Judgment : These appeals are filed by the assessee challenging the order passed by the learned single judge who declined to entertain the Writ Petitions and has advised the assessee to prefer an appeal before the Karnataka Appellate Tribunal without going into the merits of the case. FACTS OF THE CASE 2. The assessee is a registered dealer under the provisions of the Karnataka Value Added Tax Act, 2003 (hereinafter for short referred to as the ‘KVAT Act’). The assessee is engaged in the business of catering services, which includes preparation and supply of food, beverages and other eatables. The major customers for the appellant are M/s. Kingfisher Airlines Limited, M/s. Jet Airways Limited and M/s. Deviyani International Limited. The assessee has entered into catering agreements with its customers for preparation and supply of meals of various varieties and other food items including beverages and dry stores. Under the agreement the assessee has agreed to render supply services, like loading and unloading services, transportation services, high lifting services and allied services under separate heads. The consideration paid for towards cost of the food and other services like handling, loading, etc., are separately charged and the bills are also raised separately as agreed to between the parties. The assessee manufacturers food and delivers the packed food to Taj Sats who thereafter transport, high lift, load and unload the beverages till the final destination. The assessee has undertaken to render such services for an agreed consideration which is payable separately by the Airlines in addition to the cost of food and beverages. The assessee is liable to pay VAT on the sale of goods being food or any other article of human consumption or any drink. The outdoor catering services are brought to tax net under the Service Tax Act with effect from 10.9.2004. A caterer is one who is engaged in providing services in connection with catering at a place other than its own but including a place provided by way of tenancy or otherwise by the person receiving such services is liable to pay service tax at the applicable rates. Any services rendered in connection with supply of food, beverages, etc., shall be taxable under the head ‘catering services’ and thus exigible to service tax under Section 65 (105) (zzt) of the Service Tax Act. Therefore, the assessee is registered under the provisions of the Finance Act, 1994. Any services rendered in connection with supply of food, beverages, etc., shall be taxable under the head ‘catering services’ and thus exigible to service tax under Section 65 (105) (zzt) of the Service Tax Act. Therefore, the assessee is registered under the provisions of the Finance Act, 1994. The assessee is paying service tax on the gross amounts received by it towards handling charges, transportation, lifting, loading and unloading etc., 3. On 21.11.2009 the Assistant Commissioner of Commercial Taxes (Recovery) inspected the premises of the assessee. They looked into the books of accounts and the agreements entered into with the customers. They also verified the receipts showing tax payments. Thereafter, a notice dated 23.1.2010 was issued under Section 39(1) of the Act for the period of 01.4.2005 to 31.03.2009 calling upon the assessee to show cause why the returns filed should not be rejected and turnover and tax re-determined. The assessee filed his statement of objections. The Assistant Commissioner proceeded to pass a re-assessment order dated 20.2.2010 under section 39 (1) of the Act. He observed that apart form the preparation and sale of food, the assessee has entered into contract of packing and forwarding, lifting of food, handling and offloading , store handling charges etc., The services rendered by the assessee cannot be considered under the provisions of the KVAT Act and, therefore, did not include the amounts received by the assessee while recomputing the turnovers and the taxes payable under the provisions of the KVAT Act. He also proceeded to propose to levy VAT on sale of tender forms and on non-Food articles, i.e, packing materials and proposed to disallow the excess claim of input tax rebate apart from other disallowances. Pursuant to the said reassessment order, the assessee paid the additional taxes along with interest and that order has reached finality. Again the premises was visited on 17.8.2010. They called upon the assessee to produce copies of the agreement with the Airlines, vehicle lease agreement with Taj Sats, audited financial statements and the like. The assessee furnished all the copies and filed a reply. Again the premises was visited on 17.8.2010. They called upon the assessee to produce copies of the agreement with the Airlines, vehicle lease agreement with Taj Sats, audited financial statements and the like. The assessee furnished all the copies and filed a reply. However, the first respondent issued a consolidated show cause notice dated 20.9.2010 under Sections 39 (1) and (2) of the Act for the periods 01.11.2005 to 31.03.2009 and 01.04.2009 to 30.06.2010 proposing to pass another re-assessment order on the grounds that the assessee has not included the amounts received towards handling charges, transportation, etc., in the returns filed by the assessee. Over-ruling all the objections, the authorities have passed a consolidated order dated 08.10.2010 under Sections 39 (1) and (2) of the Act. 4. Challenging the aforesaid consolidated order passed under Sections 39(1) and (2) of the Act, the assessee preferred a Writ Petition. 5. Though a statutory appeal is provided against the said order to the Joint Commissioner of Commercial Taxes (Appeals), as the circular issued by him runs counter to the stand of the assessee, the learned single Judge felt no useful purpose would be served in preferring the statutory appeal. Therefore, he permitted the assessee to prefer an appeal directly to the Karnataka Appellate Tribunal, i.e., a second appeal by-passing first appeal. He declined to go into the merits of the claim on the ground of availability of alternate remedy. Aggrieved by the said impugned order, the assessee has preferred these Writ Appeals. RIVAL CONTENTIONS 6. Sri Sarangan, the learned senior counsel, assailing the impugned order passed by the learned single Judge contended that, the appeal is statutory remedy provided by the statute. De hors the statute there cannot be any appeal. When the statute provides for a first appeal and a second appeal, unless the party exhausts the remedy of first appeal, the question of preferring second appeal would not arise. On mere filing, second appellate authority cannot entertain first appeal. In that view of the matter, the order of the learned single Judge though holding that the first appeal is not an efficacious remedy but advising the appellant to prefer first appeal to the second appellate authority as the first appellate authority may not be in a position to take a different view from the one which is expressed in the circular which he has issued, is contrary to the statutory provisions. Therefore, he contended the said order per se is illegal and contrary to the statutory provisions and requires to be set aside. 