[aaykarbhavan] Re: Kerala HC rules service tax on AC restaurants invalid

Are there similar cases in other High Courts also ?

--- In aaykarbhavan@yahoogroups.com, Prarthana Jalan <prarthanajalan@...> wrote:
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> [Attachment(s) from Nimesh Dedhia included below]
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> Kerala HC rules
> service tax on AC restaurants invalid
>  
> The Kerala High Court on Wednesday held that the Centre’s decision
> to impose service tax on food and beverages supplied by air-conditioned
> restaurants with licences to serve alcoholic beverages in the 2011-12 budget was
> beyond the legislative competence of Parliament.
> Justice A.M. Shaffique passed the verdict while allowing a batch
> of writ petitions filed by Kerala Bar Hotels Association and certain bar
> hoteliers.
> The service tax was imposed on air-conditioned restaurants with
> licence to serve alcoholic beverages in the 2011-12 Union Budget. A service tax
> of 12.36 per cent applicable on 30 per cent of the bill had been imposed on such
> restaurants, which came into effect on April 1 last year.
> The petitioners contended that Article 366 Section 29 (f) of the
> Constitution defined supply of food and drinks in hotels as ‘deemed sales’ and
> empowered the State governments to collect sales tax on the total value of
> sales. Therefore, the Centre has no authority or power to collect such service
> tax.
> The court observed that the every purpose of incorporating the
> definition of tax on sale or purchase of goods in Article 366 was to empower the
> State government to impose tax on the supply, whether it was by way of or as
> part of any service of goods either being food or any other article for human
> consumption or any drink, intoxicating or not.
> The Constitution permitted sale of goods during service as
> taxable. Necessarily, service formed part of sale of goods. Therefore, the State
> government alone has the legislative competence to enact a law imposing a tax on
> service elements forming part of sales of goods, the court ruled.
> The court also ordered that if the petitioners had made any
> payments on the basis of the impugned clauses, they were entitled to seek refund
> of the amount.
>




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