V. Ramaswami, J.
1. The point that arises for consideration in these tax cases relates to the assessability of certain turnover in a canteen run by three companies, M/s. A.B.T. (P.) Ltd., M/s. Anamalai Engineering Co. and M/s. Gounder & Co. The three companies are sister concerns, The preassessment notice was issued to the manager of the canteen, proposing to assess the canteen sales. It was contended on behalf of the assessee that the canteen sales are exempt from the levy of tax under G.O. Press No. 2238, Revenue, dated 1st September, 1964. Though the assessment years are different, the same question arises now in respect of all the assessment years. The assessing officer and the appellate authority rejected this claim of exemption on the ground that the Government Order invoked by them applies only to canteens run by individual employers, who are under a statutory obligation, but not to a case where it was run by three different companies jointly for their employees. On a further appeal, the Tribunal held that though the assessee was not entitled to the benefit of the Government Order, still the turnover is not liable to tax, as the sales of food and drinks in the canteen were not in the course of business of the three companies, who were running the canteen. This revision petition has been filed by the revenue challenging this view of the Tribunal.
2. The view of the Tribunal that the sales were not in the course of the business of the respective companies and that, therefore, not liable to tax, is clearly wrong in view of the decision of the Supreme Court in State of Tamil Nadu v. Burmah Shell Company Limited : 2SCR636 . But the learned counsel for the assessee sought to sustain the exemption of the turnover from tax allowed by the Tribunal on the ground that the sales are clearly covered by the exemption granted under G.O. Press No. 2238, Revenue, dated 1st September, 1964 and the view of the Tribunal that the Government Order is not applicable is not correct.
3. Before we consider the scope of the Government Order, it is necessary to set out certain facts relating to this canteen. There are about 556 employees in M/s. A.B.T. (P.) Ltd., 367 in M/s. Anamalai Engineering Co. and 17 workers in M/s.Gounder & Co. In every one of the assessment years in question more than 25 per cent of the expenses were met by the employers and this expenditure was contributed at the ratio of 58 per cent, 39 per cent and 2 per cent respectively, which is approximately the ratio of the employees employed in each one of the companies. M/s. A.B.T. (P.) Ltd. is under the statutory obligation to run a canteen under Rule 16 of the Madras Motor Transport Workers Rules, 1965 and M/s. Anamalai Engineering Co. is under a statutory obligation to run a canteen under Rule 65 of the Madras Factories Rules. But M/s. Gounder a Co. is not under any statutory obligation to run a canteen. The canteen was run by the three companies without any motive for profit on a 'no-profit and no-loss basis'. It was only intended to provide canteen facilities to the employees of these three sister concerns and not a canteen run for general public.
4. The Government Order, which is relied on by the learned counsel for the assessee, reads as follows :
G.O. Press No. 2238, Revenue, dated 1st September, 1964.-In exercise ...the Governor of Madras hereby exempts, with effect on and from the 1st September, 1964, the tax payable under the said Act, on the sales by all canteens run by an employer or by the employees on co-operative basis on behalf of the employer, under a statutory obligation without profit-motive, provided that the employer subsidises at least twenty-five per cent of the total expenses incurred in running the canteen.
5. It might be seen from this Government Order that four conditions have to be satisfied in order to get a benefit of exemption. Firstly, the canteen must be run by an employer ; secondly, such an employer must be under a statutory obligation to run a canteen ; thirdly, it should be run without profit-motive ; and fourthly, the employer should subsidise at least 25 per cent of the total expenses incurred in running the canteen. The argument of the learned counsel for the assessee is that even to a case where the canteen is run jointly by more than one company for the benefit of their employees, the exemption under the Government Order should be extended, having regard to the object of such provision. According to the learned counsel, if A, B and C, who are three different employers run a canteen for their employees, it should be treated as a canteen run by an employer satisfying the first condition. In other words, the words 'an employer' in the first condition should include a plurality of employers. It might be possible, if all the other conditions are satisfied, to give this liberal interpretation relating to the first condition. But, in this case, M/s. Gounder & Co. was not under a statutory obligation to provide any canteen. Therefore, the canteen run by M/s. Gounder & Co. would not be entitled to any benefit under the Government Order. The learned counsel for the assessee then contended that even so, since the other conditions relating to 25 per cent contribution and running a canteen without profit-motive are satisfied, at least in respect of the sales referable to the two employers, who are under a statutory obligation, would have to be exempted. Even that is not possible, because it is the sales in the canteen that are exempt under the Government Order, if the conditions are satisfied. The sales referred to therein should, therefore, be one by the employer to the employee. When the canteen is run by one employer, who is under a statutory obligation and another, who is not under a statutory obligation, the seller is both the employers jointly and not the individual employers separately. Therefore, there is no possibility of dividing the sales into those which are exempt and those which are not exempt. The result of it is that the entire turnover would not be entitled to the benefit of the exemption under the Government Order.
6. We accordingly hold that in the instant case the turnover in dispute is liable to be included in the taxable turnover and, accordingly, we set aside the order of the Tribunal. The revenue will be entitled to its costs. Counsel's fee Rs. 150 in each.