Observing that Sodexo meal vouchers are utility goods, which are capable of being sold, delivered and possessed, the Bombay High Court has held that octroi and Local Body Tax (LBT) can be levied on them.
A division bench of justices A S Oka and Ajey Gadkari on March 20 refused to grant relief to Sodexo SVC India Private Ltd, which had claimed that octroi and LBT cannot be levied on it as they are not selling goods.
According to the petitioner company, they have obtained authorisation certificate from RBI to operate a payment system for issue of meal and gift vouchers in the form of paper-based vouchers and smart meal cards from 2009.
Senior counsel V V Tulzapurkar, appearing for the petitioner, urged that the Sodexo vouchers are a medium to acquire any article for consumption, use or sale and they are not capable of consumption, use or sale by themselves. The vouchers are only payment instructions or instruments.
“The vouchers are meant to acquire the goods which can be consumed, used or sold. The vouchers are only a medium of payment. Under both the Octroi Rules and the LBT Rules, taxes can be collected only on goods,” he argued.
The court was, however, of a different view and held that it was unable to take a view that the vouchers are not goods for the purposes of levy of LBT and Octroi.
“The scheme is that the petitioner company prints the paper vouchers and sells it to the customers. The customers, in turn, provide the vouchers to its employees. On presentation of the vouchers in restaurants or eating places or any other outlets, the ready-to-eat food items and beverages of the face value printed on the vouchers is delivered to the users. Thus, the vouchers are used to pay the price of the food items,” the court said.
“Even going by the petitioner’s scheme, the vouchers are sold by the petitioner company to its customers. Therefore, the vouchers which are printed on paper are goods within the meaning of the Maharashtra Municipal Corporations Act. The vouchers, which are capable of being sold, delivered and possessed have its own utility,” the bench held.
Refusing to grant the company any relief, the court dismissed the petition.