7. In so far as the merits is concerned, he submits that the dispute between the parties involve interpretation of constitutional provisions, doctrine of pith and substance, the theory of exclusiveness as found in Article 246 (1) of the Constitution of India and , therefore, he submits notwithstanding the alternate remedy available under the statute this is a fit case where this Court should entertain this Writ Petition and interpret these statutory and constitutional provisions so that the authorities would follow the interpretation and decide the issues in favour of the persons prescribed under the statute. He contends the contract in question involves the preparation of food and supply of food to the customers at his doors. The supply of prepared food to the customers at his doors involves transportation charges, handling charges and other charges which is essentially a service. Under no circumstances these acts constitute sale of goods. Therefore, as is clear from the invoices raised they have collected from the customers the value of the goods sold and the amount incurred in rendering service as aforesaid. The amount collected towards service rendered has suffered service tax. Excluding that portion of the value mentioned in the bill in respect of the remaining extent they have been passed and it is concluded. It is by virtue of the power conferred under Section 39(1) of the Act notices were issued claiming that exclusion of the value of the service is erroneous and that the assessee has to pay VAT even on that component. The matter was contested and over-ruling the objections of the assessee, an order has been passed under Section 39 (1) of the Act. Again a notice is issued purported to be under Section 39 (2) of the Act to again re-assess without there being any further evidence. The condition precedent for invoking jurisdiction under Section 39 (2) of the Act is, after the passing of an order under Section 39 (1) if the authorities came in possession of any further evidence, then only they could exercise power under Section 39 (2) . The condition precedent for invoking jurisdiction under Section 39 (2) of the Act is, after the passing of an order under Section 39 (1) if the authorities came in possession of any further evidence, then only they could exercise power under Section 39 (2) . In the instant case there is no further evidence and, therefore, the initiation of proceedings under Section 39 (2) and passing of an order under that provision is one without jurisdiction and liable to be set aside. If the stand of the revenue is accepted, it will amount to double taxation. The State would be collecting sales tax even in respect of services for which service tax is already paid and, therefore, he submits the impugned order is liable to be set aside. 8. Per contra, the learned Government Advocate submits that, under the terms of the contract, the assessee is expected to deliver the food articles at the customers place, i.e, aircraft. For the purpose of sales tax it is the value of the goods as determined at the time of delivery of the goods to the customer without actually the title of the goods passed is to be taken into consideration. The VAT is payable on taxable turnover. Turnover includes not only the value of the goods but also all the amounts incurred as expenditure till the delivery of goods to the customer, then only the sale is complete and, therefore, she submits as in the earlier instances, this service component was not taxed and on verification of records when it was found that the said component has escaped the assessment proceedings were initiated under Section 39 (1) and is completed n accordance with law. Therefore, the contention that the sales tax is payable only on the value of the food products which necessarily exclude the service component cannot be accepted. She also submitted that Rule 6(4) (f) of the Karnataka Sales Tax Rules specifically provided for deduction of transportation charges. However, under the VAT Rules, rule 3 (2) does not provide specifically for the deduction of the said transportation charges. Therefore, the sale price includes transportation charges. Hence, she submits the case does not call for any interference. ISSUES INVOLVED 9. However, under the VAT Rules, rule 3 (2) does not provide specifically for the deduction of the said transportation charges. Therefore, the sale price includes transportation charges. Hence, she submits the case does not call for any interference. ISSUES INVOLVED 9. In the light of the aforesaid facts and the rival contentions, the point that arise for our consideration is as under:- “In the case of a catering contract, in particular outdoor catering, when the assessee has claimed in the invoices specifically the value of goods as well as the value of the services rendered and paid service tax on the service component, is it open to the sales tax authorities to levy sales tax on both the components, namely the value of the goods and the value of services rendered?” LEGAL POSITION 10. Section 65 of the Finance Act, 1994 is the definition clause, Sub-section (24) of Section 65 defines “caterer” as under:- “Caterer” means any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accoutrements for any purpose or occasion; Sub-section 76 (a) of Section 65 defines “outdoor caterer” as under:- “outdoor caterer” means a caterer engaged in providing services in connection with catering at a place other than his own [but including a place provided by way of tenancy or otherwise by the person receiving such services]. Sub-section (zzt) of section 65 (105) defines “taxable service” as under:- 105. “Taxable service” means any service provided or to be provided. Zzt “to any person, by an outdoor caterer”. 