Restaurant food service and ancillary amenities were treated as service, not taxable sale, where revenue failed to prove sale character.

Restaurant service was treated as a question of dominant character: where meals and drinks are supplied with seating, crockery, cooling arrangements and similar amenities, the transaction is characterised as service rather than a transfer of property in food as goods. Applying settled Supreme Court principles, the burden remained on the revenue to prove that the dominant object was a sale, and section 14 of the Haryana General Sales Tax Act, 1973 could not assist unless a sale was first shown. On the facts stated, the supply of food and beverages was not established as a taxable sale, so the notices and assessment orders were quashed.

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Issues: Whether the serving of meals, beverages, and other food articles in the petitioners' restaurants, along with ancillary amenities, constituted a taxable sale under the Haryana General Sales Tax Act, 1973.

Analysis: The restaurant transactions were examined in the light of the settled principle that where food is served in an eating-house or restaurant, the real nature of the transaction depends on whether the dominant object is sale of food or rendering of service. The Court noted that the petitioners provided seating, furniture, crockery, cooling arrangements and other amenities in a clean and congenial atmosphere, and there was no material to show that customers carried away food or leftovers. Applying the principles stated by the Supreme Court, the Court held that the essence of such transactions was service to satisfy a customer's immediate need, and not a transfer of property in food as goods. The Court also held that the burden to establish that the transaction was a sale lay on the revenue, and section 14 of the Act did not assist the department because it would apply only if the activity was first shown to amount to a sale.

Conclusion: The supply of food and drinks in the petitioners' restaurants was not shown to be a taxable sale, and the notices and assessment orders were therefore liable to be quashed.

Final Conclusion: The writ petitions succeeded, and the impugned tax notices and assessment orders were set aside.

Ratio Decidendi: Where restaurant service is substantially a supply of food as part of personal service and the revenue fails to prove that the dominant object is sale of food, the transaction is not exigible to sales tax.

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