RAJU, J. - (1.) THESE writ petitions have been filed by several hoteliers which are recognised and classified as three star, four star and five star hotels by the Department of Tourism, Government of India and restaurant owners, challenging the levy of sales tax under the Tamil Nadu General Sales Tax Act, 1959, in respect of supply of food and drinks in their hotels for the assessment years 1980-81 to 1988-89. Some of these writ petitions are filed for writs of declaration, declaring entry No. 150 of the First Schedule to the TNGST Act, while some others are filed for writs of mandamus, forbearing the authorities of the Sales Tax Department from subjecting the turnover relating to supply of food and drinks to tax under entry No. 150 of the First Schedule to the Act and several other writ petitions are filed for writs of mandamus, forbearing the respondents from levying sales tax on such transactions till the State Government passes orders on the representations made for waiver of the sales tax in respect of the assessment years in question. The period of assessment, no doubt, differs from assessee to assessee as also the writ petitions filed by them. But, the legal submissions and basis of challenge, at the time of hearing of these writ petitions are common and identical and consequently are dealt with together.
(2.) THE history of the statutory provisions pertaining to the levy of sales tax in all these cases and the law declared by the Supreme Court of India and this High Court (as also some of the other High Courts) require to be dealt with in some detail to have a better understanding and appreciation of the grievance espoused on behalf of the petitioners and the legal contentions raised by the several learned counsel appearing on either side. Originally the turnover relating to hotels and restaurants in respect of sales and supply of food in restaurants was being subjected to the levy of sales tax, subject to any notification for exemption in force, under the general charging provisions of the Act in the State of Tamil Nadu. In G.O. P. No. 977, Commercial Taxes and Religious Endowments, dated October 4, 1980, published in the Tamil Nadu Government Gazette dated October 6, 1980, by way of amendment to the First Schedule to the TNGST Act, 1959, in exercise of powers under section59(1) of the Act, entry No. 150 was added in the following terms : "150. Articles of food and drink, sold to At the point of 10%." customers in three star, four star, and first sale in five star hotels as recognised by Tourism the State. Department, Government of India, whether such articles are meant to be consumed in the premises or outside. As required, legislative affirmation was also given to the same by enacting the Tamil Nadu General Sales Tax Laws (Amendment and Repeal) Act, 1981, Tamil Nadu Act 7 of 1981. The Government also issued, in exercise of its powers under section17(1) of the Act, an exemption Notification in G.O. P. No. 1001, Commercial Taxes and Religious Endowments Department, dated October 6, 1980, exempting with effect from October 6, 1980, the tax payable by any dealer under the Act on the sale of food and drinks in any hotel or restaurant other than those specified in entry No. 150 of the First Schedule to the Act. Subsequently, in G.O. Ms. No. 660, Commercial Taxes and Religious Endowments Department, dated June 12, 1981, published in the Tamil Nadu Government Gazette dated June 15, 1981, invoking the powers of section 59(1) of the Act for the entry in column No. 2 of entry No. 150 of the First Schedule, the following was substituted : "Articles of food and drink other than those specified elsewhere in this Schedule, sold to customers in hotels classified or approved by the Government of India, Department of Tourism."* In and by the very same Notification, G.O. Ms. No. 660, Commercial Taxes and Religious Endowments Department, dated June 12, 1981, the Government, in exercise of its powers under section17(1) and (3) of the Act and in cancellation of the earlier notification dated October 6, 1980, granted exemption in respect of the tax payable under the said Act by any hotel or restaurant other than those specified in entry No. 150 of the First Schedule to the Act on the sale of food and drinks other than those falling under the First Schedule to the Act. Legislative affirmation was also given to the substitution ordered to entry No. 150 of the First Schedule by G.O. Ms. No. 660, C.T. and R.E. Department, dated June 12, 1981, by the Tamil Nadu General Sales Tax (Amendment) Act, 1982, Tamil Nadu Act 4 of 1982, published in the Tamil Nadu Government Gazette dated February 20, 1982. In G.O. Ms. No. 1186, C.T. & R.E. Department, dated October 22, 1982, published in the Tamil Nadu Government Gazette dated November 24, 1982, the Government, in exercise of its powers under section17(1) of the Act granted exemption on and from October 6, 1980, in respect of (a) the tax if any, due on the sales incidental or ancillary to the sales of food and drinks; (b) purchase tax payable under section7-A of the Act; and (c) the additional tax due under the Tamil Nadu Additional Sales Tax Act, 1970 and surcharge due under the Tamil Nadu Sales Tax (Surcharge) Act, 1971, payable under the respective Acts by any hotel or restaurant other than those specified in entry No. 150 of the First Schedule to the Act.
