GOVIND RAM Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) These six writ petitions have been filed by owners of hotels and restaurants who have been served with notices for assessment to sales tax.

(2.) The case of the petitioners is that they have been serving eatable, and drinks to their customers and the same does not constitute sale and as such they are not liable to assessment or payment of sales tax. On the other hand, it has been contended by Mr. Sumer Chand Bhandari, learned counsel appearing for the Department, that it would be a question of fact in each case as to whether the transactions entered into by the petitioners would amount to 'sale' within the meaning of Section 2 (o) of the Rajasthan Sales Tax Act, hereinafter referred to as "the Act". It has been stated by the learned counsel appearing for the Department that the petitioners are making sales across the counter and are supplying eatables and drinks outside the hotels or restaurants also at the same rate and an enquiry by the assessing authority is necessary in the matter.

(3.) The question as to whether a transaction of supply of meals by hoteliers to resident guests in the hotels amounted to sale was considered by their Lordships of the Supreme Court in State of H.P. v. Associated Hotels of India AIR 1972 SC 1131 and it was held that there was essentially a contract of service between the parties and the supply of foodstuffs was part of the amenities incidental to service and as such, the transaction did not amount to sale. Their Lordships emphasised that the dominant consideration was that there should be an indention to sell and purchase and that where there is a transaction of service, the supply of foodstuffs is part of or incidental to the service by the hotelier and the transaction could not be split up into two parts.