ABHYANKAR, J. - This order will dispose of all the three Sales Tax References and the Special Civil Application under Articles 226 and 227 of the Constitution arising out of the same matter.

The references are at the instance of the assessee called the Sun-N- Sand Hotel The assessee is a hotelier and runs a well reputed hotel called the Sun-N-Sand Hotel at Juhu Beach in Bombay. The hotel has both a boarding and a lodging establishment. The customers who enter the hotel are informed of the charges they have to pay for lodging with different amenities and boarding according to their taste. They are also informed that service charges of 10 per cent, of the tariff and sales tax at five paise per rupee will also have to be paid.

For the three periods for which we are concerned in the Sales Tax References, viz., (1) from 1st April, 1961 to 14th December, 1962, in the first period, (2) from 15th December, 1962 to 31st March, 1963, in the second period and (3) from 1st April 1963 to 31st March, 1964, in the third period, the Sales Tax Officer while computing the gross turnover for the periods in question included service charges recovered by the assessee from the customers. The Sales Tax Officer rejected the contention of the assessee for deduction of these amounts or their exclusion on the ground that they were service charges for services rendered by the staff, and the proceeds of which, according to the assessee, did not represent a part of the sale price but were recovered for payment to the staff and for covering partly the breakages.

The Tribunal having rejected similar contentions in second appeal, the assessee made an application for referring the questions arising to the High Court and wanted three questions to be referred as follows :-

"(1) Whether on the facts and under the circumstances of the case, the service charges constitute or can be included in 'sale price' as defined in section 2(29) of the Bombay Sales Tax Act, 1959 ?

(2) Whether the Tribunal misdirected itself in law in holding (a) the price is what a customer pays, or (b) that because service charges have no independent existence and because they are wedded together with the sale they constitute sale price, and (c) that because the payment is not involuntary or optional, it constitutes the sale price ?

(3) Whether the State Legislature is competent to define 'sale price' in section 2(29) of the Bombay Sales Tax Act, 1959, as including 'all sums charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof' in view of entry No. 54 in the State List of Schedule VII of the Constitution of India ?"

Ultimately, however, the counsel appearing for the assessee agreed that question No. (1) would be the only question which may be referred to the High Court, and accordingly that is the only question which is referred to this Court in all these references.

Inasmuch as the third question, which raised the constitutional validity of the provisions of section 2(29) of the Bombay Sales Tax Act, 1959, was raised and could not have been referred by the Tribunal, the assessee has filed Special Civil Application No. 2642 of 1967, principally to challenge the validity of the definition of the term "sale price" in section 2(29) of the said Act. That Special Civil Application is also fixed for hearing along with these Sales Tax References and was argued, and is being decided in this order.

According to the assessee, they are required to charge the service charges on account of certain directives given to them by the Department of Tourism of the Government of India. A communication from that Department has been produced along with the petition and according to this communication, the assessee is expected to adhere to certain conditions in the running of its establishment. Among other conditions it was suggested that the service charges, if any, levied on the hotel hills will be disbursed in full to the staff concerned subject to the