11. The Apex court in the case of NORTHERN INDIA CATERERS (INDIA) LTD. VS LT. GOVERNOR OF DELHI REPORTED IN 1978 386 STC 42, at page 391 explaining the nature of business in Hotels and Restaurants, in the context of supply of means has held as under : “ Ithas already been noticed that in regard to hotels this Court has in M/s. Associated Hotels of India Limited [(1972 (29) STC 474 (SC)] adopted the concept of the English law that there is no sale when food and drink are supplied to guests residing in the hotel. The court pointed out that the supply of meals was essentially in the nature of a service provided to them and could not be identified as a transaction of sale. The court pointed out that the supply of meals was essentially in the nature of a service provided to them and could not be identified as a transaction of sale. The Court declined to accept the proposition that the revenue was entitled to split up the transaction into two parts, one of service and the other of sale of foods-stuffs. If that be true in respect of hotels, a similar approach seems to be called for on principle in the case of restaurants. No reason has been shown to us for preferring any other. The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need. What has been said in Electa B. Merrill (LRA 1915-B 481) appears to be as much applicable to restaurants in India as it does elsewhere. It has not been proved that any different view should be taken, either at common law, in usage or under statute.” In a review petition filed to a review the aforesaid order, the Supreme Court reaffirmed the said position, as under:- “The appellant prepared and served food both to the residents in its hotel as well as to causal customers who came to eat in its restaurant, and throughout it maintained that having regard to the nature of the services rendered there was no real difference between the two kinds of transactions, In both cases, it remained a supply and service of food not amounting to a sale. It is important to note that the facts alleged by the appellant were never disputed at any stage, and we find no attempt by the taxing authorities to enquire into the truth of the facts so asserted. It is in that factual context that this Court examined the question whether any liability to sales tax was attracted. Our judgment rests on that factual foundation, and must be understood in that light.” 12. The Apex court in the case of TAMIL NADU KALYANA MANDAPAM ASSN Vs. It is in that factual context that this Court examined the question whether any liability to sales tax was attracted. Our judgment rests on that factual foundation, and must be understood in that light.” 12. The Apex court in the case of TAMIL NADU KALYANA MANDAPAM ASSN Vs. UNION OF INDIA AND OTHERS reported in 135 STC 2004 pg 480, where the question arose for consideration was whether the service tax levied on service rendered by mandap keepers as defined under Sections 65,66, and 67 of the Finance Act and in so far as it levies tax on catering service which amount to tax on sale and purchase of goods and therefore is beyond the competence of Parliament, particularly in view of the definition of tax on sale and purchase of goods contained in Article 366 (29A ) (f) of the Constitution, held as under: “41. Tax on catering services does not amount to tax on sale and purchase of goods: As far as the above point is concerned, it is well-settled that for the tax to amount to a tax on sale of goods, it must amount to a sale according to the established concept of a sale in the law of contract or more precisely the sale of Goods Act, 1930. The Legislature cannot enlarge the definition of sale so as to bring within the ambit of taxation, transactions which could not be a sale in law. The following judgments and the principles laid down therein can be very well applied to the case on hand.” Xxxxxxxxxxxx “50. It may be noted that in recent times the service sector has grown phenomenally all over the world and, therefore, it was recommended by the Dr. Raja Chelliah Committee in the early 90’s that it should be taxed. Pursuant thereto, service tax was first levied in 1994 by way of the Finance Act. The power to levy such tax can be traced to serial No.97 of List I of the Seventh Schedule and this Court in Laghu Udyog Bharati v. Union of India [1999] 112 ELT 365, found no lack of legislative competence as far as the levy of service tax was concerned. Xxxxxxxxxx “54. In fact, mandap keepers provide a wide variety of services apart from the service of allowing temporary occupation of mandap. Xxxxxxxxxx “54. In fact, mandap keepers provide a wide variety of services apart from the service of allowing temporary occupation of mandap. As per section 65 (19) of the Finance Act, 1994, mandap means any immovable property as defined in Section 3 of the Transfer of Property Act, 1882, and includes any furniture, fixture, light fittings and floor coverings therein let out for consideration for organizing any official, social or business function. A mandap keeper apart from proper maintenance of the mandap, also provides the necessary parapehernalia for holding such functions, apart from providing the conditions and ambience which are required by the customer such as providing the lighting arrangements, furniture and fixtures, floor coverings, etc., The services provided by him cover method and manner of decorating and organizing the mandap. The mandap keeper provides the customer with advice as to what should be in quantum and quality of the services required keeping in view the requirement of the customer, the nature of the event to be solemnized, etc, In fact the logistics of setting up, selection and maintenance are the responsibility of the mandap keeper. The services of the mandap keeper cannot possibly be termed as a hire-purchase agreement of a right to use goods or property. The services provided by a mandap keeper are professional services which he alone by virtue of his experience has the wherewithal to provide. A customer goes to a mandap keeper, say a star hotel, not merely for the food that they will provide but for the entire variety of services provided therein which result in providing the function to be solemnized