Holding

The review petitions were dismissed; the service of meals in a restaurant was not a sale for sales‑tax purposes and the original judgment stands.

Summary

Northern India Caterers (India) Ltd., which runs a hotel and restaurant, challenged a Delhi sales‑tax assessment on the ground that meals served to casual diners were taxable as a sale. The Supreme Court had earlier held that such service was not a sale because diners could not take away unconsumed food and the transaction was a service for the satisfaction of a bodily need, accompanied by ancillary amenities. The Caterers filed review petitions arguing that the Court erred in its factual assumptions and that, under the Massachusetts‑New York rule, the service of meals should be treated as a sale. The Court reiterated the limited scope of review under Article 137 of the Constitution, noting that no new material was before it and that the earlier judgment did not contain an error apparent on the face of the record. Consequently, the review petitions were dismissed and the original finding that the restaurant service was not a sale for sales‑tax purposes was upheld.

Issues considered

Whether a review of a Supreme Court judgment can be entertained on the ground of error apparent on the face of the record.
Whether the service of meals in a restaurant constitutes a sale liable to sales tax.
Whether the earlier judgment erred in its factual and legal analysis of the transaction.
Scope and limitations of the Court's review jurisdiction under Article 137 and CPC Rule 47.

Legislation cited

Bengal Finance (Sales Tax) Act, 1941s. 21(3)
Code of Civil Procedures. Rule 47
Constitution of Indias. Article 136(1), s. Article 137
Supreme Court Rules, 1966s. Order XL rule 1

Subjects

review jurisdictionsales taxrestaurant servicesale of goodsSupreme Court of IndiaArticle 137CPC Rule 47hospitality industrytaxability of mealsservice vs sale

Judgment

650

A r.NORTHERN INDIA CATERERS (INDIA) LTD.
v.
LT. GOVERNOR OF DELHI
December 21, 1979
8 [V. R. KRISHNA IYER, V. D. TULZAPURKAR AND R. S. PATHAK, JJ.J
Review of judgments of the Court-When undertaken.

HELD: (per Tulzapurkar and Pathak, JJ.) (Krishna- Iyer J. concurring)

It is weJl-settled that a party is not entitled to seek a review of a judgment/
deliver'ed by this Court merely for the purpose of a rehearing and a fresh
c decision in the case. Normally the principle is that a judgment pronounced by
the Court is final and departure from that principle is justified only when cir-
cumstances of a substantial a·nd compelling character rnake1 it necessary to do so.
If the ·attention of the Court is not drawn to a material statutory provision during
the original hearing the Court will review its judgm~nt. The Court may also
reopen its judgment if a manifest wrong ha~ been Jone and it is necessaiy to
pass an order to do full and effective justice. [656H]
D
Saijan Singh v. State of Raiasthnn [1965] I S.C.R. 933, 948; G. L. Gttpta v.
D. N. Mehta [1971] 3 S.C.R. 748, 760; 0. N. Mahindroo v. Distt. Judge Delhi
& Anr. [1971] 2 S.C.R. 11, 27 referred to.

Po,ver to review1 its judgment has b'een conferred on tl1e Supreme Court by
Article 137 of the Constitution read with the provision3 of a law made by
E Parliament or the rules mad'e under Article 145. In 21 civil proceeding an appli-
cation for review is entertained only on a ground mentioned in O. XL VII, Rule
1 of the Code of Civil Procedure a.n.d in a criminal proceeding on the ground of
an error apparrent on the face of the record (Order XL r. 1, Supren1e Court
Rul'es 1966). Whatever be the nature of the proceedings a review proceeding
cannot be equated with the1 original hearing of a case and the finality of the /
judgment delivered by the Court will not be, reconsidered except "where a glaring
P omission or patent mistake or like grave error has crept in earlier by judicial
fallibility.'' [657C-DJ

Chandra Kanta v. Sheikh Habib, [1975] 3 SCR 933 referred to.
Apart from the fact that the material placed before the Court in the review
petition was never brought to its notice when the appeals w~re heard, the judg-
ment does not suffer from an error apparent on the face of the record. Such an
G error exists if of two or more views canvassed on the point it is possible to hold
that the controversy could be said to admit of only: one of them. If the view
adopted by the Court in the original judgment is a possible view having regard
to what the record states, it is difficult to hold tha·t there· is an error apparent
on the face of the record. [657E-F]

