TaxTMI 
TaxTMI 
2007 (3) TMI 336
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....el? Is there in that transaction an intention to sell him food contained in the meals served to him during his stay in the hotel? It stands to reason that during such stay a well equipped hotel would have to furnish a number of amenities to render the customer's stay comfortable. In the supply of such amenities do the hotelier and his customer enter into several contracts every time an amenity is furnished? When a traveller, by plane or by steam-ship, purchases his passage-ticket, the transaction is one for his passage from one place to another. If, in the course of carrying out that transaction, the traveller is supplied with drinks or meals or cigarettes, no one would think that the transaction involves separate sales each time any of those things is supplied. The transaction is essentially one of carrying the passenger to his destination and if in performance of the contract of carriage something is supplied to him, such supply is only incidental to that service, no changing either the pattern or the nature of the contract. Similarly, when clothes are given for washing to a laundry, there is a transaction which essentially involves work or service, and if the laundryman stitches....
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....ontract in the sale of food by a restaurant to customers implies a reliance, it is said, on the skill and judgment of the restaurant-keeper to furnish food fit for human consumption. The other view is that such an implied warranty does not arise in such transactions. This view is based on the theory that the transaction does not constitute a sale inasmuch as the proprietor of an eating place does not sell but "utters" provisions, and that it is the service that is predominant, the passing of title being merely incidental (Corpus Juris Secundum, Vol. 77, 1215-1216). The two conflicting views present a choice between liability arising from a contract of implied warranty and for negligence in tort, a choice indicative of a conflict, in the words of Dean Pound, between social interest in the safety of an individual and the individual interest of the supplier of food. The principle accepted in cases where warranty has been spelt out was that even though the transaction is not a sale, the basis for an implied warranty is the justifiable reliance on the judgment or skill of the warrantor and that a sale is not the only transaction in which such a warranty can be implied. The relationship ....
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....lly of service in the performance of which and as part of the amenities incidental to that service, the hotelier serves meals at stated hours. The Revenue, therefore, was not entitled to split up the transaction into two parts, one of service and the other of sale of food stuffs and to split up also the bill charged by the hotelier as consisting of charges for lodging and charges for food stuffs served to him with a view to bring the latter under the Act. 2. In Northern India Caterers (India) Ltd. -vs-Lt. Governor of Delhi, [1979] 1 SCR 557 the Bench comprising their Lordships P.N. Bhagwati, V.D. Tulzapurkar and R.S. Pathak, JJ. extended the above ratio even to restaurants, in these words: Like the hotelier, a restaurateur provides many services, in addition to the supply of food. He provides furniture and furnishings, linen, crockery and cutlery, and in the eating places of today he may add music and a specially provided area for floor dancing and in some cases a floor show. The view taken by the English law found acceptance on American soil, and after some desultroy dissent initially in certain states it very soon became firmly established as the general view of the law. ....
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....rs and all three Judges found that it should be dismissed. The order of the majority noted that it appeared from the submissions that were made in the review petition that the States were apprehensive that the judgment in Northern India Caterers would be invoked by restaurant-owners in those cases also where there was sale of food and title passed to the customers. It seemed to the two learned Judges who constituted the majority, having regard to the facts on which that judgment rested, undisputed as they had remained throughout the different stages of the litigation, and the considerations which they attracted, that no such apprehension could reasonably be entertained. Where food was supplied in a restaurant and it was established upon the facts that the substance of the transaction, evidenced by its dominant, object, was the sale of food and the rendering of service was merely incidental, the transaction would undoubtedly be exigible to sales tax. In every case it would be for the taxing authority to ascertain the facts when making an assessment under the relevant sales tax law and to determine upon those facts whether a sale of the food supplied was intended. Krishna Iyer, J., c....
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...., to regulate inter-State trade or commerce in weights, measures and the other goods which are sold or distributed by weight, measure or number. ......". In terms of Section 2(v) "sale" means -"the transfer of property in any weight, measure or other goods by one person to another for cash or for deferred payment or for any other valuable consideration". It seems to me that a perusal of the Objects and Reasons of the Bill and the Preamble of the Act cannot but lead to the conclusion that the SWM Act is concerned only with the packaging of articles, as much as the size, number, weight and even the recommended price is required to be clearly stated. As has already been pointed out the Legislature could have borrowed the definition contained in clause 29-A of Article 366 of the Constitution, but has not considered it expedient to do so. 6. This is also evident on a reading of Section 39 of the SWM Act, which is the fasciculous dealing with commodities in packaged form intended to be sold or distributed in the course of inter-state trade or commerce. It prohibits a person to make, manufacture, pack, sell, or cause to be packed or sold; or to distribute, deliver, or cause to be ....
