The supply of meals to residents in a hotel, where there is no agreement for the transfer of title to the food, no payment or promise of payment of a price, and no passing of title to the food to the guests, does not amount to a sale of foodstuffs and is not subject to sales tax.

1. This Letters Patent Appeal is directed against the judgment of the learned Single Judge dated the 14th January, 1966, in Civil Writ No.32 of 1964 whereby the writ petition by Messrs Associated Hotels of India Limited (hereinafter referred to as the company) against the order of the Excise and Taxation Officer, Simla, which was upheld in revision on the 27th October, 1965, by the Additional Assistant Excise and Taxation Commissioner, Punjab, Patiala, in S. T. Revision No.364 of 1958-59, was accepted.

2. The petitioners in the writ petition (now respondents) own a chain of hotels, one of them being the Cecil Hotel, Simla, and another Mount View Hotel at Chandigarh. They had been registered since 30th March, 1949, as dealers under the Punjab General Sales Tax Act, 1948 (Act No.46 of 1948), hereinafter to be referred to as the Act. One of the main lines of their business activity is to provide residential accommodation and their tariff for the persons staying in their hotels is an inclusive one for lodging as well as three principal meals, viz. breakfast, lunch and dinner. The company has put on the record a printed copy (annexure a) of the terms and conditions which, according to them, constituted an agreement under which rooms were allotted to the visitors and which would be binding upon the visitors. We have on it printed Oberoi Mount View, Chandigarh, but the terms and conditions are similar so far as Cecil Hotel, Simla, is concerned. Clause 1 is to the effect that nothing contained therein shall be deemed to constitute the relations of landlord and tenant or buyer and seller between the company or the hotel and any visitor or resident. Clause 4 gives the tariff and states, inter alia, that there is no sale of meals to the visitors, that the service of meals is only a personal service and no rebate is allowed if the meals are missed. In addition to the lodging and the three specified meals, the companys hotels also provide numerous other amenities, such as public and private rooms both with hot and cold running water and in the dining rooms crockery and cutlery as well as music and sometimes dancing. Up to September, 1958, the petitioners had been filing the returns of the turnover under the Act and the Assessing Authority under the Act had been treating the service of meals to residents in the hotels as sale of foodstuffs but in their overall charges made from the guests had allowed 75 per cent, rebate on a notional basis on account of rent of the premises, amenities provided etc. However, on the 2nd September, 1958, the company made an application to the Excise and Taxation Officer, Simla, objecting to the levy of the tax on the so-called sale of food not only to the residents in the hotel but also to non-residents in the restaurant in the hotel premises. The Excise and Taxation Officer vide his reply dated the 12th September, 1958, repelled the objection holding that the company while providing meals to the resident visitors of the hotel was making sale of the food to them. The company then filed an application for revision under Sec.21 of the Act before the Excise and Taxation Commissioner, Punjab, Patiala. This revision petition remained pending till November, 1963, and in spite of protests on behalf of the company the Excise and Taxation Officer assessed them to tax for the year 1960-61.

3. On the 19th December, 1963, the writ petition giving rise to this Letters Patent Appeal was filed. In the return on behalf of the respondents to the writ petition a preliminary objection was taken that since the revision petition filed by the company was still pending the writ petition could not be heard on merits. The learned Single Judge by the interim order dated the 27th September, 1965, made a note of the submission of the learned Advocate-General that-the decision of the revisional authority be awaited. The Advocate-General undertook that after the revision petition had been disposed of, he would not object to the que