H.L. Dattu, J.
1. The appellant is a dealer registered under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter for the sake of brevity referred to as 'the Act, 1957') and also registered as 'tourism industry' with the Director of Tourism, Department of Tourism, Government of Karnataka, as category 'B' unit of industry located at Halagevaderahally, Kengeri Hobli, Bangalore South Taluk.
2. The assessee for the assessment years 1998-99 and 1999-2000 had filed annual return of turnover and had declared the sales turnover of food and drinks at Rs. 28,91,755 and Rs. 27,65,150, respectively, and claimed exemption on the entire turnover by placing reliance on the tourism policy of Karnataka and the package of incentives and concessions offered to the tourism industry by the State Government in its Order No. ITY. 9. TTT. 89, dated May 30, 1992 and the certificate issued by the Director of Tourism in No. DTR/HTLS/11/94/ 05/210, dated April 9, 1997, since the sale of 'drinks' not only included sale of beverages like coffee, tea, but also sale of IML and beer. The assessing authority while concluding the assessments for the relevant assessment years had disallowed the claim of exemption on the sales turnover of IML and beer and brought the same to tax under Section 5(1A) of the Act. In the appeal filed against the said order by the assessee, the first appellate authority had allowed the appeal and had directed the assessing authority to grant the claim of exemption on the sales turnover of IML and beer for the relevant assessment years. This order was taken exception to by the revisional authority, on the ground that the order passed by the first appellate authority is erroneous and prejudicial to the interest of the Revenue. After following the formalities required, the revisional authority has cancelled the order passed by the first appellate authority and has restored the orders passed by the assessing authority for the assessment years 1998-99 and 1999-2000 by invoking his suo motu revisional powers under Section 22-A(1) of the Act by his order dated October 22, 2003. Feeling aggrieved by the aforesaid order, the assessee is before this Court in this appeal filed under Section 24 of the Act and has raised the following questions of law for our consideration and decision. They are:
(i) Whether in the facts, figures and circumstances of the case, the revisional authority was justified in law in initiating proceedings under Section 22-A when none of the requirements of that section is satisfied to sustain the order in question?
(ii) Whether in the facts, figures and circumstances of the case, it is within the jurisdiction of the revisional authority to give a contrary view and finding that the word 'drink' would include alcoholic drink when in the context of the tourism policy and the notification of the Government such interpretation is impermissible?
(iii) Whether in the facts, figures and circumstances of the case, it is permissible to rely upon the entries of the Second Schedule to hold that the word 'drink' when it is not conditioned or qualified to exclude alcoholic drink?
(iv) Whether, on the facts and circumstances of the case, the order of the respondent-revisional authority is sustainable in law?
3. Before we advert to the rival contentions, it will be convenient to refer to the tourism policy of the State Government and the implementing notification issued pursuant thereto. The State Government has announced the 'Tourism Policy' of Kamataka by a Government Order dated May 30, 1992. The object of the policy appears to be to promote tourism related activities and thereby enhancing employment and income generation among all sections of the society all over the State of Kamataka and for diversifying the tourism product to increase tourist arrivals into the State. To achieve this objective, the State Government has sanctioned a new package of incentives and concessions to the tourism industry in the State. Apart from other incentives and concessions, the tourism policy also provides for 100 per cent exemption from payment of sales tax to all new tourism units including hotels for a period ranging from three (3) years to seven (7) years from the date of commencement of tourism services depending upon their location.
4. The State Government after experimenting with the aforesaid policy and after noticing that 10 per cent of investment from private sector in the new tourism units and after receiving various representations from the new tourism units on various provisions of the tourism policy, has revised its earlier policy by issuing guidelines for implementation of new tourism policy with effect from June 1,1997 to remain in force till May 31, 2002. The redefined new tourism policy provides for reclassification of tourist places in the State of Kamataka under categories 'A, B, C, D and E', investment subsidy, exemption from sales tax, luxury tax, etc., in the annexures appended to the revised policy. Under this policy, the new tourism units will be exempted from payment of 100 per cent sales tax wherever applicable only on eatables served in the hotel and restaurant attached to the hotel or project. Here again, categorisation of new tourism units is made for the period of exemption depending upon their location in the State. If a 'unit' falls under 'B' category location, the period of exemption will only be for a period of three (3) years from the date of commencement of tourism services and if the unit falls under the categories of 'C to E', for a period of seven (7) years from the date of commencement of tourism services.
5. The assessee has registered itself as a tourism unit with the Government of Karnataka vide Order No. DTR/HTLS/11/96-97, dated September 28, 1996. On the request made by the assessee, the Director of Tourism, Bangalore, has issued a certificate dated April 9,1997 granting 100 per cent exemption from payment of sales tax and luxury tax for a period of three (3) years from the date of going into business as evidenced by first sale invoice dated February 21, 1997.
