Northern India Caterers (India) Ltd. V. Lt. Governor of Delhi 1980 Air 674: Case Analysis

This article is written by Ranveer Raj, a student in 2nd  year of BALLB studying at Lovely Professional University, Phagwara, in this article we discuss northern India caterers (India) ltd v. Lt. Governor of Delhi 1980 air 674: case analysis.

The issue, in this case, stems from the sales tax authorities taxing the food that the appellant’s hotel provided as part of its hospitality services. In contrast to hotel costs, the sales tax authorities believed it to be another good for which taxes might be levied individually. This case was initially considered by the Honorable High Court of Delhi, and an appeal was then heard by the Honorable Supreme Court of India. This book analyses the case from a variety of perspectives and focuses on its facts, issues, and ruling.


Dinner is served to non-guests at the inn’s restaurant, which is run by the appellant. The business charge specialists determined that a percentage of the revenues represented the price of the groceries served, and an expense was imposed. The viewpoint of the business charge experts was recognised by the High Court. Considering the appeals, it is unclear if the trade had a predetermined offer of basics. The Bengal Finance (Sales Tax) Act of 1941 forbids serving supper to non-residents in the litigant’s café as it pertains to the Union Territory of Delhi. This holds true regardless of whether a cost is charged for the meals as a whole or only a limited number of things are taken upon request.


The High Court gave a favorable answer to the question. The party in dispute owns and runs an inn where visitors are given complete footing for housing and food. Additionally, dinner is served to non-guests in the inn’s restaurant. In the techniques employed to assess the

According to the petitioner, the provision of suppers to residents and non-occupants could not be considered the administration of a deal under the Bengal Finance (Sales Tax) Act, 1941, and as a result, deals duty could not be collected in relation to such provision during the evaluation years 1957–1958 and 1958–1959. Sales tax experts ignored the disagreement by interpreting a portion of the money paid by residents and out-of-state guests as representing the cost of the basic items offered. When the lovely party on the basis of two inquiries, the High Court demanded a case announcement. One was whether residents who paid a single, all-inclusive fee for all services in the inn, including board, were eligible for extra charge for graciously providing suppers to guests. The second was the investigation that was conducted above. The appeal party’s primary inquiry and the opposing party’s secondary inquiry both received responses from the High Court. Furthermore, these interests are currently on special leave.


The Regardless of whether serving suppers to laid-back diners at the restaurant is offered as a deal, the issue in this scenario is:

  1. Do fees for each feast come in one big sum?
  2. Are they determined for each dish?
  3. Should the hotel’s provision of food to its guests be treated as a separate good for tax purposes?


The 1941 Bengal Finance (Sales Tax) Act (as reached out to the Union Territory of Delhi) Service of suppers to non-guests in a hotel café: Sales tax, if applicable, on the price of suppers.


It has recently come to light that with regard to inns, this Court adopted the English legal theory that there is no contract when food and drink are offered to guests staying in the inn in M/s.

Related Hotels of India Limited (supra). The Court drew attention to the fact that the flexibility of dinners was primarily in the concept of aid provided to them and couldn’t be considered as an exchange of offer. The recommendation that the Revenue is allowed to divide the exchange into two sections—one for administration and the other for the offer of groceries—was not accepted by the Court. If the same reasoning holds true for hotels, then a similar process is unquestionably required to make rules for restaurants. We have not seen any justification for favouring someone else. The traditional legal theory, holds that different administrations are supplied associatively, to be polite, the adaptation of dinners must be viewed as satisfying a significant need or in line with a general human desire.

The administration of suppers to visitors at the café of the appealing party is prohibited by the Bengal Finance (Sales Tax) Act, 1941, which also applied to the Union Territory of Delhi. This holds true whether there is a fee for the entire dinner or only for the items that are specifically requested. Within the parameters of the case, we don’t organise the costs.


The States maintained that no price should be flexibly imposed to provide food or drink to travelers who stop at inns due to the high cost of cafés. The Apex Court ruled in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi that serving meals, whether in a hotel or café, doesn’t constitute an offer of food for the purpose of charging a transaction fee but should instead be viewed as helping to meet a human need or people’s basic needs instead. This contradicted the States assumption. Whether the customer is charged for the dinner as a whole or according to each dish individually would not matter; administration charge specialists, if any were available, would have been happy with these choices, giving them the right to demand a help charge on the entire incentive for food as well. As a result of this judgement, the State legislative body was unable to impose fees on food provided in restaurants or motels, resulting in a loss of revenue for the State exchequer. The government expanded the concept of “Offer” in Article 366. Clause 29A of Article 366 was added by the 46th Constitutional Amendment, which was proposed on February 2nd, 1983. A fee for the flexible purchase of food, other items for human consumption, or any beverage (regardless of intoxication), by way of or as a portion of any assistance, for money, an agreed-upon instalment, or other significant thought, is referred to as a “charge on the deal or acquisition of products” in the clarification. The 46th Constitutional Amendment rendered the Supreme Court’s interpretation void and permitted the states to impose fees for the provision of food and drink


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