Catering contract taxation limited to sale value only; service element must be excluded from sales tax

Catering contracts are composite transactions containing both a sale element and a service element after the Forty-sixth Amendment, so they cannot be treated as wholly sales merely because food is supplied for consideration. The taxable incidence is confined to the value attributable to the goods sold, while the service component remains outside sales tax. Accordingly, the entire catering turnover is not exigible to tax as sale of goods; the turnover must be segregated so that only the sale element is taxed.

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Issues: Whether receipts from a catering contract are wholly taxable as sale of goods, or whether only the turnover attributable to sale is taxable after excluding the service element.

Analysis: The statutory scheme treated supply of food and other articles for human consumption for consideration as a deemed sale, but the constitutional and legal position after the Forty-sixth Amendment required recognition that catering contracts are composite transactions containing both sale and service. Such contracts cannot be treated as wholly sales merely because the supply of meals is the principal feature. The taxable incidence is confined to the value of the goods sold, while the service component remains outside sales tax. The contract in question therefore could not be brought entirely within the definition of sale, and the turnover had to be segregated between the sale element and the service element.

Conclusion: The entire catering turnover is not taxable as sale of goods. Only the turnover attributable to sale is exigible to tax, after excluding the service component.

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