(3.) WHILE so, the Constitution (Forty-sixth) Amendment Act, 1982, was enacted and published in the Gazette of India dated February 3, 1983, providing for among other things, insertion of clause (29-A) to article 366 of the Constitution of India, defining "tax on the sale or purchase of goods" and also validating and exempting certain levy. The relevant portion of clause (29-A) in so far as it concerns the cases before us, is sub-clause (f) which reads as hereunder : "(f) a tax on the supply, by way of 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."* The provisions of section 6, on which much controversy has been raised, read as hereunder : "6. Validation and exemption. - (1) For the purposes of every provision of the Constitution in which the expression 'tax on the sale or purchase of goods' occurs, and for the purposes of any law passed or made, or purporting to have been passed or made, before the commencement of this Act, in pursuance of any such provision, - (a) the said expression shall be deemed to include, and shall be deemed always to have included, a tax (hereafter in this section referred to as 'the aforesaid tax') on the supply, by way of 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) for cash, deferred payment or other valuable consideration; and(b) every transaction by way of supply of the nature referred to in clause (a) made before such commencement shall be deemed to be, and shall be deemed always to have been, a transaction by way of sale, with respect to which the person making such supply is the seller and the person to whom such supply is made, is a purchaser. and notwithstanding any judgment, decree or order of any court, tribunal or authority, no law which was passed or made before such commencement and which imposed or authorised the imposition of, or purported to impose or authorise the imposition of, the aforesaid tax shall be deemed to be invalid or ever to have been invalid on the ground merely that the Legislature or other authority passing or making such law did not have competence to pass or make such law, and accordingly - (i) all the aforesaid taxes levied or collected or purporting to have been levied or collected under any such law before the commencement of this Act shall be deemed always to have been validly levied or collected in accordance with law; (ii) no suit or other proceeding shall be maintained or continued in any court or before any tribunal or authority for the refund of, and no enforcement shall be made by any court, tribunal or authority of any decree or order directing the refund of, any such aforesaid tax which has been collected; (iii) recoveries shall be made in accordance with the provisions of such law of all amounts which would have been collected thereunder as such aforesaid tax if this section had been in force at all material times. 2. Notwithstanding anything contained in sub-section (1), any supply of the nature referred to therein shall be exempt from the aforesaid tax - (a) where such supply has been made, by any restaurant or eating house (by whatever name called), at any time on or after the 7th day of September, 1978, and before the commencement of this Act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time; or(b) where such supply, not being any such supply by any restaurant or eating house (by whatever name called), has been made at any time on or after the 4th day of January, 1972, and before the commencement of this Act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time : Provided that the burden of proving that the aforesaid tax was not collected on any supply of the nature referred to in clause (a) or, as the case may be, clause (b), shall be on the person claiming the exemption under this sub-section. (3) For the removal of doubts, it is hereby declared that, - (a) nothing in sub-section (1) shall be construed as preventing any person - (i) from questioning in accordance with the provisions of any law referred to in that sub-section, the assessment, reassessment, levy or collection of the aforesaid tax, or (ii) from claiming refund of the aforesaid tax paid by him in excess of the amount due from him under any such law; and (b) no act or omission on the part of any person, before the commencement of this Act, shall be punishable as an offence which would not have been so punishable if this Act had not come into force."* The Tamil Nadu State Legislature also enacted Tamil Nadu General Sales Tax (Fourth Amendment) Act, 1984, Tamil Nadu Act 28 of 1984 amending some of the provisions of the Tamil Nadu General Sales Tax Act, 1959, viz., section 2(n), 2(g), 2(r), etc., to incorporate the provisions of clause (29-A) of article 366 of the Constitution of India into the Act.;