LexTHE EAST INDIA HOTELS LTD. AND ANR. versus UNION OF INDIA AND ANR.
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THE EAST INDIA HOTELS LTD. AND ANR.
v.
UNION OF INDIA AND ANR.
NOVEMBER 15, 2000
[B.N. KIRPAL, N. SANTOSH HEGDE AND
DORAISWAMY RAJU, JJ.]
Sales Tax:
Delhi Sales Tax Act, 1975.
Sections 2(e), {g), (l) , 3 and 4-lmposition of Sales Tax-Sale of
foodstuffs in hotel or restaurant-Whether can be subjected to Sales Tax-
Held, food and drink have to be regarded as goods-There is transfer of
property in such goods by hotelier in favour of customer-The moment goods
D are supplied and sale price paid, it would amount to sale and would be
subject to Sales Tax-No cabaret, floor show or similar entertainment in
hotel or restaurant-Sales Tax-Rate of-Held, rate of tax applicable would
be as stipulated in Section 4 (/) (d).
Interpretation of Statutes-Harmonious Construction-Interpretation
E suggested making provisions otiose-Whether sustainable-Held, an Act ~as
to be read as a whole, different provision have to be harmonised and effect
has to be given to all the provisions.
Appellant was subjected to tax in respect of sales ma.de in restaurants
situated in its hotels. Appeal filed by appellant against assessment on the
F ground that sales made in restaurant could not be taxed, was dismissed. Hence,
this app~al.
Appellant contended that there is no sale in restaurant in a hotel and
sales tax could not be levied in view of the provisions of the Delhi Sales Tax
Act, 1975; and that Section 4 (1) (c) is only relatable to sale of foodstuffs in
G hotels or restaurants where there is cabaret or floor show or similar
entertainment and not to others .
. Dismissing the appeal, the Court
HELD: 1. According to Section 2(g) of Delhi Sales Tax Act, 1975 all
H movable properties, materials, articles or commodities are goods. Therefore,
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EAST INDIA HOTELS LTD. v. U.0.1.
659
food in a restaurant has necessarily to be regarded as goods. According to A
Section 2(1), transfer of property in goods by one person to another would
amount to sale. With cooked food or food which is supplied in a restaurant
falling within the definition of the word 'goods' in Section 2(g), transfer of
property in the same would amount to sale as provided by Section 2(1). (655-Ff
2. If the contention of the appellant that in a restaurant no sale at all B
takes place to a customer is correct, then the question of any tax being levied
in respect of food or drink supplied in a hotel or restaurant in which there is
a cabaret would not arise. In other words, Section 4(1) (c) would become otiose.
[666-A-B)
This obviously cannot be so. An Act has to be read as a whole, the C
different provisions have to be harmonised and effect has to be given to all of
them. Reading Sections 2(e), 2(g), 2(1), 3 and 4 together, it is clear that food
and drink would fall within the definition of'goods' under Section 2(g). There
would be a transfer of property in the same by a hotelier in favGur of the
customer. (666-B-CI
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3. When a customer goes to a restaurant and orders food and in respect
of which he pays the price indicated therein and the said food items are
supplied to him, it would clearly be a case of transfer of property in goods to
the customer. Whether the customer eats the entire or part of the dish or
chooses not to eat at all would make no difference if he pays for the dishes E
supplied. The moment the dish is supplied and sale price paid, it would amount
to a sale. f 667-A-BI
The State of Punjab v. Mis Associated Hotels of India Ltd, (197211 SCC
472, followed.
Northern India Caterers (India) Ltd v. Lt. Governor of Delhi., (1978) 4
sec 36, distinguished.
Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi., (1980) 2
sec 167, cited.
4. It is clear. that if the food or drink is supplied in a hotel or restaurant
where there is a cabaret, floor show or similar entertainment, the rate of tax
would be under Section 4(1) (c) and where there is no such cabaret, floor
show or similar entertainment the rate of tax would be the one stipulated in
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Section 4(1) (d). f667-CI
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660
SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5086of1989.
From the Judgment and Order dated 20.9.85 of the Sales Tax Assessing
Authority, Ward No. l 8 New Delhi for the Assessing year 1982-83.
Gopal Subramanium," Ms. Nina Gupta, Uday Gupta, Ms. Jaya Shrivastava
B and Yineet Kumar for the Appellants.
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Harish N. Salve, Solicitor General, Ashok Bhan, Dileep Tandon, Harish Excerpt shown. Read the full judgment & AI analysis in Lexace.