Composite hotel charges for lodging and meals do not create a taxable sale without a separable agreement to sell food.

Supply of meals to resident hotel guests under an inclusive tariff was not a sale of foodstuffs for sales tax purposes because the composite hotel charge did not contain a separable agreement to sell meals for a distinct price, and property in the food did not pass as in a sale. The guests had no right to take food away, reject it, or obtain a reduction if meals were not taken, so the essential ingredients of sale were absent. Tax authorities cannot deem a non-sale to be a sale by notional computation, and estoppel is unavailable in tax matters. The assessment challenge therefore failed.

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Issues: Whether supply of meals to resident hotel guests under the inclusive tariff amounted to a sale of foodstuffs within the meaning of section 2(h) of the Punjab General Sales Tax Act, 1948.

Analysis: The inclusive hotel charges were not split between lodging and meals in the agreement with residents, and the guests had no right to take food away, reject it, or claim any reduction if meals were not taken. Applying the settled tests of sale, the transaction lacked an agreement to sell the meals as goods for a separate price and did not involve the kind of passing of property that constitutes a sale. The authorities relied upon in tax law established that only a transaction satisfying the essential ingredients of sale can be taxed as such, and that a taxing statute cannot deem a non-sale to be a sale. The attempt to infer a separable sale from notional calculations, room-service charges, or the hotel's earlier treatment of returns raised only factual points not shown to displace the admitted position. Estoppel was also unavailable in tax matters.

Conclusion: The supply of meals to resident guests was not a sale of foodstuffs under section 2(h) of the Punjab General Sales Tax Act, 1948, and the challenge to the assessment failed.

Final Conclusion: The appeal was rejected because the resident guests' meal supply formed part of the composite hotel service and did not constitute a taxable sale.

Ratio Decidendi: For sales tax purposes, a composite hotel charge for lodging and meals is not a sale of foodstuffs unless the transaction contains a separable agreement to sell the food for price and the property in the goods passes as in a sale.

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