9911796707
TMI Blog1995 (2) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... ing rooms was not incidental to the services and amenities offered to the customers? (4) Whether, on the facts and in the circumstances of the case, there were two implied contracts, one for environment and amenities and the other for food and the price received for food only was liable to tax under the Bombay Sales Tax Act, 1959? (5) Whether, the Tribunal was justified in its conclusion that the department had discharged the burden that service of food by the applicants to its customers in the various eating rooms was a transaction liable to tax under the Bombay Sales Tax Act, 1959?" 2.. Counsel for the parties are agreed that the controversy in question Nos. 1, 3 and 5 stands concluded in favour of the Revenue by the ratio of the decision of this Court in Yogi Restaurant v. Commissioner of Sales Tax [1991] 83 STC 122 and Naranga Hotels Private Ltd. v. Union of India [1994] 94 STC 5. In that view of the matter, we answer questions 1, 3 and 5 in the affirmative and in favour of the Revenue. 3.. The only questions that fall for determination are questions 2 and 4. We shall, therefore, briefly state only those facts which are relevant for determining the controversy involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the receipts for service of food were not taxable. In support of the contention that the contract between the assessee and the customers was a contract for provision of amenities and facilities in decorated eating rooms, the assessee produced menu cards of nine different eating rooms. By referring to these menu cards, it was pointed out by the assessee before the Tribunal that different rates were charged for similar item of food in different eating rooms. The Tribunal rejected all these contentions of the assessee by its judgment and order dated April 18, 1977 and held that the service of food and drinks to the customers amounted to sales of taxable goods and that no part of the consideration received by the assessee was for something other than the supply of food and drinks. Hence this reference at the instance of the assessee. 4.. We have heard the learned counsel for the assessee Mr. S.S. Gaitonde who submits that the assessee is entitled to get deduction of a sum equivalent to 50 per cent of the amount received by it from sale of food and drinks, which according to him, in effect, was for payment for enjoyment of facilities and amenities provided by the assessee in its five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd included in the turnover." It may be expedient in this connection to refer to the decision of the Supreme Court in McDowell Co. v. Commercial Tax Officer [1985] 59 STC 277 where the question for consideration was whether excise duty on liquor sold by the dealer which was paid directly to the excise authorities by the buyers formed part of the sale price. Ranganath Misra, J. (as his Lordship then was), speaking for the Bench, referred to section 2(s) of the Andhra Pradesh General Sales Tax Act, 1957 which defines "turnover" to mean the total amount set out in the bill of sale (or if there is no bill of sale, the total amount charged) as consideration for sale or purchase of goods, and observed: "The definition clearly indicates that the total amount charged as the consideration for the sale is to be taken into account for determining the turnover. Where a bill of sale is issued (and obviously the bill has to state that total amount charged as consideration), the total amount set out therein is to be taken into account. In every transaction of sale, there is bound to be a seller at one end and a buyer at the other and transfer of title in the goods takes place for a consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. The purchaser had paid the tax because the law asked him to pay it on behalf of the manufacturer. 5.. It is clear from the above discussion that the whole of the amount payable by the purchaser as consideration for the goods constitutes "sale price" and no deduction can be made therefrom of any amount even if it is referable to any component of such consideration. It would also be appropriate at this stage to refer to a decision of this Court in Sun-N-Sand Hotel P. Ltd. v. State of Maharashtra [1969] 23 STC 507, which in our opinion squarely applies to the facts of the present case. The facts of the said case are as follows: The assessee ran at Juhu Beach in Bombay a hotel which had both a boarding and a lodging establishment. The customers who came to the hotel were informed of the charges they had to pay for lodging with different amenities and boarding according to their taste. They were also informed that they had to pay service charges at ten per cent of the tariff and sales tax at five paise per rupee. The assessee objected to the inclusion of the service charges in its gross turnover on the ground that they did not represent part of the sale price but were re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the customers and the assessee; accordingly when the assessee tells the customer the moment he (the customer) enters the hotel, that for the purposes of goods supplied, the customer will have to pay not only the tariff rates which are fixed but also over and above it 10 per cent by way of service charges, the sale price quoted must include service charges. We have already observed that so far as the customer is concerned, he has to note by virtue of the tariff card that he has to pay the tariff rates plus 10 per cent as service charges plus 5 paise as sales tax per rupee; and all this is part of the contract or agreement between the customer and the assessee in respect of the price the customer has to pay for the food that is supplied to him. In other words, all this constitutes and goes into the formulation or fixation of the price for the goods supplied, and, therefore, it must be treated as 'sale price' within the meaning of section 2(29) of the Bombay Sales Tax Act, 1959." Dealing with the contention of the assessee that the part of the amount goes to the benefit of the employees and hence it would not form part of the sale price, it was observed: ".......The fact that pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way render the price fixed by him as price plus something. The whole of the amount is price which the purchaser has to pay as consideration for the purchase, if he wants to buy the same. That being so, the whole of the amount paid by the purchaser would be sale price. 7.. In view of the above, we are of the clear opinion that the Tribunal was justified in rejecting the contention of the assessee that only fifty per cent of the receipts in respect of the service of food in the various eating rooms of the assessee's hotel was liable to tax. We do not find any base whatsoever of the contention of the assessee that there were two implied contracts, one for environment and amenities and other for food. This claim of the assessee is wholly unfounded and untenable. The obvious and incontrovertible factual position in the present case is only one contract between the assessee and its customers-express or impliedand the contract is the contract for supply of food and drinks. No part of it was relatable to anything else. Hence the whole of the consideration paid by the customers constituted sale price within the meaning of section 2(29) of the Act. 8.. In view of the above, we answer que ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
