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1992 DIGILAW 398 (MAD)

SIMPSON & CO. LTD. v. STATE OF TAMIL NADU.

1992-08-18

ABDUL HADI, RAJU

body1992
JUDGMENT RAJU, J. - The assessee is the appellant in the above tax appeal. The appellant - company are the dealers in diesel engine, tractor, marine, industrial engines, trailers, light engineering goods, etc., and for the assessment year 1971-72, they were assessed by an order dated March 30, 1976 under the Tamil Nadu General Sales Tax Act, 1959, on a total and taxable turnover of Rs. 2,54,00,878.41 and Rs. 2,35,96,231.09 respectively. The appellant filed an appeal before the Appellate Assistant Commissioner disputing a turnover of Rs. 7,18,032.25 representing the sales of edibles and refreshments in the canteen run by the appellant. The assessing officer overruled the objection of the appellant that they are entitled to the benefit of exemption granted in G.O. Press No. 2238, Revenue dated September 1, 1964. The first appellate authority sustained the claim of the appellant on the ground that the appellant is entitled to the benefits of G.O. dated September 1, 1964 referred to supra. While matters stood thus, the then Commissioner of Taxes invoked the powers under section 34 of the Act to set aside the relief granted by the first appellate authority on the ground that the appellant was not entitled to the exemption granted in the G.O. referred to above. In the view of the revisional authority the appellant will not be entitled to the benefit of the G.O. since out of the amalgamated several groups of companies whose employers who jointly ran the canteen for the benefit of their employees, two of the employers were not under statutory obligation to run the canteen and therefore, in the light of the decision of this Court reported in Deputy Commissioner v. Manager-in-charge of the Canteen, A.B.T. Premises [1977] 39 STC 265 the exemption granted in favour of the appellant deserves to be set aside. After issuing a provisional notice proposing to invoke the revisional powers and considering the explanation of the appellant, the Joint Commissioner of Commercial Taxes, who by then became the competent authority to invoke the powers under section 34 of the Act passed an order dated June 8, 1981 confirming the proposals relying upon the decision of this Court reported in [1977] 39 STC 265 (Deputy Commissioner v. Manager-in-charge of the Canteen, A.B.T. Premises). Though the appellant sought to rely upon the decision of the apex Court reported in Northern India Caterers (India) Ltd. v. Lt. Though the appellant sought to rely upon the decision of the apex Court reported in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212, the revisional authority summarily rejected the claim on the ground that the substance of the transaction is a sale of food and rendering of services is merely incidental and there is no question of service in the canteen referred to above and that it has not also been proved as a fact. Aggrieved by the above, this appeal has been filed. Heard the learned counsel appearing on either side. In our view, the exception could be legally taken to the conclusion of the Joint Commissioner that the appellant cannot take advantage of the orders of the Government in G.O. Press, No. 2238, Revenue dated September 1, 1964. It has been found as a fact that it has not been challenged even before us that during the assessment year in question the appellant not only catered to the needs of their own employees but also catered to the needs of the employees of other amalgamated groups of companies of which two companies were not under a statutory obligation to run a canteen. If that be the position, the decision reported in [1977] 39 STC 265 (Mad.) (Deputy Commissioner v. Manager-in-charge of the Canteen, A.B.T. Premises) would squarely govern this case against the claim of the assessee that the benefit of exemption apply to them. Be that as it may, that does not conclude the matter finally in that the appellant, pursuant to the notice issued while initiating the proceedings under section 34 of the Act submitted an explanation contending that in the light of the decision reported in [1980] 45 STC 212 (SC) [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi] it should be taken that the sales effected in the canteen are more by way of services to be rendered and not as sales of goods involving the transfer of property in goods and that too qua goods. Governor of Delhi] it should be taken that the sales effected in the canteen are more by way of services to be rendered and not as sales of goods involving the transfer of property in goods and that too qua goods. Unfortunately except summarily rejecting the claim based on the said decision of the apex Court with an observation that the relevant facts have not been proved, the Joint Commissioner has not chosen to give any finding with an objective consideration of the matter after adverting to the principles laid down in the case and rendering a finding as to the applicability or otherwise of the ratio of the said decision to the case under consideration and on the taxability or otherwise of the transaction. Our attention has been invited to the unreported judgment of a Division Bench of this Court in T.V. Sundaram Iyengar & Sons v. State of Tamil Nadu T.C. (A) Nos. 1451 to 1455 of 1982 rendered on October 1, 1991 in support of the claim of the appellant. That was a case wherein the learned Judges of the Division Bench considered the issue de hors the exemption notification referred to supra in the light of a claim made on the basis of the decision of the apex Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 and [1980] 45 STC 212. The learned Judges while referring to the findings recorded therein observed that the conclusions arrived at were made without collecting any material on the actual sales made in the canteen, but merely on surmises. As referred to supra, even in the case before us the plea made on behalf of the appellant was rejected on the ground that there is no question of services in the canteen referred to and it was also not proved as a fact. The conclusion of the Joint Commissioner in this regard could hardly be sustained as a judicious adjudication of the issue on objective consideration as is expected of a quasi-judicial authority discharging the powers involving the tax liability of a citizen. The conclusion of the Joint Commissioner in this regard could hardly be sustained as a judicious adjudication of the issue on objective consideration as is expected of a quasi-judicial authority discharging the powers involving the tax liability of a citizen. The fact that the appellant is not entitled to the benefit of the exemption notification does not preclude the further consideration as to the liability or otherwise of the assessee in the light of the decision of the Supreme Court reported in [1980] 45 STC 212 [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi] on which strong reliance has been placed before the Joint Commissioner as well as before us. Since the factual findings have to be made in the light of the principles laid down by the apex Court we dissuade ourselves from embarking upon such a task and in the interest of justice we consider it more appropriate and just to direct the said exercise to be made by the assessing authority which would enable the assessee as well as the assessing authority to advert to the actual fact situation of the case and effectively consider the applicability or otherwise of the ratio of the decision of the apex Court as well as the taxability or otherwise of the transaction and the turnover in question. To enable the authorities to do so we set aside the order of the Joint Commissioner in so far as it relates to the findings and conclusion on the issue raised based on the decision of the Supreme Court reported in [1980] 45 STC 212 [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi] and the matter is remitted to the assessing authority with a direction to restore the matter for consideration of the question of taxability or otherwise of the turnover relating to canteen sales to the tune of Rs. 7,16,032.25 in the light of the decision in [1980] 45 STC 212 (SC) [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi]. The assessing authority shall give sufficient opportunity to the appellant and determine the issue relating to the taxability or otherwise of the said turnover relating to the canteen sales in the light of the decision reported in [1980] 45 STC 212 (SC) [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi] and in accordance with law. Governor of Delhi]. The assessing authority shall give sufficient opportunity to the appellant and determine the issue relating to the taxability or otherwise of the said turnover relating to the canteen sales in the light of the decision reported in [1980] 45 STC 212 (SC) [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi] and in accordance with law. The appeal shall stand ordered to the extent indicated above with the direction to the assessing authority as stated supra. No costs.