6. Pursuant to Government policy/order dated May 30, 1992 the State Government in exercise of its powers under Sub-section (1) of Section 8-A of the Act has issued a Notification in No. FD.188.CSL.92(1), dated December 30, 1993 exempting with immediate effect, the tax payable under the Act in respect of sale of food and drinks by new tourism units situated in specified columns and to the extent indicated therein and during the period mentioned therein. The notification so issued by the State Government has some bearing on the issues raised in this appeal and therefore, the same is noticed by extracting the entire notification. The same reads as under:
Notification-I
In exercise of the powers conferred by Sub-section (1) of Section 8-A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), the Government of Karnataka hereby exempts with immediate effect the tax payable under the said Act in respect of sale of food and drinks by new tourism units situated in the places specified in column (2) of the table below to the extent indicated in column (3) and during the period mentioned in column (4) thereof namely:
Table
Sl. Location of the tourism unit Extent of sales tax Period of exemptionNo. exemption 1 Tourism units situated in Hundred per Three years from the date places falling under categorycent tax exemp- of commencement of gory 'B' as specified in tion without tourism services or from G.O. No. ITY 9 TTT/89, any monetary the date of this notifica-dated May 30,1992. limit. tion, whichever is later.2 Tourism units situated in Hundred per Seven years from the date places falling under category cent tax exemp- of commencement of gory 'C as specified in tion without tourism services or from G.O. No. ITY 9 TTT/89, any monetary the date of this notifica-dated May 30,1992. limit. tion whichever is later.Explanation I. - For the purpose of this notification a 'New Tourism Unit' means a unit satisfying the following conditions:
(i) the unit has been recognised by the Director of Tourism, Government of Karnataka as a 'New Tourism Unit.
(ii) the investment in the fixed assets of the unit has taken place on or after June 1, 1992 and on or before May 31, 1997.
Explanation II. - The provisions of this notification shall not be applicable to:
(i) the units whose investments are for expansion, modernisation and diversification of an existing tourism unit or to a unit established in a different name after the closure of another unit which existed prior to June 1, 1992.
(ii) The unit which ceases to be a tourism unit, from the date of its ceasing to be so ; and
(iii) the turnovers on which tax is collected by the eligible units under the provisions of the Karnataka Sales Tax Act, 1957.
Procedure:
(i) The eligible units must produce before jurisdictional assessing authority, the original certificate issued by the Director of Tourism, Government of Karnataka certifying:
(a) that the unit is registered with the Director of Tourism, Government of Karnataka and that the unit is situated in a place of category 'B' or 'C' as specified in the G.O. No. ITY 9 TTT 89, dated May 30, 1992 ;
(b) that it is eligible for the sales tax exemption in terms of G.O. No. ITY 9 TTT 89, dated May 30, 1992 as a New Tourism Unit;
(c) that the investment in fixed assets by the unit has taken place on or after June 1, 1992 and on or before May 31, 1997;
(d) the date of commencement of tourism services by the unit; and
(e) that during each accounting year during the period in which it is eligible to the concession the unit was an eligible tourism unit and that where it ceased to be so, the date from which it did so.
(ii) The certificate mentioned in Clauses (a) to (e) of sub-para (i) shall be produced by the unit before the assessing authority before the completion of assessment relating to the first accounting year during the period of exemption under this notification;
(iii) The certificate mentioned in Clauses (a) and (e) shall however, again be produced before the assessing authority before the completion of the assessments relating to each succeeding accounting year of the period of exemption.
7. Now we advert to the entries relied upon by the revising authority to form an opinion that the 'drinks' envisaged in the notification is only nonalcoholic beverages and not alcoholic beverages. There are two entries in the Second Schedule to the Act, which provides for levy of tax on sales of IML and beer and food and drinks. Entry 6 of Part 'L' of the Second Schedule to the Act provides for liquor imported from outside the country and also liquors other than those imported and, with effect from April 1, 1996 apart from what is mentioned above, the Legislature has included within the definition of 'liquor', fenny, wine and liqueur.
8. Entry 8 of Part 'F' of the Second Schedule to the Act provides for 'food and non-alcoholic drinks'. This is an inclusive definition providing for various types of foods and non-alcoholic drinks, which are exigible for payment of sales tax under the Second Schedule to the Act.
9. The revising authority, primarily relying on these two entries in the Second Schedule appended to the Act, has come to the conclusion that the appellate authority has erred in allowing exemption of the sales of IML and beer by a new tourism unit on their sales of alcoholic beverages.