In the instant case the appellant prepared and served food both to residents
H in its hotel as well as to the casual customers who came to eat in the restaurant
In both cam it remained a supply and servke of food not amounting to a sale.
The facts alleged by the appellant were never disputed at any stage. No attempt
NORTHERN INDIA CATERERS v. LT. GOVERNOR (Krishna Iyer,}.) 651

was made by the taxing authorites to enquire into the truth of the facts so A
occepted. It \Vas in that factual conte:Xt that this Court examined the question
whether any liability to sales tax was attracted. The earlier judgment rested
on that factual foundation and must be understood in that light. [658H]
Krishna Jy·cr, J. (concurring)

A case is decided on its particular conspectus of fa:ts. When the fa:cts
materially vary the l&'v selectively shifts its focus. The factual setting in which B
the decision in the judgment was founded becomes cdtical. Th·e appeal pro..
.._ ceeded on the admitted footing that the visitor to the rcst~urant who sat at the
· table and was served the dishes he desired, had no right to carry home what h'e

r .'-~anted. The basic assu1nption was that victuals as such were not sold and the
l:Onsideration \Vas for the complex of activities which included eating and drink-
ing. On these facts the conclusion arrived at was impecca·ble. [652G]

If circumstances differ the decision too will be diff~rent. But no alternative
situations were presented. If counsel defaults in the submission he cannot .find
fault with the Court for the decision. [653A]

CIVIL APPELLATE JURISDICTION: Review Petition Nos. 111-112
of 1978. D
(Application for Review of this Court's Judgment dated 7-9-1978)
In the matter of : -
.. Civil Appeal Nos. 1768-69 of 1972 .
' Soli J. SoralJjee, Addi. Sol. Genl. and P. A. Francis and B. B.
Ahuja, M. N. Shroff, R. S. Chauhan artd R. N. Sachthey for the E
Petitioners.
F. S. Nariman, La/it Bhasin, M. N. Karkhanis, Mrs. S. Bhandare
and Miss Malini Poduval for the Opposite side.
FOR INTERVENERS :
S. T. Desai and M. N. Shroff for the State of Gujarat. F
Soli !. Sorabjee Addi. Sol. General and M. N. Shroff for the State
of Maharashtra.
Badridas Sharma for the State of Rajasthan.
T. V. S. N. Chari and M. s. Ganesh for the State of Andhra G
Pradesh.
Soli J. Sorabjee Addi. Sol. Genl. and G. S. Chatterjee for the State
of West Bengal.
N. Nettar for the State of Karnataka.
A. V. Rangam for the State of Tamil Nadu.
H
s. C. Manchanda and 0. P. Rana for the State of U.P.
V. J. Francis for the State of Kera!a.
652 SUPREME COURT REPORTS [1980] 2 S.C.R.

A M. C. Bhandare for the Federation of Hotel anJ Restaurant Asso-
ciations, of India.
Y. S. Chitale for Hotel Restaurant Association Calcutta and
Eastern Region.
Lalit Bhasin, Vinay Bhasin and Vineet Kumar for South Region
B Fariya Hotel.
Mrs. Shyamala Pappu and A. Minocha for Zonth Club.
~
A. K. Rao and A. T. M. Sampath for Tamil Na<lu Hotel Associa-
b. ,~
N. Sudha karan for Hotel and Restaurant Associatian, Ernakulam.
c
Anil Diwan, Ravinder Narain and Sri Narain from Wakom
Hotels and Indovilles Hotel Division.
S. K. Gambhir for State of Madhya Pradesh.

The Judgment of V. D. Tulzapurkar and R. S. Pathak, JJ. was
D delivered by Pathak, J. Krishna Iyer, J. gave a separate Opinion.

