Madras High Court Upholds Rejection of Tax Exemption for Bakery Products Sold by Restaurants

Court Confirms Bakery Products Do Not Qualify for Exemption Under 1987 Notification

In a significant decision, the Madras High Court dismissed the appeal of Cakes N Bakes, a Chennai-based restaurant, which sought a tax exemption for bakery products under the Tamil Nadu General Sales Tax Act. The court upheld the rulings of the Original Authority and the Tamil Nadu Sales Tax Appellate Tribunal, which had denied the exemption claim.

The case revolved around the interpretation of the exemption notification issued in G.O.P.No.570 dated June 10, 1987. Cakes N Bakes, represented by counsel Mr. K.A. Parthasarathi, argued that bakery products sold in their snack bar should be exempt under this notification. The petitioner cited a previous decision by the Tamil Nadu Taxation Special Tribunal, which had allowed such exemptions.

However, the High Court bench, comprising Justices S.M. Subramaniam and C. Saravanan, found that bakery products do not fall under the category of "food and drinks" as defined in the exemption clause. The court noted that the relevant entry, Entry 48 of Part B of the III Schedule, specifically lists items like tea and coffee but does not include bakery products.

The court further explained that bakery products are categorized under Sl.No.11 of Part B of the I Schedule, which is not covered by the exemption notification. Thus, the petitioner's claim was rightly rejected by the Original Authority and the appellate Tribunal.

The judgment emphasizes the importance of adhering to the specific language of statutory provisions and reaffirms the principle that exemptions must be clearly defined within legal texts to be applicable.

Bottom Line:

Bakery products sold by a restaurant are not eligible for exemption under the notification in G.O.P.No.570 dated 10th June 1987 as they do not fall under the category of "food and drinks" mentioned in the exemption clause. 

Statutory provision(s): Tamil Nadu General Sales Tax Act, G.O.P.No.570 dated 10th June 1987, Entry 48 of Part B of III Schedule, Sl.No.9 of Part C of I Schedule, Sl.No.11 of Part B of I Schedule

Cakes N Bakes v. Commercial Tax Officer, (Madras)(DB) : Law Finder Doc Id # 2784470