Judgement

SHELAT, J.:- The respondent-company carries on business as hotellers and conducts several hotels including the Cecil Hotel at Simla. Besides conducting hotels, it also carries on restaurant business. As part of its business as hoteliers, the company receives guests in its several hotels to whom, besides furnishing lodging, it also serves several other amenities, such as public and private rooms, bath with hot and cold running water, linen, meals during stated hours etc. The bill tendered to the guest is an all inclusive one, that is to say, a fixed amount for the stay in the hotel for each day and does not contain different items of each of the aforesaid amenities. That is, however, not the case in its restaurant business where a customer takes his meal consisting either of items of food of his choce or a fixed menu. The primary function of such a restaurant is to serve meals desired by a customer, although along with the food, the customer gets certain other amenities also, such as service, linen etc. The bill which the customer pays is for the various food items which he consumes or at a definite rate for the fixed menu, as the case may be, which presumably takes into account service and other related amenities.

2. The respondent-company, as such hoteliers, has been registered as a dealer under the Punjab General Sales Tax Act, XLVI of 1948 and has been filing quarterly returns and paying sales tax under that Act.

3. On September 2, 1958 the company applied for a declaration that it was not liable to pay sales tax in respect of meals served in the said Cecil Hotel to the guests coming there for stay. In support of its plea, the company raised the following contentions: (1) that the hotel receives guests primarily for the purpose of lodging, (2) that when so received the management provides him with a number of amenities incidental to such lodging and with a view to render his stay in the hotel comfortable including meals at fixed hours, (3) that the transaction between the company and such a guest is one for the latte rot stay and not one of the incidental amenities, (4) that the bill given by the company and paid by the guest is one and indivisible, that is, is fixed amount per day during his stay in the hotel and does not consist of separate items in respect of the several amenities furnished to him including meals served to him, and (5) that the transaction so entered into does not envisage any sale of food since the guest cannot demand a rebate or deduction if he were to miss a meal or meals, nor is he entitled to carry away or deal within any manner the food served at his table, if a part of it remains unconsumed. It is, on the other hand, the management which has the right to deal with such unconsumed remainder as it likes. Such a position, therefore, is inconsistent with a sale under which the property in the whole must pass to the purchaser, and who can deal with the remainder in any manner he likes.

4. The Sales Tax Officer rejected the company s application on the ground that the transaction which takes place between the management and a resident guest takes in both lodging and boarding and the hotel charges include consideration for both. A revision under Section 21 of the Act by the company to the Commissioner met the same fate. The company then filed a writ petition for an order quashing the said decision as also the notices issued by the Sales Tax authorities under the Act. The grounds put forward in the writ petition were almost the same which the company had previously urged in its application for declaration.

5. There was no dispute regarding the facts stated in the writ petition and particularly with regard to the fact that the transaction which a visiting resident enters into with the management is one and indivisible, that the bill charged on him is likewise one and indivisible, that the charges are for each day of stay, and that that being so, the bill was incapable of being split up into separate