FEDERATION OF HOTEL AND RESTAURANT ASSOCIATIONS OF INDIA versus UNION OF INDIA AND ORS.

Citation: [2017] 12 S.C.R. 503 · Decided: 12-12-2017 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2017] 12 S.C.R. 503 
FEDERATION OF HOTEL AND RESTAURANT 
ASSOCIATIONS OF INDIA 
v. 
UNION OF INDIA AND ORS. 
(Civil Appeal No. 21790 of 2017) 
DECEMBER 12, 2017 
[R.F. NARIMAN AND NAVIN SINHA, JJ.] 
Weights and Measures - Standards of Weights and Measures 
Act, 1976 r!w. Standards {~l Weights and Measures (Enforcement) 
Act, 1985 - Legal Metrology Act, 2009 - Definition of "Sale"- If 
applicable to sen•ices rendered in liotels/restaunmts - Actio11 against 
appellant-Association for clu11:1?ing higlzer than tlze printed Maximum 
Retail Price ( MRP) for supply of packaged water bottles during 
serl'ices provided to their customer.1· in hotels and restaurants - In 
the writ petition flied by appellant, Single Judge of High Court 
held that chmging prices jiw mineral water in excess of MRP to the 
customer.1· in hotels and restaurants does not violate the provisio11.1· 
of the SWM Act - Leite rs Patent Appeals ( LPA) - Di Pis ion Bench 
disposed of the appeals holding that the judgment of Single Judge 
shall not come in the way of tlze respondent in enforcing the 
provisions of the 2009 Act, even if identical or similar to the old 
Act, and it was leji to be adjudicated in the proceedings initiated 
under the 2009 Act whether hotels/restaurant are entitled to do so 
or not - Held: Position qua "sale" remains exactly the same in the 
2009 Act as that i11 the 1976 Act, which 11ow stands repealed -
When "sale" of food and drinks takes place in hotels and 
restaurants, there is one indivisible contract of service coupled 
incidentally with sale of food and drinks - Single Judge of High 
Court was correct in holding that composite indivisible agreements 
for supply of services a11d food and drinks in the hotels/restaurants 
would not come within the purview of either the 1976 Act or the 
2009 Act - Neither the 1976 Act rlw the 1985 Act, nor the 2009 Act, 
would apply .1·0 as to interdict the .rnle of 111i11eral ll'ater in hotels 
and restaurants at prices abm•e the MRP - Judgment of Division 
Bench of High Court set aside - Standard.1· of Weights and Measures 
(Packaged Commodities) Rules, 1977 - The Legal Metrology 
503 
A 
B 
c 
D 
E 
F 
G 
H 
504 
SUPREME COURT REPORTS 
[2017] 12 S.C.R. 
A 
(Packaged Commodities) Rules, 20/l - r.3, Explanation (i) -
Constitllltion (Forty-sixth Amendment) Act - Art. 366(29-A) (j). 
B 
c 
D 
E 
Legal Metrology Act, 2009 - Statement of Object and Reasons 
- Discussed. 
Standards a/Weights and Measures Act, 1976 - Statement of 
Object and Reasons - Discussed. 
Allowing the appeals, the Court 
HELD: 1.1 On a cursory reading of the definition of "sale" 
contained in the Standards of.Weights and Measures Act, 1976, 
it will be clear that "sale" means transfer of property in goods by 
one person to another for cash or for deferred payment or for any 
I 
other valuable consideration. Despite Supreme Court's judgment 
in Mis. Associated Hotels of l11dia Ltd. case which was ajudgment 
of the year 1972, Parliament chose to adopt the definition of sale 
which does not include or split up sales of goods from services in 
composite contracts. A reading of the various penal provisions 
that are contained in the 1976 Act, starting with Section 50 sh,ow 
that there is no penalty for selling above MRP in hotels .and/or 
restaurants. [Para 9] [511-F-G] 
. ·. 
The State of Punj~'p V; .Mis. Associated Hotels of India' 
Ltd. (1972) 1 SCC 472 : [1972) 2 SCR 937 - referred 
to. 
1.2 It is dear that when "sale" of food and drinks takes 
·place in hotels and restaurants, there is really on·~ indivisible 
contract of service coupled incidenfaliy 'with sale of food and 
. 
. 
. 
F 
drinks. Since it is not possible to divide the "service ·element", 
which is the dominant element, from the. "sale element'', it is 
clear that such composite contracts cannot be the subject-matter 
of sales tax legislation-. [Para 10] [511-H; 512-A] ~ 
Northern· 1ndia Caterers (India) Ltd. v. Lt. Gbverhor of· " 
G 
Delhi [1979) 1 SCR 557 ; Northern .India Cl~terers 
(lhdia) Ltd. v. Lt. Governor of Delhi (19S0) i SCC 167: 
[19801 2 SCR 650 . ..;. refer.red to. 
H 
1.3 Bearing the trilogy of judgments in· Mis. Associaied 
Hotels of llldia Ltd. case and the two Northern India Caterers (India) 
. '••' 
, .. 
·-~· 
FEDERATION OF HOTEL AND RESTAURANT 
ASSOCIATIONS OF INDIA v. U.0.1. 
505 
Ltd. vs. Lt. Governor of Delhi cases in mind, Parliament amended A 
-'the Constitution and introduced the Constitution (forty-sixth 
Amendment) Act, by which 

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