with the required effect and ambience. Similarly the services rendered by outdoor caterers are clearly distinguishable from the service rendered in a restaurant or hotel inasmuch as, in the case of outdoor catering service the food/eatables/drinks are the choice of the person who partakes of the services. He is free to choose the kind, quantum and manner in which the food is to be served. But in the case of a restaurant, the customer’s choice of foods is limited to the menu card. Again in the case of outdoor catering, the customer is at liberty to chose the time and place were the food is to be served. But in the case of a restaurant, the customer’s choice of foods is limited to the menu card. Again in the case of outdoor catering, the customer is at liberty to chose the time and place were the food is to be served. In the case of an outdoor caterer, the customer negotiates each element of the catering service, including the price to be paid to the caterer. Outdoor catering has an element of personalized service provided to the customer, Clearly the service element is more weightly, visible and predominant in the case of outdoor catering. It cannot be considered as a case of sale of food and drink as in restaurant. Though the service tax is leviable on the gross amount charged by the mandap keeper for services in relation to the use of a mandap and also on the charges for catering, the Government has decided to charge the same only on 60 per cent of the gross amount charged by the mandap keeper to the customer.” Xxxxxxxxxxxxxxxxxxxx “56. A tax on services rendered by mandap keepers and outdoor caterers is in pith and substance a tax on services and not a tax on sale of goods or on hire-purchase activities …… Article 246(1) of the Constitution specifies that the Parliament has exclusive powers to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule of the Constitution. As per article 246(3), the State Government has exclusive powers to make laws with respect to matters enumerated in List II (State List). In respect of the matters enumerated in List III (concurrent List) both Parliament and State Government have powers to make laws. The service tax is made by Parliament under the above residuary powers.” Xxxxxxxxxxxxxxxx “58. It would be appropriate to quote Mr. Justice Venkarachalliah who ruled that “the law with respect to a subject might incidentally encroach after another subject in some way, but that is not the same thing as the law being on the latter subject. There might be overlapping, but the overlapping must be in law. The transaction may involve two or more taxable events in its different aspects. But the fact that there is an overlapping does not detract from the distinctiveness of the aspects. The consequences and facts of the legislation are not the same thing as legislative subject-matter”. 13. There might be overlapping, but the overlapping must be in law. The transaction may involve two or more taxable events in its different aspects. But the fact that there is an overlapping does not detract from the distinctiveness of the aspects. The consequences and facts of the legislation are not the same thing as legislative subject-matter”. 13. The Constitution Bench of the Apex Court in the case of K.Damodarasamy Naidu & Bros. Vs. State of Tamil Nadu and another reported in STC VOL. 117 2000 1 explaining the scope of the 46th Amendment to the Constitution wherein Article 366 was amended by inserting Clause 29-A, at para 9 and Para 21 held as under:- “9. The provisions of sub-clause (f) of (29A) of article 366 need to be analysed. Sub-clause (f) permits the States to impose a tax on the supply of food and drink. The supply can be by way of service or as part of a service or it can be in any other manner whatsoever. The supply or service can be for cash or deferred payment or other valuable consideration. The words of sub-clause (f) have found place in the Sales Tax Acts of most States and, as we have seen, they have been used in the said Tamil Nadu Act. The Tax, therefore, is on the supply of food or drink and it is not of relevance that the supply is by way of a service or as part of a service. In our view, therefore, the price that the customer pays for the supply of food in a restaurant cannot be split up a suggested by learned counsel. The supply of food by the restaurant owner to the customer though it may be part of the service that he renders by providing good furniture, furnishing and fixtures, linen, crockery and cutlery, music, a dance floor and a floor show, is what is the subject of the levy. The patron of a fancy restaurant who orders a plate of cheese sandwiches whose price is shown to be Rs. 50 on the bill of fare knows very well that the innate cost of the bread, butter, mustard and cheese in the plate in very much less, but he orders it all the same. He pays Rs.50 for its supply and it is on Rs. 50 that the restaurant owner must be taxed.” Xxxxxxxxxxxxxxxxxxxxx “21. 50 on the bill of fare knows very well that the innate cost of the bread, butter, mustard and cheese in the plate in very much less, but he orders it all the same. He pays Rs.50 for its supply and it is on Rs. 50 that the restaurant owner must be taxed.” Xxxxxxxxxxxxxxxxxxxxx “21. Parliament, when exercising the powers to amend the Constitution under article 366, cannot and does not amend State Acts, There is no other provision in the Constitution which so permits and there is no judgment of this Court that so holds. The power to make laws for the States in respect of matters listed in List II in the Seventh Schedule is exclusively that of the State Legislatures. The stage Legislatures alone could have amended or modified a State law levying tax under entry 54 of List II. The said section 6 would, therefore, be bad in law if it were construed to be an essay by Parliament, exercising constituent powers, to amend the sales tax laws of the States. The said section 6 must be read as only giving retrospective operation to the expansion of the expression “tax on the sale or purchase of goods” in entry 54 of List II to include a tax on the supply of food or drink and thus validating retrospectively State Sales Tax Acts that had therefore made provision for the levy of sales tax on the supply of food and drink. There is, accordingly, no warrant even for the submission that the said section 6 equates a provision for