KRISHNA IYER, J.-A plea for review, unless the first judicial
view is manifestly distorted, is like asking for the moon. A forensic
defeat cannot be avenged by an invitation to have a second look,
hopeful of discovery of flaws and reversal of result. I agree with my
E learned brother Pathak J, both on the restrictive review jurisdiction
and the rejection of the prayer in this case-subject to the qualifr·a ·
tions made below.

Indeed, a reading of the last paragraph of my learned brother, /
with which I concur, makes it clear that Sri Soli Sorabjee has more
F or less won the war, although he has rightly lost this battle because
of factual constraints. A case is decided on its particular conspectus
of facts. When the facts materially vary, the law selectively shifts
its focus. Here, the factual setting in which the decision is founded
becomes critical. My learned brother has made it perfectly plain
that the appeal proceeded on the admitted footing that the visitor
G
to the restaurant who sat at the table and was served the dishes he
desired had, in that case, no right to carry home what he wanted,
after eating what he wanted, and to pay for the eatables as distin-
guished from the total blend of services, including supply (not sale)
of what he chose to eat. The basic, indeed decisive, assumption was
H that victuals, as such, were not sold and the consideration was for
the complex of .activities which included eating and drinking. This
sophisticated situation being granted, the conclusion is impeccable.
NORTHERN INDIA CATERERS v. LT. GOVERNOR (Krishna Iyer, J.) 653

But if circumstances differ, the decision too will be different. But no A
alternative situations were presented. If counsel defaults in the sub-
mission, he cannot find fault with the court for the decision. This
is the long and short of it.
It sometimes happens that high-style restaurants or residential
hotels render a bungle of special services like ball dance, rare music, B
hot drinks, 'viands of high regale', glittering crockery, regal attention
or 'bikini' service and even sight-seeing transport or round-the-city
... visits, shoe-shining, air-conditioning, masage in the room etc., on
a c·onsolidak:d sum. You cannot dissect the items or decode the biU
' to discover separately the component of goods sold. This situafor
may obtain even in India with the throng of foreign tourists who c
want to be taken care of and pay all-inclusively. This maY happen
in some fa~hionable. restaurants where you cannot, as of right, remove
from the table what is left over. In these cases the decision under
review squarely applies. My learned brother has clarified and con-
fined the ratio to the contours so set out. He has also pointed out
D
that counsel, at the earlier hearing, did not contest this factual matrix.
A review in counsel's mentation cannot repair the verdict once given.
So the law laid down must rest in peace.
The learned Solicitor General took us through English and
American legal literature of vintage value and alien milieu. They
enlightened us but did not apply fully, as explained by my learned E
brother. Had they been earlier cited, had been seriously considered;
But India is India. It lives in its one lakh villages, thousands ot
towns, millions of pavement pedlars and wuyside victuallers, corner
coffee shops and tea stalls, eating houses and restaurants and some
top-notch parlours. Habits vary, conventions differ and one rigid
rule cannot apply in diver~e situations. If you go to a coffee F
house, order two dosas, eat one and carry the other home, you
buy the dosas. You may have the cake and eat it too, like a child which
bites a part and tells daddy that he would eat the rest at home.
Myriad situations, where the transaction is a sale of a meal, or item
to eat or part of a package of service plus must not be governed by G
standard rule. In mere restaurants and non-residential hotels, many
of these transactions are sales and taxable. Nor are additional ser-
vices invariably components of what you pay for. You may go to
an air~onditioned cloth-shop or sweet-meat store or handicraft~
emporium where cups of tea may be given, dainty damsels may serve
or sensuoll!s magazines kept for reading. They are device~ to attrac~ H
customers who buy the commodity and the price paid is taxable as
sale. The substance of the transaction, the dominant object, the
654 SUPRE11E COURT REPORTS [1980] 2 S.C.R.

