By C. B. Thakar | Advocate
G. G. Goyal
Janak vaghani | Chartered Accountants
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(2011) 41 vST 500 (Ker.) State of Kerala v. Mukkadan’s Hotel
Sale price — Turnover of sales — Separate charges for amenity facilities and supply of food or liquor — Served in hotel and restaurants — Entire amount forms part of sales price and turnover of sales — Separation of sale price between cost and amenity charges immaterial — Section 2(xxvii) of the Kerala General Sales Tax Act, 1963.
The State of Kerala filed the revision petition before the Kerala High Court against the decision of the Tribunal allowing the claim of the hotelier for deduction of amount collected separately in sale bill for providing lot of facility like lawn, air-conditioning, parking space for vehicles, etc., enjoyed by the customer, from determination of sale price for the purpose of levy of turnover tax under the Kerala General Sales Tax Act. The State contended before the High Court that no customer is charged for any amenity separately, but all what the dealer does is bifurcation of sale price showing substantial amount towards amenities only to avoid tax.
Held:
The question to be considered is whether the amenities separately charged without any facility or service provided is to be excluded from turnover. The dealer has no case that separate tariff is provided in hotel — one for those who do not want to avail of special amenities and the other for those who want to avail so. On the other hand, what is shown is sale price bifurcated between cost and amenities and the dealer is claiming exclusion of amenity charges from turnover for the purpose of levy of sales tax.
The turnover tax is payable on turnover which includes all amounts received for sale of goods. In fact, under Explanation 2 to section 2(xxvii) of the Act “the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of goods sold at the time of, or before, the delivery of thereof”. The words ‘anything done’ includes any service provided therefore, the charges levied for amenities provided in a bar or restaurant for the customer to enjoy the foods or liquor, form part of the price for which goods are sold.
The dealer could not correlate the charges levied and the amenity provided to any customer in any given case. Therefore, it is only dubious method to evade payment of tax.
Accordingly the High Court allowed the revision petition filed by the State and restored the assessment order passed by the assessing authorities holding the amenity charges as part of turnover of sale of goods for the purpose of levy of tax.
