EAST INDIA HOTELS LTD Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) BY this reference under section 61 (1) of the Bombay Sales Tax Act, 1959, made at the instance of the assessee, the Maharashtra Sales Tax Tribunal has referred the following questions of law to this Court for opinion :

(2.) COUNSEL for the parties are agreed that the controversy in question Nos. 1, 3 and 5 stands concluded in favour of the Revenue by the ratio of the decision of this Court in Yogi Restaurant v. Commissioner of Sales Tax [1991] 83 STC 122 and Naranga Hotels Private Ltd. v. Union of india [1994] 94 STC 5. In that view of the matter, we answer questions 1, 3 and 5 in the affirmative and in favour of the Revenue.

(3.) THE only questions that fall for determination are questions 2 and 4. We shall, therefore, briefly state only those facts which are relevant for determining the controversy involved in the said questions. Such facts are : the assessee, M/s. East India Hotels Limited, carries on business as a hotelier and runs a five star hotel at Bombay which is known as "oberoi Sheraton". In the course of its activity as a hotelier, the assessee serves vegetarian and non-vegetarian dishes of food, snacks, coffee, tea, beverages, etc. , to its resident as well as non-resident customers. The Sales Tax Officer assessed the assessee under the Bombay Sales Tax Act, 1959 ("the Act"), for the period from April 1, 1972 to March 31, 1973, by his order of assessment dated April 10, 1974 and levied tax on the receipts for supply of the above items. Against the above order of assessment, the assessee appealed to the Assistant Commissioner of Sales Tax (Appeals) and contended that the Sales Tax officer ought to have determined the turnover of sales in respect of supply of food and drinks by the assessee to its customers after making deductions therefrom of the charges for various facilities and amenities provided by the assessee in its five star hotel. It was submitted by the assessee that having regard to the high rates charged by the assessee for foods and drinks, it could not be said that the same were only for the supply of food and drinks. It was, therefore, submitted that the charges recovered by the assessee for the service of food and drinks should be bifurcated into two parts; 50 per cent being for supply of food and 50 per cent being for other factors, such as atmosphere and other amenities provided by the assessee. The Assistant commissioner rejected this contention of the assessee by his order dated November 23, 1976, as according to him, the customer has no option to have the food supplied to him at 50 per cent of the rates by foregoing other amenities. The Assistant Commissioner, therefore, held that the contract with the customers was an indivisible contract for supply of food and drinks for an all-inclusive price and hence it was not a divisible contract. Aggrieved by the above order of the assistant Commissioner of Sales Tax, the assessee went in further appeal to the Maharashtra sales Tax Tribunal ("the Tribunal") and reiterated the submissions made by it before the assistant Commissioner. With the permission of the Tribunal, the assessee pressed another contention that there was no sale of food effected by the assessee and even 50 per cent of the receipts for service of food were not taxable. In support of the contention that the contract between the assessee and the customers was a contract for provision of amenities and facilities in decorated eating rooms, the assessee produced menu cards of nine different eating rooms. By referring to these menu cards, it was pointed out by the assessee before the Tribunal that different rates were charged for similar item of food in different eating rooms. The Tribunal rejected all these contentions of the assessee by its judgment and order dated April 18, 1977 and held that the service of food and drinks to the customers amounted to sales of taxable goods and that no part of the consideration received by the assessee was for something other than the supply of food and drinks. Hence this reference at the instance of the assessee.