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IN THE HON’BLE HIGH COURT OF DELHI AT NEW DELHI
Extraordinary Civil Original Writ Jurisdiction
Writ Petition (Civil) No. OF 2016
PUBLIC INTEREST LITIGATION
In the matter of:
Anish Agarwal & Anr. ...…PETITIONERS
VERSUS
Government of NCT of Delhi & Ors. .......RESPONDENTS
INDEX
S. No Particulars Page no
1. Listing Proforma
2. Notice of Motion
3. Urgent Application
4. Memo of Parties
5. Consolidated Court Fee
6. List of Dates
7. Writ Petition under Article 226 of the
Constitution of India, along with affidavit.
8. Annexure 1:A copy of the Public Interest
Litigation No. 24471 of 2016 filed before the
Hon’ble High Court of Judicature at
Allahabad on May 18, 2016.
9. Annexure No. 2: Copy of the Order dated
26.5.2016 passed by the Hon’ble High Court
of Judicature at Allahabad in Public Interest
Litigation No. 24471 of 2016.
10. Annexure No. 3:Copy of the invoices
collected by the Petitioners evidencing that
taxes at rates higher than the prescribed
rates are being charged by the restaurants.
11. Annexure No. 4:A copy of the letter dated
July 2, 2016 sent to the Commissioner of
Value Added Tax, Department of Trade &
Taxes, Government of NCT of Delhi.
12. Annexure No. 5: A copy of the Service Tax
(Determination of Value) Rules, 2006.
13. Application under Article 226 of
Constitution of India for Interim Relief
and Directions
14. Vakalatnama
Date –08.08.2016 Counsel for the Petitioners
Place – New Delhi
Satyam Thareja Enrol. No. D/1050/2012
B-201, Priyadarshini Apartments, 17, Parparganj, Delhi-110092
Mob - 9711097019
IN THE HON’BLE HIGH COURT OF DELHI AT NEW DELHI
Extraordinary Civil Original Writ Jurisdiction
Writ Petition (Civil) No. OF 2016
PUBLIC INTEREST LITIGATION
In the matter of:
Anish Agarwal & Anr. ...…PETITIONERS
VERSUS
Government of NCT of Delhi & Ors. .......RESPONDENTS
URGENT APPLICATION
To,
The Registrar,
High Court of Delhi,
New Delhi.
Sir,
Will you kindly treat the accompanying Writ Petition as an
urgent one. The ground of urgency is mentioned in the prayer
of the Writ Petition and Application for Directions.
Date –08.08.2016 Counsel for the Petitioners
Place – New Delhi
Satyam Thareja Enrol. No. D/1050/2012
B-201, Priyadarshini Apartments, 17, Parparganj, Delhi-110092
Mob – 9711097019
IN THE HON’BLE HIGH COURT OF DELHI AT NEW DELHI
Extraordinary Civil Original Writ Jurisdiction
Writ Petition (Civil) No. OF 2016
PUBLIC INTEREST LITIGATION
In the matter of:
Anish Agarwal & Anr. ...…PETITIONERS
VERSUS
Government of NCT of Delhi & Ors. .......RESPONDENTS
NOTICE OF MOTION
To
The Counsel for Respondents
Sir,
The present Writ Petition (being filed in public interest) is likely
to come up for hearing on 10.08.2016 or any day thereafter.
