JUDGMENT

Sen, J.-The appellant, Moulin Rouge, is a company registered under the Indian Companies Act. Its business consists of running a restaurant at 20, Park Street, Calcutta-16. Apart from food and drink, it provides the customers with various services and amenities. The restaurant is air-conditioned. It provides upholstered cushioned seating, subdued lighting and also music. High class crockery and cutlery are provided. The restaurant also employs highly trained stewards who are well dressed. Personal and prompt individual attention is given to the customers. The customers cannot take away any food from the restaurant for home consumption. Even unused or unconsumed portions of food and drink are not allowed to be taken away by the customers. There is no sale of any food or foodstuff across the counter.

2. This Court in the case of State of Punjab v. Associated Hotels of India Ltd.1 held that a transaction between a hotelier and a visitor to a hotel was essentially of service. As part of the amenities incidental to that service, meals are provided in the hotel at stated hours. The Revenue was not entitled to split up the bills of the hoteliers on the ground that the bills included not only charges for lodging but also charges for foodstuff with a view to bring the latter under the province of Punjab General Sales Tax Act. It is to be noted that the case dealt with the question of levy of sales tax on supply of food by a hotel to its residents.

3. The case of the appellant is that, on legal advice, and on the basis of the aforesaid judgment it did not collect any sales tax for food and drinks provided by it to its customers. The appellant had no liability to pay or to collect any sales tax on the food and drinks supplied by it as these were not separately charged for but were included in the bills for various services and amenities provided by it to its customers. However, on 26.4.78, the Commercial Tax Officer passed an ex-parte, best judgment assessment in respect of the four quarters ending on 31.3.74, 31.3.75, 31.3.76 and 31.3.77 imposing sales tax and penalty on the appellant. Since the appellant failed to pay the tax demanded, a certificate case was started. The appellant s case is that it is not liable to pay sales tax on food and drink sold by it in its restaurant. The principles laid down in the case of Association Hotels (supra) apply in full force to its case.

4. The question of leviability of food sold by a restaurant to its customers directly came up for consideration in the case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi2, decided on September 7, 1978. That was a case under Bengal Finance (Sales Tax), Act, 1941 as extended to the Union Territory of Delhi. The question was whether the service of meals to casual visitors in the restaurant was taxable as a sale - (a) when the charges were lump sum per meal or (b) when they were calculated per dish. It was held that the Revenue was not entitled to split up the transaction into two parts, one of service and the other of sale of foodstuffs. An approach similar to the case of the hotels was adopted. It was explained that the classical legal view was that when a number of services were concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need. What the customer paid for included more than the price of the food as such. It included all that entered into the conception of service. It did not contemplate the transfer of the general property in the food supplied as a factor to the service rendered. It was ultimately held that the service of meals to visitors in the restaurant of the appellant was not sale of food and was not taxable under the Bengal Finance (Sales Tax) Act, 1941. The position would be the same whether a charge was imposed for the meal as a whole or according to the dishes separately ordered.

5. As a result of these two ju