in the original assessments, the Deputy Commissioner in exercise of suo moto powers under Section 2 35 of the KGST Act set aside the orders on exemption and directed assessment of the entire turnover of cooked food as provided under Entry 57(i) of the First Schedule to the KGST Act. Even though petitioner filed appeals before the Tribunal, Tribunal confirmed the levy mainly following Division Bench judgment of this court in NABEESA MUNDOLI, SANA RICE BOWL V. STATE OF KERALA ((2001) 9 KTR 393). During hearing of the revision cases, the Division Bench doubted the correctness of the decision of this court relied on by the Tribunal and therefore, referred the matter for our decision. 2. We have heard counsel appearing for the petitioner and Special Government Pleader appearing for the respondent. Since the question raised relates to the interpretation of Entry 57 of the First Schedule to the KGST Act, we extract hereunder the said entry relevant for the three assessment years. "Cooked food including beverages At the point of first 10% not falling under Entry 76A of this sale in the State by a Schedule sold or served in, dealer who is liable to tax under Sec.5. (i) hotels and/or restaurants, the turnover in respect of which is twenty lakhs rupees and above; and 3 (ii) bar attached hotels and/or restaurants." 3. The issue raised in this case is not exactly the one raised and decided by the Division Bench of this court in the decision abovereferred. There the question involved was whether for the purpose of deciding liability under Entry 57(i), the total turnover of the hotel should be taken into account or whether the turnover of cooked food and beverages only could be reckoned. This court held that in order to attract liability under Entry 57(i), the turnover of cooked food and beverage should be Rs.20 lakhs or more during the year. In other words, the view of the court was that turnover of other goods sold in the hotel should not be taken into account while determining the threshold limit of Rs.20 lakhs for the purpose of fixing liability. At the outset, Special Government Pleader pointed out that the Division Bench of this court decided the case based on decision of the Madras High Court in STATE OF TAMIL NADU V. ARASAN ICE CREAMS AND SWEETS RESTAURANT ((1996) 100 STC 333) which sttands reversed by decision of the Supreme Court in STATE OF TAMIL 4 NADU V. ARASAN ICE CREAM SWEETS ((2001) 121 STC 238). Therefore, after reversal of the judgment of the Madras High Court by the Supreme Court, the Tribunal's order in favour of the State is sustainable for the reason that the turnover referred to in Entry 57(i) is the total turnover of the hotel which includes all the Branches as a whole is the case of the State. The contention of the petitioner is that the word "which" occurring in Entry 57(i) refers to hotel or restaurant and so much so, turnover of individual restaurants or hotels, whether they are Branches of a company or not, should be separately taken into account and liability of each such unit should be decided in terms of the Entry contained in the Schedule. We have no doubt in our mind that the term "which" occurring in the Entry 57(i) does not refer to cooked food and it refers to hotels or restaurants. 4. The next question to be considered is whether every hotel or restaurant run by a company should be treated as an independent unit for the purpose of determining liability for payment of tax on cooked food and beverages. The Act visualises a dealer to have a single registration and Branch registration for each hotel or restaurant run by the dealer, whether it be run as company or in proprietorship or under a 5 partnership. The provisions of the Act and Rules provide for granting of Branch registration for each and every place of business of the dealer. Turnover as defined under Section 2(xxvii) is as follows: ""turnover" means the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, either directly or through another, on his own account or on account of others, whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover." From the above definition clause it is clear beyond any doubt that the turnover is always the combined turnover of the dealer in all places of business in the State. Read in this context, hotel or restaurant referred to in Entry 57(i) can only be the dealer running the hotel or restaurant and so much so, dealer's turnover means turnover of all the Branches maintained by the dealer in the State. So much so, turnover of all hotels and restaurants, though independently run by the petitioner, should be reckoned to consider whether the turnover of the hotel or restaurant reaches or exceeds Rs.20 lakhs. The combined turnover of cooked food and beverages sold in the various restaurants 6 of the petitioner exceed far above Rs.20 lakhs and so much so, petitioner is liable to pay tax on the entire turnover of cooked food and beverages at the rate provided under Entry 57(i) of the First Schedule to the KGST Act. The Deputy Commissioner as well as the Tribunal were right in holding so. 5. Since the correctness of the Division Bench judgment referred to in the Tribunal's order was doubted by the Bench referring the matter to the Full Bench, we have to consider the same. According to the above decision of this court, turnover of other goods sold in a hotel should not be reckoned for the purpose of determining liability for tax on cooked food and beverages under Entry 57(i). In other words, if a hotel has turnover of cooked food and beverages below Rs.20 lakhs and it has turnover of other goods like cosmetics or perfumes or the like, it will not be liable to pay sales tax on cooked food and beverages even if the total turnover of all the goods reaches or exceeds Rs.20 lakhs in terms of Entry 57(1) of the Act. We have already held that the term "which" referred to in Entry 57(1) refers to hotel and restaurant which again means the dealer owning or running the restaurant, and therefore the turnover referred to therein is the total turnover of the 7 dealer in all the goods. In other words, if the sale of all the goods in the hotel or restaurant reaches or exceeds Rs.20 lakhs, then the dealer running the hotel or restaurant will be liable to pay sales tax on the turnover of cooked food and beverages at the rate provided under Entry 57(i) of the Act. Therefore, the decision rendered by this court abovereferred cannot be said to have laid down the correct position of law. We accordingly overrule the same. The S.T. Revision cases are consequently dismissed. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge C.K.ABDUL REHIM Judge pms