LexNORTHERN INDIA CATERERS (INDIA) LTD. versus LT. GOVERNOR OF DELHI
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• NORTHERN INDIA CATERERS (INDIA) LTD. v. LT. GOVERNOR OF DELHI September 7, 1978 557 A [P. N. BHAGWATI, V. D. TULZAPURKAR AND R. S. PATHAK, JJ.) B Bengal Fi11ance (Sales Tax) Act 1941 (as extended to the Union Territory -0/ Delhi)--Service of meals to non-residents in a restaurant in a hoter.-SaJe,y Tax-If payable on price charged for meals. The appellant runs a hotel in which meals are served to non-residents also in the restaurant located in the hotel. The sales tax authorities treal<d a portion 9f the receipts M representing the price Of foodstuffs served and C levied tax. The High Court affirmed the view of tho sales tax authorities. On th:. question whether the transaction constituted sale of foodstuffs. Allowing the appeals lll~LD: 1. Service of meals W non~residents in the restaurant of the appcl~ lant is not taxable under the Bengal Finance (Sales Tax) Act 1941, as extended. D to the Union Territory of Delhi. This is so whether a charge is imposed for the meal as a whole or according to the dishes separately ordered. [562 F· G] 2. In State of Puniab v. Mjs. Associated Hotels of India [1972] 2 SCR 937 this Court held that there was no sale when food and drink were supplied to guests residing in the hotel. The Court pointed out that the supply of meals was essentially in the nature of a service provided to the guests and coulcl not be identified as a transaction of sale. Tb.is Court 'declined to accept the position that the Revenue was entitled to split up the transaction into two parts, one of service and the other of sale of foodstuffs. If that be true in respect of hotels, a similar approach seems to be called for on principle in the case of restaurants. Like the hotelier, a restaurateur provides many -- services in addition to the supply of food. He provides furniture and furnish- ings, linen, crockery and cutlery, and he may add music, an area for floor dancing and in some cases a floor show. The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need. No reason hae been shown for preferring any other view. (562 B, 560 F-G, 562 CJ E F State of Puniab v. Mis. Associated Hotels of India I,td. [1972] 2 SCR 937 G applied. M Js. Associated Hotels of India Ltd., Sinila v. Excise and Taxation Officer Simla AIR 1961 Punjab 449 not "Jlproved. Municipal Corporation of Delhi v. Laxn1i Narain Tt1ndon <ind A11othtr AIR 1970 Delhi 244 not approved. Crisp v. Pratt [1639] Cro. Car 549, Parker v. Flint (1699] 12 Mod. 254 Nt!wton v. Trigg 3 Mod. 327, Sauttderson v. Rowles 4 Burr. 2065 Elecla B. H A ·B c 558 SUPREME COURT REPORTS [1979] 1 S.C.R. klerrill v. Jan1es W. Hodson 1915-B L.R.A. 481, and Mary Nisky v. Childr Company 50 A.LR. 227 referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1768-1769/, 72. Appeals by Special Leave from the Judgment and Order dated 15-7-1971 of the Delhi High Court in Sales Tax Reference No. 8 of 1969. F. S. Nariman, (In CA 1768/72), V. S. Desai (in C.A. 1769). M. C. Bhandare (C.A. 1768/72) and Mrs. S. /Jlumdare and Miss M. Poduval for the Appellants. P. A. Francis, R. N. Sachthey and Miss A. Subhashini for the Respondent. ,,;: . ",,'rY. S. Chita/e, Vinay Bhasin, A. K. Srivastava and Vineet Kumar .. 'tffor the Interveners. di.p" The Judgment of the Court was delivered by E F PATHAK, J. This and the connected appeal are directed against the judgment of the Higb Court of Delhi disposing of a reference made to it under section 21 (3) of the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi on the following question:- "Whether the service of meals to casual visitors in the Restaurant is taxable as a sale : (i) when charges arc lumpsum per meal or (ii) when they are calculated per dish ?" The High Court has answered the question in the affirmative. The appellant runs a hotel in which lodging and meals are pro- vided on "inclusive terms" to residents. Meals are served to non- residents also in the restaurant located in the hotel. In the assessment proceedings for the assessment years 1957-58 and 1958-59 under the G Bengal Finance (Sales Tax) Act, 1941, the appellant contended that the service of meals to residents and non-residents could not be regarded as a sale and therefore sales tax could not be levied in
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