Service charges in hotel bills form part of taxable turnover when inseparably linked to consideration for supply.

Service charges collected by a hotel from customers for banquet hall, food, and related services were held to form part of taxable turnover under the Uttar Pradesh Trade Tax Act. Applying the broad definitions of "sale" and "turnover," the charge was treated as consideration received from customers, regardless of how it was described, because it was recovered as part of the bill and was not shown to be severable from the taxable supply. The court distinguished contrary authorities on the basis of the clear statutory language and upheld inclusion of the service charges in taxable turnover.

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Issues: Whether service charges collected by a hotel from customers in respect of banquet hall services formed part of taxable turnover under the Uttar Pradesh Trade Tax Act.

Analysis: The definition of "sale" under Section 2(h) and "turnover" under Section 2(i) of the Uttar Pradesh Trade Tax Act was applied to hold that amounts charged by the dealer from customers, in whatever name described, and recovered as part of the bill for supply of food and related services, fall within the taxable turnover where they are charged for consideration. The Court distinguished authorities relied upon by the revisionist on the ground that the statutory definition in the present Act was clear and comprehensive, and that the charge collected from customers was not shown to be severable from the taxable consideration.

Conclusion: Service charges collected from customers were includible in taxable turnover and the revisionist's challenge failed.

Ratio Decidendi: Where the taxing statute defines sale and turnover broadly to include amounts received as consideration for supply of goods or services, a separately described charge collected from customers forms part of taxable turnover if it is inseparably connected with the consideration for the supply.

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