Date –08.08.2016 Counsel for the Petitioners
Place – New Delhi
Satyam Thareja Enrol. No. D/1050/2012
B-201, Priyadarshini Apartments, 17, Parparganj, Delhi-110092
Mob - 9711097019
IN THE HON’BLE HIGH COURT OF DELHI AT NEW DELHI
Extraordinary Civil Original Writ Jurisdiction
Writ Petition (Civil) No. OF 2016
PUBLIC INTEREST LITIGATION
In the matter of:
Anish Agarwal & Anr. ...…PETITIONERS
VERSUS
Government of NCT of Delhi & Ors. .......RESPONDENTS
PUBLIC INTEREST LITIGATION UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING FOR ISSUANCE
OF WRIT ORDERS OR DIRECTIONS IN THE NATURE OF
MANDAMUS DIRECTING THE RESPONDENTS TO TAKE
EFFECTIVE STEPS AGAINST RESTAURANTS CHARGING
VALUE ADDED TAX AND / OR SERVICE TAX IN EXCESS OF
WHAT IS PROVIDED IN ACCORDANCE WITH LAW AND
FURTHER DECLARING THAT VAT CAN BE CHARGED ONLY
IN RELATION TO THE GOODS COMPONENT, SERVICE TAX
CAN BE CHARGED ONLY IN RELATION TO THE SERVICE
COMPONENT AND THAT THE SUM OF GOODS
COMPONENT AND SERVICE COMPONENT CAN IN NO
INSTANCE EXCEED TOTAL VALUE OF THE INVOICE
MEMO OF PARTIES
1. Anish Agarwal
21, Sammelan Marg,
Allahabad – 211003………………………...Petitioner No. 1
2. Avi Tandon
3, Patrika Marg, Civil Lines,
Allahabad – 211001………………………..Petitioner No. 2
VERSUS
1. Government of NCT of Delhi,
Through its Principal Secretary,
Department of Finance
4th Level, A Wing, Delhi Secretariat,
IP Estate, New Delhi 110002…………...Respondent No. 1
2. The Commissioner of Value Added Tax
Department of Trade & Taxes,
2nd Floor , Vyapar Bhawan, New Delhi..Respondent No. 2
3. Union of India,
Through its Principal Secretary,
Ministry of Finance,
Department of Indirect Taxes (Service Tax),
North Block, Central Secretariat,
New Delhi 110001……………………….Respondent No. 3
4. Chairman, Central Board of Excise and Customs,
Department of Revenue,
Ministry of Finance,
Government of India,
North Block, Central Secretariat,
New Delhi 110001……………………….Respondent No. 4
5. Chief Commissioner of Service Tax,
Delhi Zone, C.R. Building, I.P. Estate,
New Delhi – 110009…………………..…Respondent No. 5
Date –08.08.2016 Counsel for the Petitioners
Place – New Delhi
Satyam Thareja Enrol. No. D/1050/2012
B-201, Priyadarshini Apartments, 17, Parparganj, Delhi-110092
Mob - 9711097019
.
LIST OF DATES
DATES RELEVANT EVENTS
NIL The Government of National Capital Territory of
Delhi levies VAT on sale of goods (at the rate of
20% on the sale of liquor and aerated drinks and
at the rate of 12.5% on goods being food and
other beverages given in a restaurant). The
Union of India levies service tax on services
involved in supply of food in a restaurant at the
rate of 15%).
NIL The Petitioners noticed various (almost all) are
charging VAT on the entire invoice value and
also service tax at the rate of 6%. This practice is
noticed in almost every restaurant and is the
prevalent market practice.
NIL Pursuant to Sections 89(1)(a), 89(1)(b) and
89(1)(c) of the Delhi Value Added Tax Act, 2004,
in case any dealer knowingly keeps false
accounts or issues false invoice, he shall be
liable to be punished with imprisonment for a
term which may extend to six months of rigorous
imprisonment and with fine.
May 18,
2016
The Petitioners filed a writ petition in relation to a
similar matter in the Hon’ble High Court of
Judicature at Allahabad and the Hon’ble High
Court was pleased to pass an order on May 26,
2016 permitting the Respondents to file counter
affidavit in the matter. The matter is pending
before the Hon’ble Allahabad High Court.
June 2016 The Petitioners collected some sample invoices
evidencing the fact that restaurants are charging
VAT even on the service component of their
invoices.
July 2, 2016 The Petitioners wrote a letter to the
Commissioner of Value Added Tax, Department
of Trade & Taxes, Government of NCT of Delhi
requesting appropriate action against such
restaurants for charging VAT even on the service
tax component of the invoices.
NIL The Petitioners have not received any response
from the Commissioner of Value Added Tax,
Department of Trade & Taxes, Government of
NCT of Delhi. The Government of NCT of Delhi
is a direct beneficiary from this illegal activity.
Hence it may be possible that the VAT
Authorities are deliberately not taking any action
against such excess and illegal tax that is being
charged by the restaurants.
