The Orissa High Court held that the Akbari Continental is categorized as a ‘Restaurant’ and is entitled to sales tax exemption.
The Petitioner, Akbari Continental Pvt. Ltd. is a hotelier carrying on the business of providing lodging accommodation and manufacture and sale of food, drinks etc. the Petitioner went in appeal before the ACST. The ACST noted that the Petitioner was entitled to exemption under Sl. NO. 30-FFFF of the Tax-Free Schedule as a continuing unit of IPR-1980. It was noted that the General Manager, DIC, Cuttack by a letter drew the attention of the STO to the fact that as per the recommendation of the State Level Empowered Committee, the Petitioner was held to be entitled to sales tax exemption. However, the 7th State Level Empowered Committee at a meeting reversed its earlier decision. This decision was communicated by the Director, DIC to the STO. The ACST held that the Petitioner was thus entitled to exemption at least till 30th April, 1996. As regards purchase or sale of soft drinks, IMFL and cigarettes, which were not manufactured or processed by the Petitioner, it was held that the Petitioner was entitled to sales tax incentive. Thus, only such deductions as were usually available in respect of such goods as first point tax paid goods were allowed. As a result, the amount payable under the assessment order was reduced to Rs.37,860/-. The excess tax paid was asked to be refunded.
As regards the claim for tax exemption under Entry No.30- FFFF of the IPR 1989, it was held that the Petitioner was not eligible for the said tax exemption since it had failed to produce any certificate to show that it was a SSI unit set up after 1st August 1980 and before 1st April, 1986 and that it had gone into commercial production after 1st April 1986.
The department contended that in the list of industries excluded from the exemption provision under Entry No.30-FFFF was “Guest House and Restaurant”. The Department contended that the activities in the restaurant run by the Petitioner was distinct from that of the hotel and therefore the dealer’s business related to the restaurant was not eligible for tax concession. This explanation was accepted by the Tribunal. The matter was accordingly remanded to the STO for a fresh assessment. The reassessment notice has already been stayed by this Court.
The division bench headed by the Chief Justice Dr. S. Muralidhar and Justice B.P. Routray found no reason why only for AY 1995-96 the Department’s case ought to be accepted by the Tribunal particularly since the eligibility certificate issued by the DIC is the same for all these AYs. Consequently question was answered in favour of the Petitioner and against the Department by holding that the Petitioner is a hotel and does not fall under Clause 27 of the ineligibility list of IPR-1989 and is entitled to sales tax exemption under Entry 30-FFFF in terms of the Finance Department Notification dated 16th August, 1990.
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