sales tax on food and drink in State Sale Tax Acts with a provision for sales tax on the supply of food and drink. Neither the State of Maharashtra nor the State of Uttar Pradesh had provisions in their Sales Tax Acts prior to the introduction of clause (29A) in article 366 which enabled them to tax the supply of food and drink. The said section 6, therefore, can be of no assistance to them. The levy of sales tax on the supply of food and drink prior to February 2, 1983, in the State of Maharashtra and in the State of Uttar Pradesh is bad in law.” 14. The said section 6, therefore, can be of no assistance to them. The levy of sales tax on the supply of food and drink prior to February 2, 1983, in the State of Maharashtra and in the State of Uttar Pradesh is bad in law.” 14. Relying on the aforesaid judgment and after considering the other judgments of the Apex Court, the Delhi High Court in the case of Indian Railways Catering and Tourism Corporation Ltd., v. Government of NCT of Delhi and others, reported in (2010) 32 VST 162 Delhi at Para 40, held a under:- “40. The legal proposition, which emerge from a careful analysis of the above-referred decisions, can be summarized as under: (a) It is open to the States to levy sales tax/value added tax, on the whole of the consideration, in transactions of sale of goods, such as sale to a customer in a restaurant, irrespective of the incidental element of service which is necessarily involved in sale of goods of this nature: (b) If the transaction between the parties is covered under article 366(29A) of the Constitution, it is permissible for the States to levy and collect sales tax/value added tax on the value of the goods involved in the execution of the transaction. It is not permissible to levy sale tax/value added tax in respect of service component of such composite transaction and ; (c) In respect of composite transactions, other than those covered by article 366 (29A) of the Constitution, if it is found that the intention of the parties was to segregate the element involving sale of goods from the element involving providing of service and actually the transaction represents distinct contracts which are clearly discernible, the State would have the power to separate the agreement involving sale of goods, from the agreements to provide services, and impose tax on the sale component of the transaction. If no such intention is found or the transaction does not involve two distinct contracts, one for sale of goods and the other for providing of services, it is not permissible to disintegrate such a composite contract so as to levy sales tax/value added tax on that component which involves sale of goods, during the course of the transaction. If no such intention is found or the transaction does not involve two distinct contracts, one for sale of goods and the other for providing of services, it is not permissible to disintegrate such a composite contract so as to levy sales tax/value added tax on that component which involves sale of goods, during the course of the transaction. The test for deciding whether the composite contract falls in the first category or in the second category would be to ascertain what is the dominant nature of the transaction between the parties.” 15. In the light of the aforesaid judgments of the Apex Court, we have to appreciate the rival contentions of the parties. COMPOSITE CONTRACT OR INDIVISIBLE CONTRACT 16. It is the specific case of the Revenue that contract in question is indivisible contract. The dominant nature of the contract being sale of goods, even if an element of service is involved, applying doctrine of pith and substance, as the dominant intention of the contract is to sell eatables at the door steps of the customer, the entire sale price of the eatables sold is liable to sales tax, value added tax and therefore the contention that no VAT could be levied on that portion of the consideration for which service tax is paid is not tenable. Therefore, the entire argument proceeded on the assumption that the contract in question is a contract for sale of goods. 17. The supreme Court at Para 56 of the judgment in TAMIL Nadu KALYANA MANDAPAM ASSOCIATION case, has categorically held that a tax on services rendered by mandap keepers and outdoor caterers is in pith and substance, a tax on services and not a tax on sale of goods or on hire-purchase activities. At paragraph 54, again it has been reiterated that in the case of a restaurant, the customer’s choice of foods is limited to the menu card. Again in the case of outdoor catering, the customer is at liberty to chose the time and place where the food is to be served. In the case of an outdoor caterer, the customer negotiates each element of the catering service, including the price to be paid to the caterer. Outdoor catering has an element of personalized service provided to the customer. Clearly the service element is more weighty, visible and predominant in the case of outdoor catering. In the case of an outdoor caterer, the customer negotiates each element of the catering service, including the price to be paid to the caterer. Outdoor catering has an element of personalized service provided to the customer. Clearly the service element is more weighty, visible and predominant in the case of outdoor catering. It cannot be considered as a case of sale of food and drink as in restaurant. Though the service tax is leviable on the gross amount charged by the mandap keeper for services in relation to the use of a mandap and also on the charges for catering, the Government has decided to charge the same only on 60 percent of the gross amount charged by the mandap keeper to the customer. Thus out door catering is essentially that of providing a service. The manner of service provided assumes predominance over the providing of food in such situations which is a definite indicator of the supremacy of the service aspect. The Legislature in its wisdom noticed the said supremacy and identified the same as a potential region to collect indirect taxes. Moreover, it has been a well-established judicial principle that so long as the legislation is in substance, on a matter assigned to Legislature enacting that statute, it must be held in its entirely even though it may trench upon matter beyond its competence. Incidental encroachment does not invalidate such a statute on the grounds that it is beyond the competence of the Legislature. 