July, 2016 Hence, the present petition
Date –08.08.2016 Counsel for the Petitioners
Place – New Delhi
Satyam Thareja Enrol. No. D/1050/2012
B-201, Priyadarshini Apartments, 17, Parparganj, Delhi-110092
Mob - 9711097019
IN THE HON’BLE HIGH COURT OF DELHI AT NEW DELHI
Civil Original Extraordinary Writ Jurisdiction
Writ Petition (Civil) No. OF 2016
In the matter of:
Public Interest Litigation under
Article 226 of the Constitution of India
and
In the matter of:
Anish Agarwal & Anr. ...…PETITIONERS
VERSUS
Government of NCT of Delhi & Ors. .......RESPONDENTS
PUBLIC INTEREST LITIGATION UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING FOR ISSUANCE
OF WRIT ORDERS OR DIRECTIONS IN THE NATURE OF
MANDAMUS DIRECTING THE RESPONDENTS TO TAKE
EFFECTIVE STEPS AGAINST RESTAURANTS CHARGING
VALUE ADDED TAX AND / OR SERVICE TAX IN EXCESS OF
WHAT IS PROVIDED IN ACCORDANCE WITH LAW AND
FURTHER DECLARING THAT VAT CAN BE CHARGED ONLY
IN RELATION TO THE GOODS COMPONENT, SERVICE TAX
CAN BE CHARGED ONLY IN RELATION TO THE SERVICE
COMPONENT AND THAT THE SUM OF GOODS
COMPONENT AND SERVICE COMPONENT CAN IN NO
INSTANCE EXCEED TOTAL VALUE OF THE INVOICE
TO,
THE HON’BLE CHIEF JUSTICE
AND HIS COMPANION JUSTICES
OF THE HON’BLE HIGH COURT OF DELHI
THE HUMBLE PETITION
OF THE ABOVE NAMED PETITIONERS.
MOST RESPECTFULLY SHOWETH:
1. The writ petitioners have no personal interest in the
litigation. The Petition is not guided by self-gain or for gain
of any other person / institution / body and that there is no
motive other than of public interest in filing the writ
petition.
2. The Petitioners are advocates and are accordingly aware
about the law relating to Value Added Tax and Service
Tax. The Petitioners have, during the course of several
restaurant visits, noticed that most of the restaurants are
imposing taxes in excess of what has been provided by
law. Accordingly, the Petitioners have collected some bills
evidencing the same. The various laws applicable and
their interpretation as given by various courts including
the Hon’ble Supreme Court of India clarify that the taxes
collected by the restaurants are in excess of what has
been authorized by law and accordingly taxes are being
collected without the authority of law.
3. The consumers as a class will be the primary
beneficiaries of this Public Interest Litigation. It is common
knowledge that contesting matters before Courts is
expensive and accordingly, contesting imposition of small
amounts on each and every bill by consumers is neither
financially viable nor practical. However, together, the
consumers are being made to pay a huge amount of tax,
all without authority of law.
4. The Union of India and the Government of NCT of Delhi
are directly involved in the matter because service tax
and value added tax is collected by them. If this Hon’ble
Court holds that the taxes are being collected without the
authority of law, the total amount collected by the Union of
India / the Government of NCT of Delhi would be affected.
Accordingly, the Union of India and the Government of
NCT of Delhi together with the relevant secretaries,
commissioners and departments have been made as
parties in the present Public Interest Litigation.
Restaurants as such would also may be affected as the
total amounts of tax which is required to be charged by
the restaurants pursuant to the extant laws would be
determined by this Hon’ble Court in this Public Interest
Litigation. However, this determination would not affect
the restaurants adversely as (i) the restaurants recover
the entire amount of tax from their customers; and (ii) as
the Petitioners are praying for reduction in the total
amount of tax which cannot have an adverse affect on the
restaurants. In case any proceedings are initiated against
restaurants for illegally collecting tax in excess of what is
provided in law, those proceedings will be separate and
the restaurants will certainly get a chance to defend
themselves. Additionally, the Petitioners are not praying
for determination of liability of any of the restaurants and
accordingly, making the restaurants as a party in this
Public Interest Litigation would not be helpful. Lastly,
given the number of restaurants, making all the
restaurants as parties would neither be in the interests of
justice nor be practical.
5. The Petitioners are advocates practicing in various
Hon’ble Courts in India including primarily the Hon’ble
Supreme Court of India. The Petitioners have completed
LL.B. (Business Law Hons.) from National Law University,
Jodhpur in the year 2012. Petitioner No. 1 completed his
LL.M. from Harvard Law School in the year 2015 and
Petitioner No. 2 completed his B.C.L. from the University
of Oxford in the year 2013. The Petitioners have always
been associated with Legal Aid endeavors at the Law
School and University levels.Accordingly, the Petitioners
are adequately equipped in assisting this Hon’ble Court
and have the competence to espouse the cause raised in
this Petition. The Petitionershave the means to pay the
costs, if any, imposed by the Court and undertake to
make best endeavors to abide by the orders of this
Hon’ble Court.
