MOULIN ROUGE PVT. LTD. vs THE COMMERCIAL TAX OFFICERS & ORS.

The Supreme Court held that the transaction between a restaurant and its customers is primarily a service, not a sale of goods, thereby exempting the restaurant from sales tax on food and drinks provided. Citing the precedent in State of Punjab vs. Associated Hotels of India Ltd. (1972) 1 SCC 472, the Court ruled that charges for food served in a restaurant are part of the overall service provided and cannot be separately taxed under the Punjab General Sales Tax Act. The Court upheld the appellant's position that it was not liable to collect or pay sales tax on food and drinks as they were included in the service charges.