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1975 (12) TMI 162 - SC - VAT and Sales TaxWhether food made available to a resident customer in a hotel by a hotelier against a consolidated charge for all the services and amenities and food amounts to a sale of an article of food for the purposes of the Food Act Held that - The definitions of the term sale have in terms been made subject to the context of the respective Acts in which they occur. Consequently in judging whether a transaction is a sale or not due regard must be had to the purpose scheme and context of the particular Act under which the question arises. The learned Judges of the High Court appear to have overlooked the important distinction between the connotation of sale for purposes of the Sales-tax Act and the one under the Food Act. The High Court has not recorded any finding on the merits of these cases. It has maintained the acquittal merely on the ground that the transaction in question did not amount to sale of article of food within the meaning of the Food Adulteration Act. The case would therefore have to go back to the High Court for deciding the appeals on merits. Appeal allowed.
Issues Involved:
1. Whether food provided by a hotelier to a guest as part of a consolidated charge for room and amenities, including food, constitutes a "sale" under the Prevention of Food Adulteration Act, 1954. 2. Whether the term "store" in sections 7 and 16 of the Act means storage simpliciter or storing for sale. Detailed Analysis: Issue 1: Whether food provided by a hotelier to a guest as part of a consolidated charge for room and amenities, including food, constitutes a "sale" under the Prevention of Food Adulteration Act, 1954. The Supreme Court addressed whether the provision of food by a hotelier to a guest, when included in a consolidated charge for room and amenities, amounts to a "sale" under the Prevention of Food Adulteration Act, 1954 (Food Act). The High Court had previously ruled that such a transaction did not constitute a sale, relying on the norms and tests applied under the Punjab General Sales Tax Act. The High Court's reasoning was that there was no transfer of property in the food to the customer unless it was consumed, and the predominant character of the transaction was a contract for work or services, not a sale of food. The Supreme Court disagreed with the High Court's reasoning, emphasizing the distinction between the definitions of "sale" in the Sales Tax Act and the Food Act. The Court noted that the definition of "sale" under the Food Act is broader and includes "an offer for sale," "exposing for sale," or "having in possession for sale." The Court stated that the purpose, scheme, and context of the Food Act are entirely different from those of the Sales Tax Act. The Food Act aims to prevent the supply of adulterated foodstuffs as part of business activity, and the term "sale" must be interpreted in its widest amplitude to cover all commercial transactions involving the supply of adulterated food. The Court concluded that the mere offer of food for a money consideration, whether as a distinct item or as part of a consolidated charge, constitutes a "sale" under the Food Act. The Court rejected the argument that the primary object of the transaction was to provide amenities and services, with food being incidental. The Court held that the supply or offer of food by a hotelier to a resident customer against a consolidated charge amounts to a "sale" of an article of food for the purposes of the Food Act. Issue 2: Whether the term "store" in sections 7 and 16 of the Act means storage simpliciter or storing for sale. The Supreme Court examined the interpretation of the term "store" as used in sections 7 and 16 of the Food Act. The High Court had held that the term "store" meant "storing for sale." The Supreme Court agreed with this interpretation, stating that the terms "store" and "distribute" in sections 7 and 16 take their meaning from the context and the collocation of words in the Act. The Court emphasized that the Food Act's broad scheme is to prohibit and penalize the sale, import, manufacture, storage, or distribution for sale of any adulterated article of food. The Court noted that section 10 of the Act, which confers powers on the Food Inspector to take samples, indicates that the Food Inspector can take samples only from persons engaged in specific business activities related to the sale of food. The Court concluded that "storage" or "distribution" of an adulterated article of food for purposes other than for sale does not fall within the mischief of sections 7 and 16. The Court held that the term "store" in section 7 means "storing for sale," and storing adulterated food for purposes other than for sale would not constitute an offense under section 16(1)(a). Conclusion: The Supreme Court reversed the High Court's judgment on the first issue, holding that the supply or offer of food by a hotelier to a resident customer against a consolidated charge constitutes a "sale" under the Food Act. The Court agreed with the High Court's interpretation on the second issue, affirming that the term "store" means "storing for sale." The case was remitted to the High Court for further proceedings on the merits. Appeals allowed.
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