18. Article 246(1) of the Constitution specifies that the Parliament has exclusive powers to make laws with respect to any of the matters enumerated in List 1 in the Seventh Schedule of the Constitution. As per article 246(3), the State Government has exclusive powers to make laws with respect to matters enumerated in List II (State list). In respect of the matters enumerated in List III (Concurrent List) both Parliament and State Government have powers to make laws. The service tax is made by the Parliament under the above residuary powers. Once the Parliament has made law dealing with this aspect of service by virtue of the residuary power conferred on them by the Constitution, Article 248 comes into operation. It declares that Parliament has exclusive power to make any law with respect to any matter not enumerated in Concurrent List of the State Laws. Once the Parliament has made law dealing with this aspect of service by virtue of the residuary power conferred on them by the Constitution, Article 248 comes into operation. It declares that Parliament has exclusive power to make any law with respect to any matter not enumerated in Concurrent List of the State Laws. Such power shall include the power to make law, imposing tax not mentioned in either of these lists. Therefore, in fact, once the Parliament makes law, it excludes the other Legislatures to make law in respect of which the Parliament has made law. But the 46th amendment to the Constitution which introduced clause (29-A) to Article 366 specifically provided for those types of cases where in respect of the very same transaction , both the State Legislature as well as the Parliament can make law. Sub-Clause (f) of clause (29-A) of Article 366 specifically deals with catering services. It reads thus: “(29-A) tax on the sale or purchase of goods includes.- Xxxxx Xxxxx (f) a tax on the supply, by way or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. “ 19. The apex court in the case of BHARAT SANCHAR NIGAM LIMITED AND ANOTHER VS. UNION OF INDIA AND OTHERS reported in (2006) 145 STC 91 held as under:- “43. All the clauses of article 366(29A) serve to bring transactions where one or more of the essential ingredients of a sale as defined in the Sale of Goods Act, 1930 are absent, within the ambit of purchases and sales for the purposes of levy of sales tax. To this extent only is the principle enunciated in Gannon Dunkerly limited. The amendment especially allows specific composite contracts, viz., works contracts (clause (b)), hire purchase contracts (clause (c)), catering contracts (clause (f)) by legal fiction to be divisible contracts where the sale element could be isolated and be subjected to sales tax Xxxxxxxxxxxxxxx 45. To this extent only is the principle enunciated in Gannon Dunkerly limited. The amendment especially allows specific composite contracts, viz., works contracts (clause (b)), hire purchase contracts (clause (c)), catering contracts (clause (f)) by legal fiction to be divisible contracts where the sale element could be isolated and be subjected to sales tax Xxxxxxxxxxxxxxx 45. The reason why these services do not involve a sale for the purposes of Entry 54 of List II is, as we see it, for reasons ultimately attributable to the principles enunciated in Gannon Dunkerley’s case, namely, if there is an instrument of contract which may be composite in form in any case other than the exceptions in Article 366 (29-A) , unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sell from the agreement to render service, and impose tax on the sale. The test therefore for composite contracts other than those mentioned in Article 366 (29A) continues to be did the parties have in mind or intend separate rights arising out of the sale of goods. If there was no such intention there is no sale even if the contract could be disintegrated. The test for deciding whether a contract falls into one category or the other is to as what is the substance of the contract. We will for the want of a better phrase, call this the dominant nature test.” Xxxxxxxxxxx 50. We agree, after the 46th Amendment, the sale elements of those contracts which are covered by the six sub-clauses of clause (29A) of Article 366 are separable and may be subjected to sale tax by the States under entry 54 of List II and there is no question of the dominant nature test applying. Xxxxxxxxxxx 88. No one denies the legislative competence of the States to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction. This does not however allow the State to entrench upon the Union List and tax services by including the cost of such service in the value of the goods. This does not however allow the State to entrench upon the Union List and tax services by including the cost of such service in the value of the goods. Even in those composite contracts which are by legal fiction deemed to be divisible under Article 366(29-A), the value of the goods involved in the execution of the whole transaction cannot be assessed to sales tax” 20. The Apex court in the case of IMAGIC CREATIVE (P) LTD VS. COMMISSIONER OF COMMERCIAL TAXES reported in (2008) 2 SCC 614 , held as under: “29. …… A distinction must be borne in mind between an indivisible contract and a composite contract. If in a contract, an element to provide service is contained, the purport and object for which the Constitution has to be amended and Clause (29-A) had to be inserted in Article 366, must be kept in mind. Xxxxxxxxxxxxxxx 31. The court while interpreting a statute, must bear in mind, that the legislature was supposed to know law and the legislation enacted is a reasonable one. The court must also bear in mind that where the application of a parliamentary and a legislative Act comes up for consideration endeavours shall be made to see that provisions both the Act are made applicable. 32. Payment of service tax as also VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract, irrespective of the element of service provided.” 