Sales tax on hotel food turns on whether supply is a sale or merely incidental service, requiring proper factual examination.

In sales tax matters involving food and drinks supplied in a hotel or restaurant, the taxing authority must examine the facts to decide whether the dominant object is a sale of food and whether any service is merely incidental. A bare finding that the assessee ran a hotel where food and drinks were served to visitors is insufficient to treat the transaction as a non-sale on the basis of social service. The finding below was held inadequate, the order was set aside, and the matter was remitted for fresh assessment in accordance with law.

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Issues: Whether the supply of food and drinks in a hotel could be treated as not constituting a sale on the limited finding that the assessee ran a hotel wherein food and drinks were served to visitors, and whether the matter required fresh assessment.

Analysis: The record contained only the bare finding that the assessee ran a hotel where food and drinks were served to visitors. That finding was held to be insufficient to sustain the conclusion that the transaction was merely a social service and not a sale. The relevant inquiry was whether, on the facts, the dominant object of the transaction was the supply of food as a sale and whether any rendering of service was merely incidental. The assessing authority had to determine the true nature of the transaction on a proper factual examination, applying the governing sales tax principles.

Conclusion: The finding below was inadequate, the order was set aside, and the matter was remitted for fresh assessment according to law.

Ratio Decidendi: In sales tax matters concerning food supplied in a hotel or restaurant, the taxing authority must determine from the facts whether the dominant object is a sale of food and whether services are merely incidental; a bare finding that food and drinks are served is insufficient.

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