6. The Petitioners wrote a letter dated July 2, 2016 to The
Commissioner of Value Added Tax, Department of Trade
& Taxes, Government of NCT of Delhi requesting them to
take action against these restaurants for charging
amounts in excess of what has been authorized by law.
However, the Petitioners have not received any response
from as of date, nor, to the best of Petitioners knowledge
any public clarification has been issued by the
Commissioner. Given that the Government of NCT of
Delhi is a direct beneficiary from this illegal collection of
taxes, it is quite possible that it does not want to take any
action against such illegal collection of taxes.
7. The Petitioners have already filed a Public Interest
Litigation in relation to a same issue (within the territory of
Uttar Pradesh) before the Hon’ble High Court of
Judicature at Allahabad on May 18, 2016 beingPublic
Interest Litigation (PIL) No. 24471 of 2016titled “Anish
Agarwal and Anr. v. State of Uttar Pradesh and 4
Ors.”and the Hon’ble Allahabad High Court vide its order
dated May 26, 2016 had granted a period of 4 weeks to
the Respondents to file counter affidavit in the matter.
8. That it is submitted that no Writ Petition, Application
including Review Application etc. or any other
proceedings arising from or related to relief sought in the
instant matter has been filed by the Petitioner, or is
pending before this Hon’ble Court or any other Court
within jurisdiction of this Hon’ble High Court or Supreme
Court of India. It is submitted that the Petitioner has not
received any notice, information or copy of any Caveat
Application by registered post or otherwise from any of
the Respondents/Opposite Parties or from any other
source. It is hereby clarifed that although the writ petition
filed in Allahabad High Court is in relation to the same
issue, the territorial jurisdiction of the two courts are
different and accordingly, the nature of relief that would
be provided by the two courts would be entirely different.
9. This is a civil writ petition being a public inteerst litigation
under article 226 of the Constitution of India praying for
issuance of a writ of mandamus directing Respondents 1
and 2 to take appropriate action against restaurants
charging value added tax on the service component of
their invoices and directing the respondents to give wide
publicity to the fact that value added tax is required to be
levied only on the goods component of invoices being
60% of the invoice issued by restaurants and that value
added tax cannot be issued on the service component
[being 40% as per the Service Tax (Determination of
Vlaue) Rules, 2006]. Alternatively, In case this Hon’ble
Court holds that the goods component of invoices issued
by restaurants is more than 60% of the invoice value,
then it is prayed that this Hon’ble Court may declare rule
2C of the Service Tax (Determination of Value) Rules,
2006 as ultra vires the Constitution of India and issue a
writ of mandamus directing the Central Government to
give wide publicity to the same so that restaurants do not
charge service tax on goods component of their invoices.
10. That the Government of NCT of Delhi levies a tax on the
sale of goods under the Delhi Value Added Tax Act,
2004. The Union of India levies a tax on services under
the Finance Act, 1994.
11. That in accordance with Section 4(1)(c) of the Delhi Value
Added Tax Act, 2004 (hereinafter “VAT Act”), goods
specified in Schedule IV of the VAT Act are chargeable to
tax at the rate of 20%. Schedule IV of the VAT Act
provides for Liquor (Foreign, Indian Made Foreign Liquor
and Country Liquor) and Aerated Drinks. Accoridngly,
VAT at the rate of 20% is charged on sale of goods being
liquor and aerated drinks. In accordance with Section
4(1)(e) of the VAT Act, goods not specified in the
Schedules are chargeable to tax at the rate of 12.5%.
Therefore, sale of goods being food and other beverages
served at restaurants is chargeable to tax at the rate of
12.5%.
12. That in accordance with Section 66B, service tax is levied
at the rate of 14% on all services other than those
mentioned in the negative list. Further, in accordance with
Section 119 of the Finance Act, 2015 read with
Notification No. 22/2015-Service Tax dated November 6,
2015, a Swach Bharat Cess is levied at the rate of 0.5%
on all taxable services. Further, in accordance with
Section 161 of the Finance Act, 2016, a Krishi Kalyan
Cess is levied at the rate of 0.5% on all taxable services.