21. In LARSEN & TOUBRO V. UNION OF INDIA reported in (1993) 1 SCC 365, the Apex Court dealing with a works contract, where also a deemed sale takes place, held as under: “The position of a contractor in relation to a transfer of property in goods in the execution of a works contract is not different from that of a dealer in gods who is liable to pay sales tax on the sale price charged by him from the customer for the goods sold. The said price includes the cost of bringing the goods to the place of sale. The said price includes the cost of bringing the goods to the place of sale. Similarly, for the purpose of ascertaining the value of goods which are involved in execution of a works contract for the purpose of imposition of tax, the cost of transportation of the goods to the place of works has to be taken as part of the value of the said goods. The charges mentioned in item No. (vii) Relate to the various expenses which form part of the cost of establishment of the contractor. Ordinarily the cost of establishment is included in the sale price charged by a dealer from the customer for the goods sold. Since a composite works contract involves supply of materials as well as supply of labour and services, the cost of establishment of the contractor would have to be apportioned between the part of the contract involving supply of materials and the part of involving supply of labour and services. The cost of establishment of the contractor which is relatable to supply of labour and services cannot be execution of a contract and the cost of establishment which is relatable to supply of material involved in the execution of the works contract only can be included in the value of the goods.” 22. Therefore, by virtue of the aforesaid Constitutional amendment, a contract of catering is treated as a composite contract for supply of goods, which involve both service as well as sale. By legal fiction it is treated as deemed sale, empowering the State Legislature to levy sales tax/VAT by virtue of the power conferred on them by Entry 54 of List II of VII Schedule to the Constitution , in so far as value of goods involved in the execution of contract. 23. In the light of the aforesaid Constitutional provision and the declaration of law by the Apex Court, it is not possible to hold that catering services is indivisible contract. It is a composite contract. It involves both service and deemed sale of goods. In so far as sale aspect is concerned, the State Legislature is competent to levy tax. In respect of service component is concerned, the Parliament has the power to levy service tax. Therefore the entire consideration paid under the agreement cannot be the subject matter of service tax nor can it be the subject matter of sales tax. In so far as sale aspect is concerned, the State Legislature is competent to levy tax. In respect of service component is concerned, the Parliament has the power to levy service tax. Therefore the entire consideration paid under the agreement cannot be the subject matter of service tax nor can it be the subject matter of sales tax. Otherwise, it would amount to double taxation. Since catering contract involves supply of goods and service, the consideration received under such contract has to be apportioned between the part of the contract involving supply of goods and the part of the contract involving supply of service and appropriate tax to be levied separately. In other words supply of material involved in the execution of the catering contract only can be included in the value of goods. In view of the specific provision as contained in sub-clause (f) of clause (29-A) of Article 366 of the Constitution of India, the contract in question namely, out door catering , is a composite contract and both the Parliament as well as the State Legislature is competent to levy tax on service aspect and sale aspect respectively. ON FACTS 24. It is in this background we have to look into the contract and in particular, the bill raised by the assessee supplying food and beverages to Kingfisher Airlines. It reads as under: Kingfisher Airline Rate Sheet for in Flight Catering It was mutually agreed that you will raise separate bill for Food and Beverages and charges VAT (Local Applicable Sales Tax from time to time) on that And further it was mutually agreed that you will arise separate bill for Services Transportation and Handling and Charge service tax (As per Govt. of India Notification from time to time) on that * Price are exclusive of all Prevailing taxes/Levis. The above meal prices are for the menu as enclosed or in equivalent menu. Above meal prices, is an average price for various meal types including hi-lift, ice, dry ice & store handling. The above prices are exclusive of dry stores items to be supplied by the airline as mentioned in the menu.” 25. A perusal of the aforesaid bill makes it very clear that parties have agreed that a separate bill for food and beverages and charges payable under VAT is to be raised. The above prices are exclusive of dry stores items to be supplied by the airline as mentioned in the menu.” 25. A perusal of the aforesaid bill makes it very clear that parties have agreed that a separate bill for food and beverages and charges payable under VAT is to be raised. Similarly, a separate bill for service transportation and handling charge service tax, is to be raised for payment of service tax. The aforesaid bill clearly stipulates that a sum of Rs. 70.50 is the amount payable for sale of food and beverages and Rs. 19.50 payable for service and transportation and handling charges. Therefore, the tax under VAT is liable to be paid on Rs. 70.50 and service tax is liable to be paid on 19.50. Admittedly, the assessee has paid VAT Accordingly. The said assessment was accepted by the authorities. It is only by issuing notice under section 39(1) of the Act, a demand was made to re-assess the tax payable by the assessee even in respect of Rs. 19.50, for which the assessee had already paid service tax. In fact, after the returns were filed, reassessment proceedings under Section 39(1) was initiated and after hearing the assessee they accepted the contention of the assessee and dropped the proceedings. Strangely an attempt was made to reopen the said assessment by issuing notice under Section 39(2) of the Act which is sine quo non for invoking jurisdiction under section 39 (2) of the VAT Act, the earlier order was reversed and levy was imposed on the entire consideration mentioned in the bill. That is how the consolidated order for both the periods were challenged before the learned Single Judge and is the subject matter of this proceedings. 