1967 (5) TMI 65 - HC - VAT and Sales Tax

Hotel meal supplies not deemed sale under Punjab Sales Tax Act; appeal dismissed.

State of Punjab and Another Versus Associated Hotels India Ltd.

State of Punjab and Another Versus Associated Hotels India Ltd. - [1967] 20 STC 1 (P&H) Issues:- Interpretation of the definition of sale of foodstuffs under the Punjab General Sales Tax Act, 1948- Application of essential ingredients of sale as defined in section 2(h) of the Act- Relatability of power to impose sales tax to entry 48 of List II of the Seventh Schedule to the Government of India Act, 1935- Analysis of precedents regarding the definition of sale in tax laws- Determination of whether sale of food takes place in a hotel settingAnalysis:The judgment of the High Court pertains to a Letters Patent Appeal challenging a decision regarding the levy of sales tax on the supply of meals by a hotel. The appeal arose from a writ petition filed against the order of the Excise and Taxation Officer, which was upheld in revision by the Additional Assistant Excise and Taxation Commissioner. The petitioners, a hotel company, contended that the supply of meals to residents in their hotels did not constitute a sale of foodstuffs under the Punjab General Sales Tax Act, 1948. The main issue before the court was to determine whether the supply of meals to residents amounted to a sale of foodstuffs.The learned Single Judge analyzed the essential ingredients of a sale as defined in section 2(h) of the Act, emphasizing the passing of property in the goods for a price, payment of price, and passing of title. The power to impose sales tax was linked to entry 48 of List II of the Seventh Schedule to the Government of India Act, 1935. Reference was made to the Supreme Court judgments in cases such as State of Madras v. Gannon Dunkerley and Co. and Pandit Banarsi Das Bhanot v. State of Madhya Pradesh, which clarified the elements of a sale for tax purposes.The court considered precedents like The Government of Andhra Pradesh v. Guntur Tobaccos Limited to determine the liability for sales tax on specific transactions. In the present case, the court examined the terms and conditions of the hotel company, noting that guests were not allowed to claim reductions if they did not consume meals on the premises and could not take away food for later consumption. Based on these facts, the Single Judge concluded that no sale of food took place in the hotel setting.During the appeal, arguments were presented regarding the calculation of charges for meals and amenities provided by the hotel. However, these were deemed as questions of fact that were not raised before the lower court. The appellant also raised the issue of estoppel in tax cases, contending that the company had been assessed based on a different method previously. The court dismissed these arguments, emphasizing that there was no substance in the appeal and upheld the decision of the Single Judge, ordering the appeal to be dismissed with costs.In conclusion, the High Court affirmed that the supply of meals to residents in the hotel did not amount to a sale of foodstuffs under the Punjab General Sales Tax Act, 1948. The judgment provided a detailed analysis of the legal principles and precedents governing the definition of sale for tax purposes, ultimately deciding in favor of the hotel company.