The Madras High Court held that bakery products do not fall under the 1987 sales tax exemption notification. Only tea, coffee, and green tea are covered, dismissing a Chennai restaurant’s plea.
The Madras High Court has recently made it clear that bakery products cannot be brought under the exemption notification for sales tax.
The case came before the High Court after a petition was filed by a restaurant located at No.32, Nungambakkam High Road, Chennai. The restaurant is engaged in preparing and selling food and drinks, and it was admitted before the court that none of these items were sold under any brand name.
The petitioner argued that according to the notification in G.O.P.No.570 dated 10th June 1987, the sale of bakery products in a snack bar was exempted from sales tax. Therefore, they claimed entitlement to the exemption under that notification.
Earlier, the Tamil Nadu Taxation Special Tribunal had ruled in favour of the assessee, finding that the bakery products sold by the restaurant would fall under the heading “food and drinks” in the Government Order.
The Tribunal also observed that these items were being sold from a restaurant licensed by the Corporation of Chennai.
However, this view was later reversed by the Tamil Nadu Sales Tax Appellate Tribunal, which decided that the petitioner was not eligible for the exemption.
Challenging this decision, the petitioner approached the Madras High Court by way of a writ petition.
Before the High Court, it was argued that the petitioner’s case clearly fell under Entry 48 of the III Schedule, which meant that selling bakery products was not covered by the exemption clause.
The court was told that only specific items such as tea, coffee, and green tea, as listed under Entry 48 of Schedule III, were covered under the exemption notification. Therefore, the appellate Tribunal was correct in rejecting the petitioner’s claim.
After examining the provisions carefully, the bench of Justices SM Subramaniam and CS Saravanan rejected the plea of the petitioner.
The judges observed:
“Holistic reading of the above items stipulated under Sl.No.9 to 1st Schedule would indicate that the bakery products are not included and thus would not fall under the exemption notification. In fact, the bakery products are stated in I Schedule of Part B of Sl.No.11. The said Sl.No.11 of part B of I Schedule has not been exempted under the notification. Therefore, the petitioner’s case would not fall under the exemption notification. Therefore, this Court has no hesitation in arriving at a conclusion that the Original Authority and the appellate Tribunal has rightly interpreted the exemption notification and the scope of its applications.”
With this finding, the High Court confirmed the order of the appellate Tribunal and dismissed the writ petition filed by the restaurant.
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This ruling makes it clear that the exemption granted under the 1987 Government Order applies only to limited items like tea, coffee, and green tea, and not to bakery products.
Businesses selling bakery goods from restaurants or snack bars will therefore not be able to claim the benefit of this sales tax exemption.
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