A life-style and other telling factors must determine whether the appa-
rent vendor did sell the goods or only supply a package of services.
Was there a right to take away any eatble served, whether it b,, bad
manners to do so or not? In the case we have, the decision ·went
on the ground that such right was absent. In cases where such a
· negative is not made out by the dealer-and in India, by and large,
B the practice does not prohibit carrying homc-exigibility is not
repelled.
I agree with my learned brother and dismiss the plea for review.
PATHAK, J.-These Review Petitions are directed against the
judgment of this Court dated September 7, 1978 disposing of Civil
c Appeals Nos. 1768 and 1769 of 1972.
Northern India Caterers (India) Ltd. run a hotel in which .be-
sides ·providing lodging and meals to residents it also operates a
restaurant where meals are served to non-residents or casual visitors.
In a reference made to the High Court of Delhi under s. 21(3) of
D the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union
Territory of Delhi, the High Court expressed the opinion that the
service of meals to casual visitors in the restaurant was taxable as
a sale. On appeal, this Court took a contrary view and held that
when meals were served to casual visitors in the restaurant operated
by the appellant the service must be regarded as providing for the
E
satisfaction of human need and could not be regarded as constituting a
sale of food when all that the visitors were entitled to do was to eat
the food served to them and were not entitled to remove or carry
away uneaten food. Supporting considerations included the circums-
tance that the furniture and furnishings, linen, crockery and cutlery /

F were provided, and there was also music, dancing and perhaps a
floor show.
Mr. So!i J. Sorabjee, the learned Additional Solicitor General,
who has been briefed by the respondent to appear at this stage in the
case has, with his usual thoroughness and ability, succeeded in
G putting together a mass of legal material which we greatly wish had
been before the Court when the appeals were originally heard. On
the basis of that material, he submits that the judgment delivered by
this Court ought to be reviewed. We have no hesitation in saying
that had this material been available earlier, it would have enalJled
the Court to consider still further aspects of the problem and examine
11 it more comprehensively. But having regard to the basis on which
the appeals proceeded, we are unable to say that the result would
necessarily have been different.
NORTHERN INDIA CATERERS v. LT. GOVERNOR (Pathak. J.) 655

The learned Additional Solicitor General contended that the A
judgment of this Court is amendable to review because, he says, it
proceeds on the erroneous assumption that a restaurant can, for the
purposes of the point of law decided by us, be likened to an inn.
We have been referred to Halsbury's Laws of England(') and the
Hotel Proprietors Act, 1956 mentioned therein. Our attention has
B
also been invited to a statement in Benjamin's "Sale of Goods"(')
that when a meal is served to a customer in a restaurant there is a
\
... sale of goods, the element of service being subsidiary. As regards
y judicial opinion in England, reliance has been placed on Rex v. Wood
' Green Profiteering Committee; Boots Cash Chemists (Southern)
Lim-Exparte, ( 3 ) Rex v. Birmingham Profiteering Committee; Pro- C
l'incial Cinematograph Theatres, Lim. Exparte(4) and Lockett v.
A. & M. Charles, Ltd.(') It appears, however, that the first and
third of these three cases cannot be said to bear directly on the
point. It was also urged that Merrill v. Hodson(•) and Maiy Nisky
v.. Childs Company,(') on which this Court relied, represent the
Connecticut-New Jersey rule, but the opposite view embodied in D
the Massachusetts-New York rule and expressed in Friend v. Childs
Dining Hall Co.( 8 ) represents the true law. It was said that the
subsequent enactment of the Uniform Commercial Code(') ·in the
United States has preferred the Massachusetts-New York rule "by
providing that for the purpose of the implied warranty of merchanti-
bilitY, the serving for value of food or drink to be consumed either E
on the premises or elsewhere is a sale."('") We were invited to
consider Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax Officer &
Ors.(1') for the proposition that the concept of "sale of goods" as1
understood in the legislative entry in List II of the Sexenth Schedule
of our constitntional enactment should be enlarged to take into F
account a meaning not intended earlier but necessitated by an envi-
ronment of social control measures. Finally, reference has been
made to certain observations in State of Punjab v. M/s. Associated
(I) 21 Hals. 3rd Edn. 441-2.
• (2) 1974 Edn. p. 37 para 39 .
(3) [1920] 89 L.J. K.ll. 55.
(4) [1920] 89 L.J.K.B. 57.
(5) [1938] 4 All E.R. 170.
(6) LR.A. 1915B 481.
(7) 50 A.L.R. 227.
(8) 5 A.L.R. 1100.
(9) s 2-314(1).
(l O) 67 Am. Jur. 2d. 633 s. 46 '.
(II) [1978] 2 S.C.R. 433.
656 SUPREME COURT REPORTS [D80] 2 S.C.lt.