10. The learned Counsel Sri S. Narayana for the assessee would contend that the food and drinks on which exemption is granted by the implementing notification issued by the State Government pursuant to the tourism policy would also include alcoholic beverages and therefore, the revisional authority was not justified in making a difference and distinction between alcoholic and non-alcoholic beverages while interpreting the word 'drinks' in the implementation notification issued by the State Government pursuant to its industrial policy dated May 30, 1992. ) Smt. Sujatha, learned Additional Government Advocate, would contend that in view of new tourism policy which has come into effect from June 1, 1997, the appellant is not entitled to any exemption from sales tax on 'drinks' be it alcoholic or non-alcoholic beverages, since the exemption from sales tax is provided only on eatables served in the hotel and restaurant attached to the hotel or project. Proceeding further, the learned Additional Government Advocate would submit that entry 8 of Part 'F' of the Second Schedule to the Act speaks of only food and non-alcoholic drinks and therefore, what is exempted under the notification is food and non-alcoholic drinks though the notification does not use any prefix to the expression 'drinks' in the notification. The learned Additional Government Advocate further adds that this Court by interpretation should not widen the meaning of the expression 'drink' that finds a place in the notification, to include alcoholic beverages such as IML, beer, etc.
11. Before we consider the rival contentions of the learned Counsel for the parties to the lis, it will be convenient to clear the apprehension of the learned Additional Government Advocate for the Revenue, It is settled rule of constriction that in interpreting a fiscal statute, the court cannot proceed to make good the deficiencies, if there be any, in the statute; it shall interpret the statute as it stands. The Supreme Court in the case of C. A. Abraham v. Income-tax Officer, Kottayam : [1961]41ITR425(SC) , has stated that, 'in considering a taxing Act, the court is not justified in straining the language in order to hold a subject liable to tax'.
12. The Supreme Court in the case of Union of India v. Wood Papers Ltd. [1991] 83 STC 251, has observed, that 'the choice between a strict and liberal construction arises only in case of doubt in regard to the intention of the Legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation'.
13. A division Bench of this Court in the case of Mangalore Chemicals & ' Fertilizers Ltd. v. Deputy Commissioner of Commercial Taxes, Mangalore [1991] 83 STC 228, has observed2, that 'truly speaking, liberal and strict construction of an exemption are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then, it being in nature of exception, is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction'.
14. In Re Novopan India Ltd. v. Collector of Central Excise and Customs [1994] Suppl 3 SCC 606, the court has observed:
16. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals [1991] 83 STC 228 and in Union of India v. Wood Papers' [1991] 83 STC 251 referred to therein represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assesses assuming that the said principle is good and sound-does not apply to the construction of an exception or an exempting provision ; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals [1991] 83 STC 234 and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave : [1969]2SCR253 , that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption.
15. At this stage, it may be useful to refer to the observations made by the Madras High Court in the case of S.R. and Co. v. State of Tamil Nadu [1978] 42 STC 99, wherein the court has observed:. It is a well-known principle that when a Legislature or a rulemaking authority speaks, we must gather its meaning and what was intended primarily and in the first instance from the words used. There are several refinements to this aspect and one of those is that words used in a taxing statute must be understood in their natural sense and not, according to any technical sense, a principle too well-established to need quoting of authority. We do not see why the same principle must not be applied to an exemption notification, for, a taxing statute itself has to be construed according to its words and before the Revenue can tax a person, the Revenue has to establish that the tax falls within the four corners of the statute ; in other words, within the import of the statute as stated by the words used in the statute.
16. We do not intend to overburden this judgment with many more case law on the point. Therefore, we revert back to the issues raised in this appeal.
17. The State Government with the main objective of encouraging tourism industry/units has issued Government Order dated May 30, 1992. Apart from other incentives and concessions, the Government policy also provides for exemption from payment of sales tax to new tourism units wherever applicable in the manner specified in the policy itself. Pursuant to the policy of the State Government, the implementing agency has issued a notification dated December 30, 1993 in exercise of its powers under Section 8-A of the Act, exempting with immediate effect the tax payable under the Act in respect of sale of food and drinks by new tourism units as specified in the notification. At this stage itself, it is relevant to notice that the State Government has revised its tourism policy with effect from June 1, 1997 and the policy to be in force till May 31, 2002. The policy would apply to new tourism units which commences execution of the project on or after June 1, 1997 and before May 31, 2002 with prior approval in writing of the Director of Tourism, Government of Karnataka, and would be eligible for incentives and concessions. It is also relevant to notice that it is not the case of the revisional authority that it is the revised new tourism policy that would apply to the appellant's new tourism unit and therefore, it may not be necessary to take note of the contention of the learned Additional Government Advocate for the Revenue that the revised tourism policy does not provide any exemption on the sales turnover of alcoholic beverages or in the alternative, it provides exemption from payment of sales tax only on the eatables served in the hotel and restaurant attached to the hotel or project and therefore, it should be inferred that the earlier policy also restricted the exemption only on non-alcoholic beverages. In our view, there is fallacy in the submission made by the learned Additional Government Advocate for the Revenue. Firstly, the revised policy was made to come into effect only with effect from June 1, 1997 and the said policy would not apply to a new tourism unit which has commenced the execution of the project on or after May 30, 1992 with the prior approval in writing by the Director of Tourism, Government of Karnataka. It is an undisputed fact, that in the instant case, the assessee had registered itself as a new tourism unit with the prior approval of the Director of Tourism, Government of Karnataka, vide Order No. DTR/HTLS/11/96-97, dated September 28, 1996. Therefore, it is the earlier tourism policy of May 30, 1992 and the implementation notification dated December 30, 1993 would apply in the assessee's case. Thirdly, the earlier Government order while sanctioning the exemption from payment of sales tax, only said that new tourism units shall be exempted from payment of sales tax wherever it is applicable and it did not restrict the exemption only on sale of eatables as has been done in the revised policy which has come into effect from June 1, 1997. Therefore, the subsequent or the revised tourism policy would not throw any light in understanding or interpreting the earlier Government order dated May 30, 1992.
