FATEH MAIDAN CLUB Vs. COMMERCIAL TAX OFFICER
HIGH COURT OF ANDHRA PRADESH
FATEH MAIDAN CLUB
COMMERCIAL TAX OFFICER
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A.LAKSHMANA RAO, J. -
(1.)THIS writ petition has been filed seeking a writ of prohibition restraining the respondents from assessing or collecting sales tax purportedly under the provisions of the Andhra Pradesh General Sales Tax Act, 1957, hereinafter referred to as "the Act", from April 1, 1983, onwards. The petitioner herein as the Fateh Maidan Club. So far as the liability of the petitioner-club to pay sales tax in respect of food or drinks supplied or served to its members is concerned, the matter is squarely covered by a decision of this Court in Writ Petition No. 12920 of 1988 and batch dated February 14, 1992 [reported as Jubilee Hills International Centre v. Commercial Tax Officer  87 STC 227 (AP)]. It was held therein that the clubs come within the meaning of "dealer" under the Act and therefore, the clubs were liable to pay sales tax.
(2.)IT is, however, submitted by Mr. S. Dasaratharama Reddi, learned counsel for the petitioner-club, that though section 5-C of the Act had been given retrospective effect from February 2, 1983, the authorities have no power to levy tax in respect of the transactions that had taken place during the period from February 2, 1983 to June 30, 1985, as the amendment enlarging the definition of the words "sale", "turnover" and "tax" was given effect only from July 1, 1985.
Placing reliance on the decision of the Supreme Court in Govind Saran Ganga Saran v. Commissioner of Sales Tax  60 STC 1, it is submitted by the learned counsel for the petitioner-club, that when the components which enter into the concept of a tax have not been clearly and definitely indicated by the Legislature, the authorities have no power to levy the tax. In the said decision, the Supreme Court pointed out as follows :
" The components which enter into the concept of a tax are well-known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed, and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. "
Section 5-C of the Act reads as follows :
" Every dealer running any restaurant or eating house or hotel (by whatever name called), who supplies, 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, shall on the total amount charged by the said dealer for such supply pay a tax at the rate of five paise on every rupee on the aggregate of such amounts realised or realisable by him during the year. "
(3.)THE taxable event attracting the levy is the supply or service of any food or drink or any other article for human consumption, and thus the taxable event has been clearly indicated in the section itself. The person, who is liable to pay the tax has also been mentioned in the section itself and that is the dealer running any restaurant or eating house or hotel. " Dealer" as defined in section 2 (e) of the Act means, any person who carries on the business of buying, selling, supplying or distributing goods directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes a club. This definition was incorporated in the Act from the beginning the Act was made. Therefore, the second component is also satisfied. The third requirement to be satisfied is the rate of tax. This has been clearly mentioned in the section itself and it is at the rate of five paise on every rupee. Then the fourth component relates to the measure or value to which the rate will be applied for computing the tax liability. The section provides that tax shall be levied at the rate of five paise on every rupee on the total amount charged by the dealer for the supply or service of the food or drink or any other article. Therefore, the measure or value to which the rate will be applied has also been clearly indicated in the section. Thus all the four components that enter into the concept of a tax have been mentioned in the section.
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