A Hotels of India Ltd.(') and Municipal Corporation of Delhi v. Laxmi ....
Narain Tandon etc. etc.(')
Learned counsel for the intervenor States generally adopted the
submissions of the learned Additional Solicitor General.
The review petitions have been vigorously opposed by Mr. F. S.
B Narirnan, appearing for the appellant, who has urged that no ground
for review has been made out and that, in any event the judgment of
this Court does not suffer from error. He pointed out that the
decisions based on the Massachusetts-New York rule holding that the
service of meals to customers in a restaurant . constitutes a sale of ,r
c food turned on the need for the importing an implied warranty that
the food was fit for eating. That consideration, it was said, need
not influence the courts in India because the lacuna had been filled
by law such as the Food Adulteration Act aimed at ensuring the
supply of wholesome food to consumers. The submission is that
whether the service of meals is or is riot a sale must be determined
D by the nature of the transaction and not be the need to import an
implied warranty of fitness. In other words, it is said, the factor of
implied warranty must follow on the transaction being a sale and
not that the transaction is a sale because an implied warranty is a
necessary guarnntee for public health. We are reminded that the
true basis of our judgment is that no title in· the food passes to the
E consumer. as is evidenced by the circumstance that the unconsumed •
portion of the food cannot be carried away by him. It is pointed
out that there never was any dispute by the respondent that custo-
mer in a restaurant who orders food for consumption by him on the
premises is oot entitled to take away the unconsumed portion of the
)
food. The essential nature of the transaction, he reiterates, is that
F
it is a service afforded for the satisfaction of a bodily need, and the
service is provided by supplying food for eating. In the end, he has
emphasised the limited scope of the power of review and the strict
conditions in which it can be invoked. Dr. Y. S. Chitale and Mr.
Anil Dewan, appearing for some intcrvenors, adopt the same line of
G argument.
The question is whether on the facts of the present case a review ~-
is justified.
It is well settled that a party is not entitled to seek a review of
a judgment delivered by this Court merely for lhe purpose of a re-
H hearing and a fresh decision of the case. The normal principle is
(l) [1972] 2 S.C.R. 937.
(2) [19761 2 S.C.R. 1050.
NORTHERN !NOIA CATERERS v. LT. GOVERNOR (Pathak, /.) 657

that a judgmeut pronounced by the Court is final, and departure from
that principle is justified only when circumstances of a substantial
and compelling character make it necessary to do so. Sajjan Singh
v. State of Rajasthan.(') For instance, if the attention of the Court
is not drawn to a material statutory provision during the original hear-
ing, the Court will review its judgment. G. L. Gupta v. D. N.
Mehta.(') The Court may also reopen its judgment if a manifest
wrong has been done and it is necessary to pass an order to do full
and effective justice. 0. N. Mahindroo v. Distt. Judge Delhi & Anr.(')
, Power to review its judgments has been conferred on the Supreme
Omrt by Art. 13 7 of the Constitution, and that power is subject to
the provisi011s of any law made by Parliament or the rules made c
under Art. 145. In a civil proceeding, an application for review is
entertained only on a ground mentioned in XLVII rule 1 of the Code
of Civil Procedure, and in a critninal proceeding on the ground of
an error apparent on the face of the record. (Order XL rule 1, Sup-
reme Court Rules, 1966). But whatever the nature of the proceed-
ing, it is beyond dispute that a review proceeding cannot be equated
with the original hearing of the case, and the finality of the judgment
deliverd by the Court will not be reconsidered except "where a glar-
ing omission or patent mistake or like grave error has crept in earlier
by judicial fallibility." Chandra Kanta v. Sheikh F!abib.(4)
Now, besides the fact that most of ·the legal material so assi- E
duously collected and placed before us by the learned Additional
Solicitor General, who has now been entrusted to appear for the
re11pondent, was never brought to our attention when the appeals were
heard, we may also examine whether the judgment suffers from ·an
error apparent on the face of the record. Such an error exists if of
two or more views canvassed on the point it is possible to hold that
the controversy can be said to adtnit of only one of them. If the
view adopted by the Court in the original judgment is a possible view
having regard to what the record states, it is difficult to hold that
• there is an error apparent on the face of the record .
What were the considerations on which this Court held that the G
transaction was not a sale? The Court said, and this was emphasised
in no small degree, that the supply and service of food to a customer
to be eaten in the restaurant was not a sale for the reason that he
was merely entitled to eat the food served to him and not to remove
(1) [1965] I S.C.R. 933, 948.
(2) [1971] 3 S.C.R. 74~, 760.
(3) [1971] 2 S.C.R. JI, 27.
(4) [1975] 3 S.C.R. 933.
658 SUPREME COURT REPORTS [1980] 2 S.C.R.

