SRINIVASAN, J. - (1.) BY section 2 of the Madras Act XV of 1949, section 3(1), the charging section of the Madras General Sales Tax Act, 1939, was amended by the addition of a proviso in these terms :- "Provided that if and to the extent to which such turnover relates to articles of food and drink sold in a hotel, boarding house or restaurant, the tax shall be calculated at the rate of 4 1/2 pies for every rupee if the turnover relating to these articles is not less than Rs. 25, 000."
(2.) THE constitutionality of this proviso was challenged in A. R. Krishna Iyer v. State of Madras It was contended therein that the impugned proviso offended against Article 14 of the Constitution. This Court upheld the contention holding : "In our opinion, the distinction between two classes of dealers in articles of food and drink with an annual turnover of Rs. 25, 000 and more, i.e., (i) dealers in such articles of food and drink sold in hotels, boarding houses and restaurants (ii) dealers in such articles of food and drink sold elsewhere, has no reasonable or just relation to the object of the Act, which is to tax the turnover of the sales of a dealer. THE apparent discrimination, which results in one class of such dealers being singled out for levy of tax at a higher rate, has not been explained by any classification with a reasonable basis, having a just and reasonable relation to the object of the Act. We are of opinion that the proviso to section 3(1)(b) of the Act offends Article 14 of the Constitution and is, therefore, void and unenforceable against the first petitioner." In another decision of this Court in State of Madras v. Kanchilal Krishnaswami Nayudu, J., sitting singly had to consider whether the turnover of sales of articles of food and drink sold at sweetmeat stall fell for chargeability within the terms of the proviso above extracted. The learned Judge held therein that, "The three terms, hotel, boarding house and restaurant, imply that what is supplied as and by way of meals, refreshments and drinks are intended to be consumed at the place where facilities are provided for such consumption, and they do not refer to a stall, where such facilities are not provided, since in a stall sweetmeats are sold for the purpose of being taken away from there and not for the purpose of consuming there. It is not suggested that in the sweetmeat stall in question, provision is made for the purchasers to sit and consume the articles. The inclusion of food and drink in the proviso further reinforces the view that what is supplied or sold is intended for consumption at the place, since drink at any rate is not ordinarily intended to be taken home. Taking the language of the clause 'articles of food and drink sold in a hotel, boarding house or restaurant', the irresistible inference that could be come to is that the articles of food and drink are intended ordinarily to be consumed at the place, which cannot be the case in the case of a street-stall as in the present case ......"
(3.) IT was accordingly held that the proviso would not apply to a sweetmeat stall which did not partake of the characteristics of a hotel, boarding house or restaurant. These decisions were followed by an amendment of the Madras General Sales Tax Act. By section 3 of the Act XV of 1956, the proviso was amended, and in the form in which it stood at the relevant time, it ran thus : "Provided that if and to the extent to which such turnover relates to articles of food or drink or both sold in a hotel, boarding house, restaurant, and stall or any other place, the tax shall be calculated at the rate of 4 1/2 pies for every rupees, if the turnover relating to those articles is not less than Rs. 25, 000." The petitioner in the present case is the proprietor of a sweetmeat stall. The net assessable turnover was determined at Rs. 65, 007. Since the amendment of the proviso by Act XV of 1956 came into effect on 8th October, 1956, the assessing authority ascertained the quantity of turnover in respect of the periods 1st April, 1956 to 7th October, 1956, and 8th October, 1956 to 31st March, 1957, in so far as it related to sales of articles of food or drink he determined them respectively at Rs. 29, 971 and Rs. 33, 841. The first of these turnovers was assessed to tax at 3 pies a rupee and the second at 4 1/2 pies. This order of assessment was appealed from and the ground was taken that the selection of prepared foods alone for being subjected to a higher rate of tax as distinct from other raw products, which were also articles of food and drink, amounted to discrimination. The contention was not accepted. The appeal failed. When the matter came to the Appellate Tribunal, the Tribunal dismissed the appeal holding that it had no authority to question the validity of the provisions of the Act and the Rules. The matter has now come to this Court by way of a revision under section 12-B(1) of the Act.;