Food or any other article of human consumption sold at
restaurants is not specified in the negative list. Therefore
the effective rate of service tax on services provided in
restaurants is 15%.
13. In accordance with Rule 2C of the Service Tax
(Determination of Value) Rules, 2006 the Central
Government has notified the method for determination of
value of service portion involved in the supply of food or
any other article of human consumption or any drink in a
restaurant. Pursuant to Rule 2C of the Valuation Rules,
40% of the total amount is considered as service.
Therefore, as per the Service Tax (Determination of
Value) Rules, 2006, service tax of 6% (40% of 15%) is
applicable on the total value of transactions relating to
supply of food or any other article of human consumption.
14. That the Government of NCT of Delhi has not released
any guidelines similar to the Service Tax (Determination
of Value) Rules, 2006 for determination of value of the
goods component in relation to the invoices raised by
restaurants.
15. That various restaurants in the National Capital Territory
of Delhi are charging (i) VAT at the rate of 20% for liquor
and aerated drinks and 12.5% on food and other
beverages; and (ii) service tax at the rate of 6%; on total
invoice value in relation to food and other articles of
human consumption.
16. That, mathematically, 6% is 40% of 15%. Therefore, the
restaurants are charging (i) service tax at the rate of 15%
on the service portion of the invoice; and (ii) VAT at the
rate of 20% (for liquor and aerated drinks) and 12.5% (for
food and other beverages) on the entire invoice value.
Effectively, restaurants are charging VAT even on their
admitted portion of services (that portion which the
restaurants are admitting is a service) in relation to food
and other items of human consumption sold by them.
17. That the Petitioners informed various Value Added Tax
Authorities about these violations by restaurants,
however, to the best of Petitioners’ knowledge, no action
has been taken by them.
18. That in relationt the same issue in the context of Uttar
Pradesh, the Petitioners have already filed a Public
Interest Litigation in the Allahabad High Court on May 18,
2016. A copy of the Petition filed with the Allahabad High
Court is annexed herewith and marked as Annexure 1. A
copy of the order passed by the Hon’ble High Court of
judicature at Allahabad is annexed herewith and marked
as Annexure 2.
19. That the Petitioners collected invoices from different
restaurants (annexed herewith and marked as Annexure
3) and wrote to the Commissioner of Value Added Tax,
Department of Trade & Taxes, Government of NCTabout
these violations together with a copy of the invoices for
the purpose of evidence (annexed herewith and marked
as Annexure 4).
20. That, to the best of knowledge of the Petitioners, no
action has been taken by the Commissioner of Value
Added Tax, Department of Trade & Taxes, Government
of NCTagainst such violations by the restaurants.
21. That the present Writ Petition is being filed by way of
Public Interest Litigation and the Petitioners do not have
any personal interest in the matter. This petition is in fact
being filed in the interest of consumers of the National
Capital Territory of Delhi at large and also to safeguard
monetary and economic interests of the National Capital
Territory of Delhi.
22. That it appears that the Government of NCT of Delhi and
the Commissioner of Value Added Tax, Department of
Trade & Taxes, Government of NCTare well aware these
flagrant violations of the VAT Act. However no action is
being taken as this entire activity benefits the Government
of NCT of Delhi.
23. That the Petitioners are not aware whether Respondents
1 and 2 consider it appropriate for restaurants to charge
VAT on the entire value of invoice in relation to food and
other items of human consumption sold by restaurants.
24. That alternatively, in case it is held that the transaction
involving sale of food or any other items of human
consumption does not include any service component or
the service component is less than 40%, Rule 2C of the
Service Tax (Determination of Value) Rules, 2006 would
be ultra vires the Constitution of India and the Finance
Act, 1994. A copy of the Service Tax (Determination of
Value) Rules, 2006 is attached herewith and marked as
as Annexure 5.
25. That the Petitioners have not filed any other similar
Petition in this Hon’ble Court. Although a similar petition
has been filed by the Petitioners in the High Court for
Judicature at Allahabad, the scope of that petition is in
relation to illegal collection of tax under the Uttar Pradesh
Value Added Tax Act, 2008 and as such the cause of
action and the territorial jurisdiction in the two petitions
are separate.
26. That this Hon’ble Court has jurisdiction to entertain the
present petition under Article 226 of Constitution of India.
