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 company's 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 Section 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 question arising in the writ petition being heard and finally decided by this Court instead of asking the department to refer the case to this Court.
4. The learned Single Judge in the order under appeal has held that the supply of meals to the residents in the petitioners' hotel in the circumstances of this case does not amount to sale of foodstuffs within the meaning of Section 2(h) of the Act but that the supply of meals and other eatables to the casual and other non-resident visitors is a sale of the foodstuffs. As regards the latter point his decision has not been challenged by the company and the only question to be decided in the Letters Patent Appeal is the correctness of the learned Single Judge's decision on the first point.
5. The learned Single Judge has analysed the essential ingredients of a sale as denned in Section 2(h) of the Act as follows:-
(i) The existence of goods which form the subject-matter of the sale ;
(ii) Passing of the property in the goods for a price ;
(iii) Payment or promise of payment of price ; and
(iv) Passing of title.
6. The power to impose sales tax is relatable to entry 48, viz., sale of goods, in List II of the Seventh Schedule to the Government of India Act, 1935, which was in force when the Punjab Act was originally put on the statute. That particular entry corresponds to entry 54 in the State List in the Seventh Schedule to the Constitution of India. The Supreme Court in the State of Madras v. Messrs Gannon Dunkerley and Co. (Madras) Limited A.I.R. 1958 S.C. 560 construed with reference to the definition of sale as contained in Section 2(h) of the Madras General Sales Tax Act (Act No. 9 of 1939) and entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935, that the essential ingredients of sale were that there should be an agreement between the parties for transferring the title in the goods, that it must be supported by money consideration and that in consequence of the transaction property must pass in the goods to the vendee. It was not competent to the Provincial Legislature, while making a law imposing tax on the sale of goods, to provide a certain transaction, which was not actually sale, to be deemed as sale for the purpose of levying tax. The particular contract, which was being considered in that case, was a building contract and it was laid down by the Supreme Court that when by its terms such a contract envisages that eventually the building will pass into the ownership of the person who places the order, yet it was not legally possible for the Sales Tax Authorities to split up the works contract into its component parts, viz., one for the labour undertaken and the other for the material used up; inasmuch as there was no agreement to sell materials as such, the property in them did not pass as movables. It was only when there was an agreement between the parties for the sale of the goods in which the property eventually passes that the transaction could be called a sale of goods.
7. This judgment was followed by the Supreme Court in Pandit Banarsi Das Bhanot and Ors. v. State of Madhya Pradesh and Ors. A.I.R. 1958 S.C. 909 though a qualification was added that there might be contracts which might consist of two distinct agreements, one for the sale of materials and another for work and labour, and in such a case, it would be competent to the State to impose tax on the sale of materials even construing that word in its narrow sense.
8. Another judgment of the Supreme Court cited before the learned Single Judge was The Government of Andhra Pradesh v. Guntur Tobaccos Limited  16 S.T.C. 240. The question, which was to be determined, was whether the company was liable to pay sales tax under the Madras General Sales Tax Act, 1939, on the value of the packing materials used by it for storage of dried tobacco and it was held in the majority judgment that in the absence of any evidence from which contract to sell 'packing material' for a price might be inferred, the use of 'packing material' by the assessee must be regarded as in execution of the works contract and the fact that the tobacco delivered by the constituent was taken away with the 'packing material' would not justify an inference that there was an intention to sell the 'packing material'.
9. There is no dispute as regards the principles laid down in these judgments and the question for determination is to apply these principles to the facts of the case. The learned Single Judge has noted that the admitted facts of the instant case are (i) that there is no splitting up of the charge made from a resident in a hotel, (ii) that a guest in a hotel is not only entitled but is specifically debarred from claiming any reduction in his bill if he does not take food in the hotel, (iii) the guests to whom the meals are served cannot under the agreement take away the food for later consumption or giving it away to someone else and (iv) he has no right to reject the food.
10. On these facts the learned Single Judge's view that no sale of food takes place appears to be unexceptionable and fully supported by authorities.
11. Mr. T. S. Munjral, learned counsel for the appellants, urged with reference to the printed condition 4(c) that for other items, except the three principal meals, such as 'early morning tea' and 'afternoon tea', there were extra charges according to the tariff of the company and on that basis the price of each of three principal meals could be calculated. It was further pointed out that the company's hotel also supplies packed lunches and dinners, the price of which could form a basis for splitting up the charges, viz., for lodging etc. and for meals. He also referred to condition No. 7 according to which room service is provided on a charge of Re. 1 per meal and he said that on these bases the value of the amenities such as crockery and cutlery etc. could also be estimated. These are all, however, questions of fact, which were not at all agitated before the learned Single Judge, and at the hearing of the writ petition before him the facts appear to have been admitted.
12. Then Mr. T. S. Munjral maintained that during the pendency of the writ petition the facts were still being gone into by the Assessing Authority but that is putting in another form the preliminary objection initially raised by the learned Advocate-General but later on given up by him.
13. Lastly Mr, T. S. Munjral urged that up to September, 1958, the company had been submitting returns under the Act and was being assessed to sales tax on the basis of notional and splitting up of the charges for food supplied and it could not change its position subsequently. It is, however, futile to argue that there is any estoppel in tax cases.
14. We are, therefore, of the view that there is no substance in the appeal, which is dismissed with costs. Counsel's fee rupees two hundred.