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TMI Blog1978 (9) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... The following two questions of law have been referred to this Court under section 21(3) of the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi: "(1) Whether the supply of meals by the petitioner to the residents, who pay a single all-inclusive charge for all services in the hotel, including board, if they desire to partake of it, without entitling them to a rebate, if they miss it, is taxable under the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi. (2) Whether the service of meals to casual visitors in the restaurant is taxable as sale (i) when the charges are lump sum per meal, or (ii) when they are calculated per dish." The petitioner has been running a hotel in which lodging and meals are provided on "inclusive terms" and meals are also served to non-residents in the restaurant. For the assessment year 1957-58 the petitioner was assessed to sales tax and an additional demand of Rs. 2,988.28 was created against it. The petitioner's contention was that there was no element of "sale" in serving food along with other amenities provided to customers and charging them on all-inclusive basis. The contention was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court. F.S. Nariman, Senior Advocate (in C.A. No. 1768 of 1972), V.S. Desai, Senior Advocate (in C.A. No. 1769 of 1972) and M.C. Bhandare, Senior Advocate (in C.A. No. 1768 of 1972) (Mrs. S. Bhandare and Miss M. Poduval, Advocates, with them), for the appellants. P.A. Francis, Senior Advocate (R.N. Sachthey and Miss A. Subhashini, Advocates, with him), for the respondent. Y.S. Chitale, Senior Advocate (Vinay Bhasin, A.K. Srivatsava and Vineet Kumar, Advocates, with him), for the interveners. JUDGMENT The judgment of the Court was delivered by PATHAK, J .-This and the connected appeal are directed against the judgment of the High 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 the charges are lump sum 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 provided on "inclusive terms" t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he many facilities that constituted the components of that hospitality determined the legal character of the transactions flowing from them. Long ago, in Crisp v. Pratt (1639) Cro. Car. 549., it was pointed out that innkeepers do not get their living by buying and selling, and that although they buy provisions to be spent in their house, they do not sell them but what they do is to "utter" them. "Their gain", it was added, "is not only by uttering of their commodities, but for the attendance of their servants, and for the furniture of their house, rooms, and lodgings, for their guests This test went to the root, and we find it repeated in Parker v. Flint (1699) 12 Mod. Rep. 254. In Newton v. Trigg(1691) 3 Mod. Rep. 327., Holt, C.J., defined the true status of an innkeeper by reference to the services afforded by him, that he was an "hospitator", and was "not paid upon the account of the intrinsic value of his provisions, but for other reasons: the recompense he receives, is for care and pains, and for protection and security but the end of an innkeeper in his buying, is not to sell, but only a part of the accommodation he is bound to prepare for his guests". And for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or drink to customers did not partake of the character of a sale of goods, the court commented: "The essence of it is not an agreement for the transfer of the general property of the food or drink placed at the command of the customer for the satisfaction of his desires, or actually appropriated by him in the process of appeasing his appetite or thirst. The customer does not become the owner of the food set before him, or of that portion which is served for his use, or of that which finds a place on his plate or in side dishes set about it. No designated portion becomes his. He is privileged to eat, and that is all. The uneaten food is not his. He cannot do what he pleases with it. That which is set before him or placed at his command is provided to enable him to satisfy his immediate wants, and for no other purpose. He may satisfy those wants; but there he must stop. He may not turn over unconsumed portions to others at his pleasure, or carry away such portions. The true essence of the transaction is service in the satisfaction of a human need or desire,-ministry to a bodily want. A necessary incident of this service or ministry is the consumption of the food required. This cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has not been proved that any different view should be taken, either at common law, in usage or under statute. It was urged for the respondent that in Associated Hotels of India Ltd. [1972] 29 S.T.C. 474 (S.C.); [1972] 2 S.C.R. 937. this Court drew a distinction between the case of meals supplied to a resident in a hotel and those served to a customer in a restaurant. We are unable to find any proposition of law laid down by the court there which could lead to that inference. We may point out that in the view which appeals to us we find ourselves unable to agree with the observations to the contrary made by the Punjab High Court in M/s. Associated Hotels of India Ltd., Simla v. Excise and Taxation Officer, Simla [1966] 17 S.T.C. 555; A.I.R. 1966 Punj. 449., and by the Delhi High Court in Municipal Corporation of Delhi v. Laxmi Narain Tandon A.I.R. 1970 Delhi 244 (F.B.). In the result, we hold that the service of meals to visitors in the restaurant of the appellant is not taxable under the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi, and this is so whether a charge is imposed for the meal as a whole or according to the dishes separatel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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