and carry away the unconsumed portion of the food. Had that
amounted to a sale, the unconsumed portion would have belonged to
the customer to take away and dispose of as he pleased. Besides,
the Court noted, there were other amenities and services of consider- ' __ ...
able materiality which were also provided. That was the case set
up by the appellant before the assessing, appellate and revisional
B authorities, and it was apparently also the case pleaded before the
High Court. It was summarised thus in the petition under Article
136(1) of the Constitution filed in this Court:
" ( 1) The Hotelier and Catering indu~try is a service
oriented industry unlike and as distinguished from other
sale oriented industries. The purpose of a Hotelier and
... -
Caterer is not to sell food, but to service it in proper atmos-
phere so as to make the service and consumption of food
enjoyable for the guests. In the dining hall, the petitioner
provided certain basic facilities and amenities, such as, air-
conditioning services, music, facilities for dancing (i.e .
.D
dancing floor) specially designed crockery, special lighting,
etc. The petitioner had built up a reputation for providing
the aforesaid services and people patronise the dining halls
as a result of these amenities.
(2) Though the customer pays for the food, he can
E enjoy only that much of food as can be consumed by him •
at one particular time. The guest is not entitled to carry
away the unconsumed portion of his food. There is thus
no passing of property for a stipulated money consideration,
which would imply the guests' right to carry away the un- )
consumed portion of his food.
(3) The amount received by the petitiorier is not the
price of any goods. On the other hand, it represents the
petitioner's charges for looking after the convenience and
enjoyment of the customer including his needs for food and
rendering him various kinds of other services and provid- •
ing him with various facilities and comforts."

The appellant prepared and served food both to residents in its
l10tel as well as to casual customers who came to eat in its restaurant,
and throughout it maintained that having regard to the nature of the
service§ rendered there was no real difference between the two kin~
B of transactions. In both cases it remained a supply and service or
food not amounting to a sale. It is important to note that the facts
alleged by the appellant were never disputed at any stage. and we
NORTHERN INDIA CATERERS v. LT. GOVERNOR (Pathak.!.) 659

find no attempt by the taxing authorities to enquire into the truth of
the facts so asserted. It is in that factual context that this Court
examined the question whether any liability to sales tax was attracted ..
Our judgment rests on that factual foundation, and mnst be under-
stood in that light.
It appears from the submissions now made that the respondent as B
well as other States are apprehensive that the benefit of the judgment
of this Court will be invoked by restaurant-owners in those cases alsu
'.w. ..
where there is a sale of ·food and title passes to the customers. It
It" · seems to us that having regard to the facts upon which our judgment
' rests-undisputed as they have remained throughout the different
stages of the litigation-and the considerations which they attract, c
no such apprehension can be reasonably entertained. Indeed, we
have no hesitation in saying that where food is supplied in an eating-
house or restaurant, and it is esta~lished upon the facts that the
substance of the transaction, evidenced by its dominant object, is a
sale of food and the rendering of services is merely incidential, the
transaction would undoubtedly be exigible to sales-tax. In every
case ii will be for the taxing authority to ascertain the facts when
making an assessment under the relevant sales tax law and to deter-
mine upon those facts whether a sale of the food supplied is intended.
We are of the view that these review petitions must fail. They
are, accordingly, dismissed. There is no order as to costs. E

P.B.R. Review petitions dismissed.

. i
•