9911796707
TMI Blog1983 (1) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic according to a la carte menu. In addition to the service of meals, beverages and tea, the petitioner-concerns have got bar licences for beer and whisky and the customers can consume liquor and beer. The petitioners had been charging sales tax on eatables and drinks up to the second quarter of the year 1978-79, at the rate of 7 per cent and used to pay this tax to the sales tax department. However, the Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC) held that the service of meals to visitors to the restaurants was not taxable and that was so whether the charge was for the meals as a whole or according to the dishes separately ordered. The petitioners stopped charging sales tax from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a prevalent practice that that the people purchase foodstuffs and carry away in the tiffin boxes. They have challenged this order of the Assessing Authority. Similarly, a show cause notice in form S.T. 25 dated 21st July, 1980, was issued to Messrs. Imperial Hotel and Restaurant, Karnal, which culminated in passing an order dated 23rd March, 1982, vide which the petitioners were assessed to pay sales tax on the gross turnover annually at the rate of 7 per cent and the petitioners were made liable to pay sales tax, which they had not charged from their customers. The petitioners filed appeal against that, but the appellate authority did not decide it for a long time. The assessing authority issued show cause notice in form S.T. 25 on 2nd D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi High Court in East India Hotels Ltd. v. Commissioner of Sales Tax [1981] 48 STC 179. On the other hand, Mr. Bishnoi, the learned Additional Advocate-General, Haryana, has argued that the respective Assessing Authorities went into all the aspects of the matter. It was held that the return for the year 1978-79 was not submitted and it could not be said whether it was mentioned therein that the customers could not take away the leftovers. It has been held by their Lordships of the Supreme Court that if food was supplied in an eating house or restaurant and the dominant object of the transaction is sale of food and rendering of service is merely incidental, such sale is exigible (to tax). The petitioners did not provide any high-cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vers and remnants of food, but that is because the people think such a conduct to be bad mannered and against etiqutte." There is no material on the file for the conclusion that a part of the food is given to beggars or dogs. Beggars and dogs do not enter any restaurant worth the name. Whatever is served, the whole or substantial part thereof is consumed by the customers. The property in the food articles or drinks does not pass on to the customers before they consume them nor afterwards because after those articles are consumed they are destroyed and they do not remain capable of being possessed. For that reason, the Supreme Court in Northern India Caterers' case [1978] 42 STC 386 (SC) held that in these circumstances there was no elemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a right to satisfy his appetite by the process of destruction. What he thus pays for includes more than the price of the food as such. It includes all that enters into the conception of service, and with it no small factor of direct personal service. It does not contemplate the transfer of the general property in the food supplied as a factor in the service rendered. " Even after the decision of the review application the position of the articles of food served in the restaurants, which provide other services to the customers, remains substantially the same. Mr. Bishnoi has laid a great stress on the following paragraph of the judgment in the review application (reported in [1980] 45 STC 212 (SC); AIR 1980 SC 674): "It appears from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt had an occasion to examine this argument in somewhat similar circumstances in East India Hotels Ltd.'s case [1981] 48 STC 179. It has been observed: "The ratio of the two judgments of the Supreme Court in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC) and [1980] 45 STC 212 (SC) is that if food is served in a restaurant, it is a mere supply to meet the demand of the customer's stomach and is not a sale as such. It is a service rendered to a hungry customer and not a sale of food." It was held: "(i) that the entire receipts of the assessee including the amount charged for the supply of food in its restaurant and the amount charged for services had to be excluded from the taxable turnover, and no q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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