27. That since the Respondents 1 and 2 have failed to
discharge their statutory and constitutional obligations the
Petitioner does not have any other alternative and equally
efficacious remedy and is constrained to file the instant
Writ Petition in the nature of a PIL, on the following
amongst other:-
GROUNDS
A. Because the present writ petition is pro bono publico in
which the Petitioner has no personal interest in the matter
or the reliefs sought herein.
B. Because the actions of the restaurants are in clear
violation of the VAT Act and Article 265 of the Constitution
of India.
C. Because the effective rate of tax being charged from the
customers at restaurants is 20 + 6 = 26% (for liquor and
aerated drinks) and 12.5 + 6 = 18.5% (for food and other
beverages). Charging 26% (for liquor and aerated drinks)
and 18.5% (for food and other beverages) tax on food
and other articles of human consumption sold at
restaurants is wholly without the authority of law.
D. Because a contract for providing food or any other article
of human consumption at a restaurant is contract divisible
into goods component and service component by virtue of
the legal fiction created by Article 366(29A)(f) of
Constitutio of India. Accordingly, tax on sale of goods can
be imposed on the sale component and service tax can
be imposed on the service component.
E. Because the Hon’ble Supreme Court of India in the case
of BSNL v. Union of India (2006) 3 SCC 1 (3 Judge
Bench) has held that after the Forty-sixth Amendment to
the Constitution of India, the sale element of those
contracts which are covered by the six sub-clauses of
clause (29-A) of Article 366 of Constiution of India are
separable and there is no question of the dominant nature
test applying.
F. Because Art. 366(29A)(f) of Constitution of India squarely
covers good or any other articles for human consumption
or any drink (whether or not intoxicating) supplied by
restaurants. Therefore, such contracts are divisible under
the legal fiction created by Art. 366(29A)(f) into contract
for sale and contract for service.
G. Because although a contract can have both sale
component and a service component, service component
of a contract does not contain any sale component and
sale component of a contract does not contain any
service component.
H. Because the Hon’ble Supreme Court in the case of BSNL
supra [at para 88] has unequivocally clarified this issue in
relation to levy of sales tax on the services component as
follows:
“No one denies the legislative competence of the
States to levy sales tax on sales provided that the
necessary concomitants of a sale are present in the
transaction and the sale is distinctly discernible in
the transaction. This does not however allow the
State to entrench upon the Union List and tax
services by including the cost of such service in the
value of the goods.”
I. Because similarly, the Hon’ble Supreme Court in the case
of Imagic Creative (P) Ltd. v. Commissioner of
Commercial Taxes and Others (2008) 2 SCC 614 [at para
32] held as follows:
“Payments of service tax as also VAT are mutually
exclusive. Therefore, they should be held to be
applicable having regard to the respective
parameters of service tax and the sales tax as
envisaged in a composite contract as
contradistinguished from an indivisible contract. It
may consist of different elements providing for
attracting different nature of levy. It is, therefore,
difficult to hold that in a case of this nature, sales
tax would be payable on the value of the entire
contract, irrespective of the element of service
provided.”
J. Because Sections 89(1)(a), 89(1)(b) and 89(1)(c) of the
Delhi Value Added Tax Act, 2004, in case any dealer
knowingly keeps false accounts or issues false invoice,
he shall be liable to be punished with imprisonment for a
term which may extend to six months of rigorous
imprisonment and with fine. By charging service tax, the
dealer is admittedly declaring that there is a service
component in the invoice.Therefore, charging VAT on the
entire value of the invoice seems to be a flagrant violation
of the Delhi Value Added Tax Act, 2004.
K. Because Article 265 of the Constitution of India clearly
provides that no tax shall be levied or collected except by
authority of law.
L. Because Respondents 1 and 2 are under an obligation to
enforce the provisions of VAT Act and uphold the
Constitution of India as such.
M. Because Respondents 1 and 2 have failed in their duty to
protect the interests of consumers.
N. Because alternatively if, assuming without conceding that
the supply of food and other articles of human
consumption do not involve 40% of services, the Service
Tax (Determination of Value) Rules, 2006 would be ultra
vires the Constitution of India and the Finance Act, 1994
as they would be intending to impose service tax on
goods component of the invoice.
O. Because alternatively, assuming without conceding, that
the contract is not divisible even under the fiction created
by Article 366(29), then the dominant nature test as
propounded by the Hon’ble Supreme Court of India in the
case of BSNL supra would apply and either service tax or
VAT would be chargeable (depending on whether service
is the dominant component or sale is the dominant
component). However, both service tax and VAT would
not be applicable.