26. In the light of what is stated above, to is clear that the contract in question, namely, out door catering is a contract for service. By virtue of sub-clause (f) of clause (29-A) of Article 366 of the Constitution, it is to be treated as composite contract and the State Legislature is competent to levy sale tax on the sale aspect. Bu that does not empower them to levy tax on the entire amount mentioned in the bill. 27. However, the learned counsel for the Revenue sought to rely on the judgment of this Court in the case of M/S. APCO CONCRETE BLOCK AND ALLIED PRODUCTS Vs. Bu that does not empower them to levy tax on the entire amount mentioned in the bill. 27. However, the learned counsel for the Revenue sought to rely on the judgment of this Court in the case of M/S. APCO CONCRETE BLOCK AND ALLIED PRODUCTS Vs. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES in STA No. 84/2009, disposed off on 8th July 2010, wherein it is held as under: “8. In the light of the expressed provisions under the Acts and Rules and the explanation given by the Government, the position is clear that the dealer collects freight charges as part of total order value. Though it is specifically mentioned what is the cost component to the said transportation charges, collecting the value of before effecting sale of the goods. When sale of goods becomes complete only after the delivery of the goods, therefore, it becomes part of taxable turnover. If after transfer of title on the goods by delivery of the goods, for which he has already collected the price of the goods and after delivery if he receives the transportation charges, then the said amount does not form part or the taxable turnover as it is not a part of the sale consideration or paid prior to sale of the goods. That appears to be a clear manifestation of the intention by the legislature as contained in various definitions referred to above and the clarifications issued by the Government. In that view of the matter, the order passed by the revisional authority is strictly in accordance with law, whereas the appellate authority was carried away by the legal position prior to the enactment of the Act and thus he got confused himself without looking into the express provisions contained in the Act. The revisional authority was therefore justified in interfering with the order as the order was prejudicial to the revenue.” 28. In the aforesaid judgment the Court was dealing with the law prior to introduction of VAT where Rule 6(4) (f) of the Karnataka Sale Tax Rules, specifically provided for deduction of transportation charges. However, under the VAT Rules, Rule 3 (2) did not provide specifically for deduction of such transportation charges. In that context, it was held that sale price included transportation charges. However, under the VAT Rules, Rule 3 (2) did not provide specifically for deduction of such transportation charges. In that context, it was held that sale price included transportation charges. That was not a case where the court was called upon to decide whether the sales tax is payable on the sale price inclusive of transportation charges. This Court was not called upon to decide whether any service tax was payable on any portion of sale price. Therefore, the said judgment in no way supports the case of the Revenue. The sale price includes transportation charges and out of that sale price what is the service aspect and what is the sale aspect, is to be decided in the light of what is stated above. Therefore, the contention that in view of the aforesaid judgment, the question involved in this case is fully covered, has not substance. ALTERNATIVE REMEDY 29. In so far as the contention that there is alternative remedy available, the learned Single Judge accepted the case of the appellant that the Commissioner has issued circulars to the effect that if transportation charge is a pre-sale expenditure, it forms part of the sale price and VAT is payable on the entire amount and no useful purpose will be served by preferring the statutory appeal. Having accepted the said contention, he advised the assessee to prefer an appeal directly to the Karnataka Appellate Tribunal, which is not bound by the circular issued by the Commissioner and to treat the said appeal as First Appeal. The right to appeal is a creation of statute. Either the appeal is maintainable in terms of the stature or it is not maintainable. The Court has no power to create new appellate forum, adivse the parties or such forums to entertain the appeal contrary to statutory provisions. In view of the fact that what is involved in this case is interpretation of constitutional provisions in the light of Supreme Court Judgment, we deem it proper to entertain the Writ Appeal and decide the constitutional issue once and for all in so far as the State is concerned, so that both the assessee and the Department would be clear about this constitutional provision.ie. the scope and levy of service tax as well as sales tax, so that all the assessments in future could be brought in conformity with the judgment which we have rendered today. the scope and levy of service tax as well as sales tax, so that all the assessments in future could be brought in conformity with the judgment which we have rendered today. In that view of the matter, notwithstanding the alternative remedy, we are inclined to entertain this appeal, decide the appeal on merits and lay down the law. Therefore, we do not see any merit in the said contention. 30. For the aforesaid reasons, we pass the following order: (a) The appeals are allowed. (b) The impugned order passed by the learned Single Judge as well as the Assessing Authority, are hereby set aside. (C) It is declared that a contract for out-door catering is a composite contract which falls under sub-clause(f) of clause (29-A) of Article 366 of the Constitution of India and service tax is payable on service aspect and sales tax is payable on deemed sales aspect and it is not an indivisible contract. (d) The assessee had deposited by virtue of the interim order of the learned Single Judge, a sum of Rs. 25 lakhs. Now that the assessment orders are set aside declaring that the sale tax is not liable to be paid on service aspect, the Revenue shall refund the said amount of Rs. 25 lakhs within four months from the date of the receipt of this order with interest at 6 % per annum, failing which the interest payable will be 12% per annum. (e) Parties to bear their own costs.