Title: Commercial Taxes Officer Versus Chokhi Dhani Resorts Pvt. Ltd.
Decided on: 02 June, 2023
Case No.: S.B. Sales Tax Revision / Reference No. 63/2020
CORAM: HON’BLE Justice Sammer Jain
Introduction
The present case involves a series of Sales Tax Revisions/References (STRs) filed by the revenue against an order of the Rajasthan Tax Board. The central issue revolves around the taxation of services provided by M/s Chokhi Dhani Resorts Pvt. Ltd., which includes food and entertainment services, specifically whether the revenue is justified in taxing the entire consideration for food or not.
Facts
A survey conducted on the premises of M/s Chokhi Dhani Resorts Pvt. Ltd. revealed that the establishment issued entry coupons to customers, charging Rs. 350 per adult and Rs. 175 per minor. These coupons were described as “adjustable in food only.” However, the company paid VAT only on a portion of this amount (Rs. 250 for adults and Rs. 125 for children) and accounted separately for the remaining amount under various heads like cultural receipts, administrative expenses, and maintenance. This bifurcation of charges led to the dispute.
Judgment
The court examined the definitions of “sale” and “sale price” under the Rajasthan Value Added Tax Act, 2003, and concluded that the entire amount charged for food must be subject to VAT, regardless of bundled services. The court cited the Supreme Court’s ruling in K. Damodarasamy Naidu and Bros. v. The State of Tamil Nadu, emphasizing that the price a customer pays for food in a restaurant cannot be split based on the services provided. The court dismissed the assessee’s argument that the dominant supply was entertainment, as the coupons were adjustable only against food, and separate charges were imposed for additional services. The court also noted that invoices were issued only upon specific customer requests.
Consequently, the court allowed the Sales Tax Revisions/References, upheld the levy of penalties, and set aside the Rajasthan Tax Board’s order.
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Written by Yagya Agarwal