P. Because lack of appropriate guidelines for determination
of goods component of the invoice by the Government of
NCT of Delhi cannot permit the restaurants to charge both
service tax and tax on sale of goods on the same
component.
Q. Because the Respondents have failed to discharge their
constitutional duties.
R. Because the action/inaction of the Respondents is
demonstrably violative of Article 265 of the Constitution of
India.
S. Because customers of restaurants effectively do not have
any remedy against these collusive strategies by the
restaurants and the Respondents.
T. Because it is the fundamental duty of every Indian citizen,
to safeguard public property and to espouse the cause of
the public at large.
PRAYER
It is, therefore, most respectfully prayed that this Hon’ble Court
may graciously be pleased:
(i) To issue a writ, order or direction in the nature of
mandamus, directing Respondent No. 1 and 2 to take
appropriate action against restaurants for charging VAT
on the service component of the invoices raised by them
in relation to supply of food or other articles of human
consumption and any drink (whether or not intoxicating)
which is in contravention to the provisions of the Delhi
Value Added Tax Act, 2008 and the Constitution of India
and is punishable under sections89(1)(a), 89(1)(b) and
89(1)(c) of the Delhi Value Added Tax Act, 2004 with
imprisonment for a term which may extend to six months
of rigorous imprisonment and with fine.
(ii) To declare that VAT can be collected only in relation to
the goods component of an invoice and VAT cannot be
collected in relation to the service component of an
invoice.
(iii) To issue a writ, order or direction in the nature of
mandamus, directing Respondent No. 1 and 2 to widely
publicize to the public at large by way of a circular,
advertisement, press note or any other appropriate
method that VAT can be collected only on the goods
component (being 60% or such other percentage, as may
be determined by this Hon’ble Court, of the total value) of
the invoice raised by restaurants on supply of food or
other articles of human consumption or any drink
(whether or not intoxicating) and that the effective rate of
VAT currently applicable in case of restaurants is 12%
(for liquor and aerated drinks) and7.5% (for food and
other beverages) of the total amount charged or such
other value as may be determined by this Hon’ble Court;
(iv) To issue a writ, order or direction in the nature of
mandamus, restraining the Respondent Nos. 1 & 2 from
levying sales tax in relation to service component and
Respondent Nos. 3, 4 and 5 from levying service tax in
relation to sale component of invoices raised by
restaurants on supply of food or other articles of human
consumption or any drink (whether or not intoxicating).
(v) To issue a writ, order or direction in the nature of
mandamus, directing the Respondents to follow an
appropriate method of valuation of service component
and goods component in relation to invoices raised by
restaurants on supply of food or other articles of human
consumption or any drink (whether or not intoxicating), as
may be determined by this Hon’ble Court.
(vi) To issue a writ, order or direction in the nature of
mandamus, directing the Respondents to widely publicize
to the public at large by way of a circular, advertisement
or any other appropriate manner the method for valuation
of service component and goods component in relation to
invoices raised by restaurants as may be determined by
this Hon’ble Court;
(vii) To issue a writ, order or direction in the nature of
mandamus, restraining the Respondents from devising or
adopting any method of valuation whereby the sum of (i)
goods component and (ii) service component exceeds
gross value of the invoice.
(viii) Alternatively, to issue an order, declaration or direction
declaring Rule 2C of the Service Tax (Determination of
Value) Rules, 2006 as ultra vires the Finance Act, 1994
and the Constitution of India, and issue a writ, order or
direction in the nature of mandamus, restraining the
Respondents from enforcing Rule 2C of the Service Tax
(Determination of Value) Rules, 2006 if the service
component in relation to supply of food or any other
article of human consumption and any drink (whether or
not intoxicating) being provided in a restaurant is less
than 40% of the total value charged by the restaurant.
(ix) To issue any other appropriate writ, order or direction
which this Hon’ble Court deems just and proper, in the
facts and circumstances of the present matter.
(x) The costs of the writ petition may also be awarded in
favour of the Petitioners.
Date –08.08.2016 Counsel for the Petitioners
Place – New Delhi
Satyam Thareja Enrol. No. D/1050/2012
B-201, Priyadarshini Apartments, 17, Parparganj, Delhi-110092
Mob - 9711097019