1. For the assessment year 1972-73 the petitioner returned a taxable turnover of Rs. 2,50,868. The Joint Commercial Tax Officer, Purasawalkam, determined the taxable turnover at Rs. 2,60,868 by an assessment order dated 13th July, 1973. The place of business of the dealer was inspected on 6th August, 1973, by the officers of the intelligence wing. They recovered 7 slips from the business premises. The managing partner, at the time of inspection, admitted in his statement of that date that all the slips related to the business of the dealer. After issuing a notice under section 16 and after hearing the dealer, the Joint Commercial Tax Officer brought to tax a further turnover of Rs. 7,05,703 as suppressed turnover. He also levied a penalty of Rs. 38,903 being 1 1/2 times the tax due. The dealer filed an appeal before the Appellate Assistant Commissioner and contended that none of the slips recovered related to his business, that they were neither in the handwriting of any of the partners nor employees of the dealer and that there is no intrinsic evidence to connect the slips with the dealer's business. The Appellate Assistant Commissioner noted that slip No. 1 showed the trading results of the business for a whole year, that there is a reference to purchases and sales and that, in view of the statement of the managing partner at the time of inspection, it should be held that these slips related to the business of the dealer. In that view, he came to the conclusion that the assessing authority was justified in coming to the conclusion that the sale amount of Rs. 9,56,569 as noted in the slips, related to the appellant's business in 1972-73 and the addition to the turnover was correct. All the same, the Appellate Assistant Commissioner held that there was no specific finding that there was a wilful non-disclosure of the transaction found in the slips and that, therefore, no penalty could he levied. Accordingly, he cancelled the penalty. The dealer preferred an appeal before the Tribunal questioning the addition on the ground of escaped turnover. The revenue filed T.M.P. No. 2 of 1977 before the Tribunal praying to restore the levy of penalty made by the assessing officer. The Tribunal, after a reappraisal of the entire material available, came to the conclusion that the slips recovered from the dealer's premises did relate to the business carried on by the dealer and that the total sales during the year were Rs. 9,56,568.73 and that, therefore, the enhancement of the turnover was right and does not call for any interference. The Tribunal also held that having regard to the turnover originally returned and the recovery of the slips subsequently, which showed a larger turnover, there was a wilful suppression attracting the levy of penalty. He also held that as there was a large scale suppression of turnover, the levy of penalty was called for and was justified. On that ground the Tribunal entertained the petition filed by the revenue for restoration of the penalty, and with an observation that the facts and circumstances did not warrant such large penalty of Rs. 38,903, reduced the penalty to Rs. 1,500. It is against this order of the Tribunal that the dealer has filed this revision petition.
2. In this petition the dealer has questioned both the redetermination of the turnover by the addition of Rs. 7,05,703 as also the levy of penalty of Rs. 1,500. Under section 36(3) of the Tamil Nadu General Sales Tax Act of 1959 in disposing of an appeal the Tribunal may, after giving the appellant a reasonable opportunity of being heard, enhance the assessment or penalty or both. Purporting to invoke this power, the revenue filed an application for enhancement of the penalty. This Court has held in State of Tamil Nadu v. Jakthi Veliyeetakam 1977 40 S.T.C.466 that the general power conferred on the Tribunal for enhancing the penalty can be invoked only if there was something to be enhanced. If the Appellate Assistant Commissioner had set aside the order of penalty in toto, the Tribunal will have no jurisdiction to entertain any such petition for enhancement as, in such a case, there was no penalty that could be enhanced. Enhancing the penalty already imposed is different from restoring the penalty which was imposed by the original authority but set aside by the Appellate Assistant Commissioner since the subject-matter of the appeal before the Tribunal was the order of the appellate authority and not that of the original authority. Consequently, therefore, the petition T.M.P. No. 2 of 1977 before the Tribunal was not maintainable and the order of the Tribunal in so far as it levied Rs. 1,500 as penalty was without jurisdiction and is liable to be set aside and that portion of the order is accordingly set aside.
