High Court held that contract was for sale of goods and VAT did not apply

1. Petitioner, a Government company, provided services, including catering on board the trains run by Indian Railways.

2. It also sub-leased the contract in respect of some trains to various contractors.

3. It had been paying VAT, in respect of the services on board the trains, including providing of food and beverages and the tax was paid up to 30th April, 2007.

4. It sought a determination from the Commissioner, VAT, u/s 84 on the taxability to VAT in respect of the food and beverages served to the passengers, on board the trains.

5. The commissioner held the petitioner taxable under VAT.

6. The Appellate Tribunal quashed the determination order regarding taxability of food and beverages loaded on trains from Delhi.

On appeal, the High Court held as under:

7. We hold that the transaction between the petitioner-company and Indian Railways for providing food and beverages to the passengers, on board the trains, is a transaction of sale of goods by the petitioner-company to Indian Railways.

8. It is neither a contract for providing services nor a composite contract for supply of goods and providing of services.

9. We also hold that sale in respect of goods loaded on board the trains in Delhi, takes place, when the goods are loaded in the trains.

10. Accordingly, we find no merit in the writ petitions and the same are hereby dismissed.

Case Reference - Indian Railways Catering & ... vs Govt Of Nct Of Delhi & Ors.

Delhi High Court