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....umer. 2(r) "retail sale price" means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer and where such price is mentioned on the package, there shall be printed on the packages the words[Maximum or Max. retail price].... inclusive of all taxes [or in the form MRP Rs..... inclusive of all taxes.]] Explanation.--For the purpose of this clause "maximum price" in relation to any commodity in packaged form shall include all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing forwarding and the like, as the case may be] 2 (w) "wholesale dealer", in relation to any commodity in packaged form, means a dealer who does not directly sell such commodity to any consumer but distributes or sells such commodity through one or more intermediaries. Explanation.--Nothing in this clause shall be construed as preventing a wholesale dealer from functioning as a retail dealer in relation to any commodity, but where he functions in relation to any commodity as a retail dealer, he shall comply with all the provisions of these rules which a retail dealer is req....
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.... shall not charge any price in excess of the revised price, irrespective of the month in which the commodity was pre-packed.] (5) Nothing in sub-rule (4) shall apply to a package which is not required under these rules to indicate the month and the year in which it was pre-packed. (6) No retail dealer or other person shall obliterate, smudge or alter the [retail sale price], indicated by the manufacturer or the packer, as the case may be, on the package or on the label affixed thereto. (7) The manufacturer or packer shall not alter the price on the wrapper once printed and used for packing.] 8. In view of the decisions rendered in Associated Hotels and Northern India Caterers the SWM Act should necessarily have contained a deeming definition calculated to bring within its statutory sweep services and supplies offered even in hotels and restaurants in the context of the catering or lodging services offered on their premises to its customers. However, it does not do so. Nevertheless, Rule 23 of the SWM Rules proceeds to proscribe retail dealers, manufacturers, packers and wholesale dealers from making any sale of a commodity in packaged form at a price exceeding t....
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....issioner of Central Excise, New Delhi, (2004) 7 SCC 591. The Apex Court has observed that the "SWM Act as well as the Packaged Commodities Rules have been enacted to protect the consumers who are entitled to pay only such price as has been printed thereon. The purpose of printing the MRP on cigarette packages is to achieve a standardisation of prices throughout the country and to inform consumers of the appropriate price of the product. There is no scope for "underdeclaration" because the consumer can insist on the retailer abiding by the printed MRP. Provisions for penalties under the Act on the retailer ensure this. It is not open to the retailer who may be proceeded against for selling above the printed MRP to contend that it was incorrect or false, nor can the retailer defend any violation of the printed MRP by asking for an enquiry into its reasonableness". The Apex Court had also noted that in the event that the retailer or manufacturer violates Rule 23(2) of SWM Rules "he is liable to be proceeded against and may be fined upto an extent of Rs.2000/ per package under Rule 39 of the Packaged Commodities Rules and Section 67 of the SWM Act". These observations were made....
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....nks by hotels and restaurants. Mr. Midha has also laboured on Rule 5 of the SWM Rules and the fact that the commodities mentioned in the Third Schedule included aerated soft drinks, mineral water and drinking water. This may be so but the sweep and intendment of the SWM Act and Rules are palpably obvious from the fact that in respect of these commodities it is the packaging thereof which has been specifically dealt with. A reading of Section 33, to which my attention was invited by Mr. Midha, fortifies the conclusion that the Act is primarily concerned with the display of weight, measure, number, MRP etc. on the packaging and does not travel further to punish the charging of a price in excess of the stated MRP. Mr. Midha further adverted to the practice adopted in hotels and restaurants including the opening of the bottle before its service and availability of other drinking water at no charge. These factors are irrelevant to the exercise of interpretation of a statute. Similarly, Mumbai Bidi Tambaku Vyapari Sangh, on which reliance has been placed by Mr. Midha, does not further the cause of the Respondents since this Judgment would be applicable if there was an ambiguity in the st....