3. Coming to the merits of the redetermination of the turnover under section 16, the case of the learned counsel for the dealer is that though the slips were recovered from the business premises of the dealer, they did not relate to the business of the dealer as such and that, therefore, on the basis of those slips neither could it have been held that any turnover has escaped assessment or the turnover was suppressed, nor could the turnover have been enhanced. The petitioner has also filed T.C.M.P. No. 23 of 1980 praying to permit to raise additional ground in respect of this addition to the original turnover. The ground sought to be raised is that in view of the decision of the Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi : 1SCR557 , the Supply of articles of food in the dealer's restaurant cannot be regarded as sale and that, therefore, the turnover relating to the same could not be included in the taxable turnover. The learned Additional Government Pleader objected to this petition for permission to raise additional ground, on the ground that it is a new point that is raised for the first time in this revision and such a ground shall not he permitted to be raised. We are unable to accept this objection of the learned counsel for the revenue. It is not a case where the dealer disputed any new turnover for the first time in revision. The entire addition to the turnover amounting to Rs. 7,05,703 was the subject-matter of dispute from the beginning. The dealer was contending that the turnover was not liable to be included in his taxable turnover. It is true that this was on the basis that the original turnover determined in the original assessment proceedings was the only taxable turnover and there were no further sales effected by him and that there was no suppression of the sales and that the slips recovered also did not relate to his business. But the question now sought to be raised is another aspect of the liability of the petitioner relating to the same turnover which is disputed. This Court has held in Stale of Madras v. Voltas Limited. Madras : No. 2, 1963 14 S.T.C.861, that in a revision petition under section 38 the revision petitioner cannot seek permission to raise questions of law relating to a turnover not comprised in the petition by filing a miscellaneous petition. But if it related to a turnover which is the subject-matter of dispute he could raise any new point of law relating to the taxability of that turnover. Further, in this case, the judgment of the Supreme Court was rendered only on 7th September, 1978, and he could not have raised any ground relying on the same at any earlier stage. The only decision that was holding the field up-till that time was the decision in State of Himachal Pradesh v. Associated Hotels of India Ltd. : 2SCR937 and that case in terms did not apply to the facts of the petitioner's case. We are, therefore, of the view that the petitioner is entitled to raise this additional ground and we are also satisfied that it is just and reasonable to permit the petitioner to raise this additional contention.
4. Though on such permission granted we have to simply remand the matter to the Tribunal for a reconsideration on merits in the light of the judgment of the Supreme Court, we consider it desirable to state the ratio of the judgment of the Supreme Court as that was the subject-matter of controversy at the Bar. While the learned Government Pleader would contend that the application of the decision of the Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi : 1SCR557 , as explained in the review order reported in 45 S.T.C. 212, will have to be restricted to food and drinks supplied in residential hotels or restaurants attached to residential hotels and not generally to all the restaurants where such food is supplied, irrespective of the fact whether the food is consumed in the hotel itself or whether it is purchased and taken home. On the other hand, the learned counsel for the dealer argued that in spite of the review order the original decision stands and the supply of food by a hotelier is not at all taxable under the Tamil Nadu General Sales Tax Act as it would not amount to a sale.
5. In the decision in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi : 1SCR557 , the two questions that were considered were : (1) Whether the supply of meals to residents, who paid a single all-inclusive charge for all services in the hotel, including board, was exigible to sales tax, and (2) whether the service of meals to casual visitors in the restaurant was taxable as a sale (i) when the charges were lump sum per meal or (ii) when they were calculated per dish So far as the first question is concerned, it was concluded by the earlier decision of the Supreme Court in Associated Hotels of India Ltd. : 2SCR937 The Supreme Court also held on the second question that the service of meals to visitors in the restaurant of the appellant was not taxable under the Act, whether a charge was imposed for the meal as a whole or according to the dishes separately ordered. Though this was the ultimate conclusion, the ratio of the judgment will have to be considered with reference to the process of reasonings made in the original judgment. The Supreme Court noted some of the English judgments and a passage in 'Innkeepers & Hotels' by Professor Beale wherein it was stated that :
'As an innkeeper does not lease his rooms, so he does not sell the food he supplies to the guest. It is his duty to supply such food as the guest needs, and the corresponding right of the guest is to consume the food he needs and to take no more. Having finished his meal, he has no right to take food from the table, even the uneaten portion of food supplied to him, nor can he claim a certain portion of food as his own to be handed over to another in case he chooses not to consume it himself. The title to food never passes as a result of an ordinary transaction of supplying food to a guest.'
6. The Supreme Court then noted that in England this principle was extended to the service of food at eating places or restaurants as well and not being restricted to supply of food by an innkeeper. The learned Judges then considered the decisions of the American Courts wherein also it was found that when food is supplied to a customer in a hotel or a restaurant, there is no agreement for the transfer of the general property of the food or drink placed at the command of the customer for the satisfaction of his desires, or actually appropriated by him in the process of appeasing his appetite or thirst, and he is only privileged to cat and the uneaten food is not his. The Supreme Court also noted that though the decided cases even in the States applied the same principle as in English Courts, the legislature later intervened in the United States by an enactment of the Uniform Commercial Code which provided in effect that the serving for value of food or drink to be consumed either on the premises or elsewhere constituted a sale.
7. Coming to the decision in India, the Supreme Court referred to the decision in Associated Hotels of India Ltd. : 2SCR937 and after noting that that case related to the food and drinks supplied to guests residing in a hotel, observed that there is no distinction in law between the meals supplied to a resident in a hotel and those served to a customer in a restaurant. The Supreme Court further observed :
'Like the hotelier, a restaurateur provides many services in addition to the supply of food. He provides furniture and furnishings, linen, crockery and cutlery, and in the eating places of today he may add music and a specially provided area for floor dancing and in some cases a floor show.'
