7. Levy of taxes on food and drinks

(1) Notwithstanding anything contained in this Act, but subject to the provisions of this Act,-

(a) every dealer shall pay tax on the sale of ready to eat unbranded foods including sweets, savouries, unbranded non-alcoholic drinks and beverages served in or catered indoors or outdoors by star hotels recognized as such by Tourism Department of the State Government or Government of India and restaurants attached to such hotels at the rate of 2 [fourteen] and half per cent of the taxable turnover; and

(b) every dealer other than those mentioned in clause (a) 3 [whose total turnover is not less than rupees ten lakhs for a year], shall pay tax on the sale of ready to eat un-branded foods including sweets, savouries, un-branded non-alcoholic drinks and beverages served in or catered indoors or outdoors by hotels, restaurants, sweet-stalls, clubs, caterers and any other eating houses, at the rate of 4 [five] per cent of the taxable turnover.

Explanation I.- For the purpose of computing the total turnover under this sub-section, the purchase turnover liable to tax under section 12 of this Act, shall be added to the sales turnover.

 Explanation II.- For the purpose of computing the total turnover under this sub-section, the sales turnover of all business units in a common premises sharing the common kitchen or common employees shall be added to the sales turnover of the business unit having higher turnover.

 (2) The dealer, who pays tax under clause (a) of sub-section (1) shall be entitled to input tax credit on the goods specified in the First Schedule purchased by him in the State.