Casino Hotel vs State Of Kerala on 29 August, 2006

    Casino Hotel vs State Of Kerala on 29/8/2006

JUDGMENT

   C.N. Ramachandran Nair, J.

   1. The first question raised is whether the tribunal is correct in confirming
the assessment of soda and mineral water at twenty per cent under Entry 87 of
Ist Schedule to the KGST Act as against six per cent claimed by petitioner under
Entry 40 of Ist Schedule. Petitioner is a star hotel and is liable to pay tax on
cooked food and beverages at the point of first sale at six per cent as provided
under Entry 40 of Ist Schedule to the KGST Act. In order to appreciate the
contentions raised, the relevant Entry is extracted hereunder:

40. Cooked food including At the point of first beverages not falling sale in
the State by 6% under entries 53 and 54 a dealer who is liable of this Schedule
sold or to tax under Section 5 served in bar attached

    hotels and/or star hotel/s

    restaurants.

   2. The question is whether Soda which is aerated water and mineral water sold
by petitioner which are also beverages, attract tax at six per cent under Entry
40 or twenty per cent under Entry 87 of Ist Schedule. Counsel for petitioner
contended that aerated water and soda are also beverages and, therefore, when
those items are sold in star hotels or bar attached hotels and restaurants, rate
of tax can be only six per cent. We are unable to accept this contention
because, aerated water and mineral water are specifically covered by Entry 87 of
Ist Schedule which attracts tax at twenty per cent. The point of levy is first
sale by a dealer who is liable to tax under Section 5. A hotel is also a dealer
who is liable to tax under Section 5. A hotel is also a dealer which is liable
to pay tax at the point of first sale on these commodities. The items of
beverages referred to in Entry 40 are not beverages specifically mentioned
elsewhere in the Ist Schedule to the Act. In other words, beverages normally
made in hotels, like, coffee, tea, fruit juice, etc. are the items referred as
beverages in Entry 40. So far as the items of beverages, like bottled soft
drinks, mineral water or soda, rate of tax is at the appropriate rate mentioned
in Entry 87 and a hotel/restaurant referred to in Entry 40 buying such items
from registered dealers and making re-sales will be entitled to second sale
exemption. A Full Bench of this Court in Lazarus Alosius v. State of Kerala ,
held that soda and cola sold in bar attached hotels attracts tax at twenty per
cent. We do not think the case can be any different so far as mineral water also
is concerned. We, therefore, uphold the order of the tribunal confirming the
assessment of soda and mineral water under Entry 87 of Ist Schedule to the KGST
Act and dismiss the S.T. Rev. Case on this issue.

   3. So far as the next issue i.e. assessment of purchase turnover of ice from
unregistered dealers under Section 5A is concerned, the issue is covered by the
decision of this Court in State of Kerala v. Cochin Shipyard Ltd. . Following
the said decision, we

   dismiss the S.T. Rev. Case on this issue also.