8. In that view it was held that the service of meals to visitors in the restaurant of the appellant therein was not taxable under the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi, and this is so whether a charge is imposed for the meal as a whole or according to the dishes separately ordered.
9. It appears that a review petition was filed by the Delhi Administration, in which a number of States appeared as interveners. The judgment was sought to he reviewed on the ground that the judgment proceeded on an erroneous assumption that a restaurant can, for the purposes of the point of law decided by the Supreme Court, be likened to an inn. The review order is reported in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi : 2SCR650 Pathak, J., who delivered the original judgment, spoke for himself and Tulzapurkar, J., and traced the grounds on which the earlier judgment was based. The learned Judge observed :
'that the supply and service of food to a customer to he eaten in the restaurant was not a sale for the reason that he was merely entitled to eat the food served to him and not to remove and carry away the unconsumed portion of the food. Had that amounted to a sale, the unconsumed portion would have belonged to the customer to take away and dispose of as he pleased. Besides, the court noted, there were other amenities and services of considerable materiality which were also provided.'
10. The learned Judge also referred to the statement in the petition filed under article 136(1) of the Constitution relating to the facts on which the case was decided and ultimately held that their judgment was based on the uncontroverted and admitted facts that the appellant prepared and served food both to the residents in its hotel as well as to casual customers who came to cat in its restaurant, and throughout it maintained that having regard to the nature of the services rendered there was no real difference between the two kinds of transactions. In both cases, it remained 'a supply and service of food not amounting to a sale'.
Krishna Iyer, J.
11. who delivered a separate judgment, concurred with the other two learned Judges but made certain striking observations which bring out the real ratio of the earlier judgment. The learned Judge observed :
'If you go to a coffee-house, order two dosas, eat one and carry the other home, you buy the dosas. You may keep the cake and eat it too, like a child which bites a part and tells daddy that he would cat the rest at home. Myriad situations where the transaction is a sale of a meal, or item to eat or part of a package of service plus must not be governed by standard rule. In mere restaurants and non-residential hotels, many of these transactions are sales and taxable. Nor are additional services invariably components of what you pay for. You may go to an air-conditioned cloth-shop or sweetmeat store or handicrafts emporium where cups of tea may be given, dainty damsels may serve or sensuous magazines kept for reading. They are devices to attract customers who buy the commodity and the price paid is taxable as sale. The substance of the transaction, the dominant object, the life-style and other telling factors must determine whether the apparent vendor did sell the goods or only supply a package of services. Was there a right to take away any eatable served, whether it be bad manners to do so or not In the case we have, the decision went on the ground that such right was absent. In cases where such a negative is not made out by the dealer - and in India, by and large, the practice does not prohibit carrying home - exigibility is not repelled.'
12. It may be seen from the review order as also from the earlier judgment that it matters not whether the food was served in a residential hotel or a restaurant attached to that hotel or a mere restaurant or non-residential hotel. The transaction will become a sale only if there is a right vested in the customer to take away the eatables served. If the customer has no right to home what he wanted after eating what he wanted, it would not be a case of sale. It may be mentioned that in all cases whether mere hotels or non-residential hotels, or high-styled restaurants or residential hotels, some sort of a service also is included. In the original judgment the Supreme Court pointed out that the provision of furniture and furnishings, linen, crockery and cutlery and providing music or floor area for dancing or floor show are all included in the concept of service and the price paid includes for such service as well. This type of service is normally available in not merely high-styled restaurants but also in any ordinary restaurants. Therefore, the distinguishing feature which makes the transaction a sale or not is the blending of the services above referred to with the right or no right to carry home what he wanted after eating what he wanted, which will be the deciding factor. If it is with no right to carry home, it will not amount to a sale and if it is with a right to carry home, it will amount to a sale. Therefore, in every case it will have to be decided with reference to the turnover that is sought to be taxed as to whether it amounted to a sale or not applying the principles laid down by the Supreme Court in the above decision.
13. The Supreme Court also has made this pertinent observation relating to the burden of proof :
'Indeed, we have no hesitation in saying that where food is supplied in an eating-house or restaurant, and it is established upon the facts that the substance of the transaction, evidenced by its dominant object, is a sale of food and the rendering of services is merely incidental, the transaction would undoubtedly he exigible to sales tax. In every case it will be for the taxing authority to ascertain the facts when making an assessment under the relevant sales tax law and to determine upon those facts whether a sale of the food supplied is intended.'
14. This passage clearly shows that each case will have to he decided on its own facts and from the mere fact that the food was supplied in a restaurant and not a high-styled restaurant or a residential hotel it cannot be presumed to be a sale or no sale.
15. We accordingly set aside the order of the Tribunal even in respect of the assessment and remand the matter for fresh disposal in the light of the above observations. We may add that the order of the Tribunal so far as the penalty is concerned is set aside and the Tribunal is not entitled to go into it again. There will be no order as to costs.
16. Petitions allowed.