18. In this appeal, the controversy is only with regard to the expression 'drinks'. The question is whether the expression 'drinks' would include only non-alcoholic beverages or does it include alcoholic beverages? The view of the assessing authority and the revising authority is, the word 'drink' that is exempted under the implementation notification should be understood only as non-alcoholic beverages, since the Second Schedule to the Act provides separate entries to liquor and food and non-alcoholic beverages and therefore, the words 'food' and 'drinks' appearing in the implementation notification should be understood as items categorised under entry 8 of Part 'F' of the Second Schedule to the Act which speaks of 'food and non-alcoholic drinks'. The conclusion so reached by the revi-sional authority is primarily relying on the entries in the Second Schedule to the Act. This conclusion of the revising authority, in our opinion, is not a sound reasoning, for the reason the Schedule in an Act sets down things and objects and contains their names and descriptions. The Schedules do not enact anything. The entries therein derive their substance only from the relevant sections in the code of the Act and the expressions in the Schedules can have no evocative function. Therefore, while construing a word or expression that finds a place in the exemption notification, their wholesale adoption without qualification is not the correct way of interpreting an article/commodity mentioned in the notification. Reference can be usefully be made to the observations made by the Supreme Court in the case of Sterling Foods v. State of Karnataka [1986] 63 STC 239, wherein, the court has stated that 'the question whether raw shrimps, prawns and lobsters after suffering processing retain their original character or identity or become a new commodity has to be determined not on the basis of a distinction made by the State Legislature for the purpose of eligibility to State sales tax (e.g., entry 13a of Schedule III to Karnataka Sales Tax Act, 1957), because even where the commodity is the same in the eyes of the persons dealing in it, the State Legislature may make a classification for determining liability to sales tax'. Therefore, in our view, the revisional authority was not justified in coming to the conclusion, that merely because entry 8 of Part '' of the Second Schedule to the Act speaks of only 'food and non-alcoholic beverages', the expression in the notification 'food and drinks' should be understood as categorised under entry 8 of Part 'F' of the Second Schedule to the Act.
19. Now coming back to the expression used in the notification dated December 30, 1993, what is exempted from payment of sales tax in respect of sales under the Act is 'food and drinks'. The meaning of the expression 'food' is any substance normally eaten or drunk by a living organism. The term 'food' also includes liquid drinks. Food is the main source of energy and nutrition for animals, and is usually of animal or plant origin. The word 'drink' is primarily a verb, meaning to ingest liquids. As a noun, it refers to the liquid thus ingested. It is often understood in a narrower sense or in common parlance to refer to alcoholic beverages. Drinks often consumed would include water, juice, soft drinks, sports drinks, dairy drinks, alcoholic beverages, cocktails, mixed drinks, hot beverages including coffee, tea, hot chocolate, etc. Therefore, alcoholic beverages are also drinks not only in the commercial parlance but also in common parlance. Therefore, in our view, 'drinks' that finds a place in the implementing notification dated December 30, 1993 would include not only 'non-alcoholic beverages' but also 'alcoholic beverages'.
20. In view of the above, the appeal filed by the assessee requires to be allowed. Accordingly, the following:
Order
I. Sales tax appeal is allowed.
II. The impugned order passed by the revisional authority in No. ZAC-IBCD-3 : SMR-11 : 03-04, dated October 22, 2003 is set aside.
III The impugned orders passed by the first appellate authority in Appeal Nos. 112 and 113 of 2002-03 for the assessment years 1998-99 and 1999-2000, dated March 4, 2003 are restored. Ordered accordingly.