CA Koduri Jitendra Babu
In the case of Sodexo SVC India Private Limited. Vs The State of Maharashtra and Others, Bombay High Court has held that Sodexo meal vouchers are utility goods- Octroi & LBT can be levied on the same. Sodexo has preferred an appeal against the verdict in Supreme Court and Hon ‘ble Supreme Court has held that Sodexo Vouchers are not goods and therefore not liable for Octroi or LBT under Section 2(25) of the Maharashtra Municipal Corporation Act, by setting aside the judgement of the Bombay High Court. The Supreme Court held as under:
16) ………….The intrinsic and essential character of the entire transaction is to provide services by the appellant and this is achieved through the means of said vouchers. Goods belong to the affiliates which are sold by them to the customers’ employees on the basis of vouchers given by the customers to its employees. It is these affiliates who are getting the money for those goods and not the appellant, who only gets service charges for the services rendered, both to the customers as well as the affiliates.
17) It is to be borne in mind that the vouchers are not ‘sold’ by the appellant to its customers, as wrongly perceived by the High Court, and this fundamental mistake in understanding the whole scheme of arrangement has led to wrong conclusion by the High Court. The High Court has also wrongly observed that vouchers are capable of being sold by the appellant after they are brought into the limits of the city. These vouchers are printed for a particular customer, which are used by the said customer for distribution to its employees and these vouchers are not transferrable at all.
18) As already pointed out above, without the sanction/ authorisation of the RBI to operate such a payment system under the Payment and Settlement Systems Act, 2007, nobody can operate such a system, as the purpose of the said Act is to regulate the payment and settlement thereof by means of ‘ Paper Based Vouchers ‘. An insight into the Policy Guidelines dated March 28, 2014 issued by the RBI to regulate such transactions would also clinchingly bears out that the real nature of the transaction is to provide service and by no stretch of imagination these vouchers can be termed as ‘ goods ‘.
24) We may mention here that the appropriate test would be as to whether such vouchers can be traded and sold separately. The answer is in the negative. Therefore, this test of ascertaining the same to be ‘goods’ is not satisfied.
26) Thus, the value of such free food and non-alcoholic beverage provided by an employer to an employee is treated as expenditure incurred by the employer and amenity in the hands of the employee. It is this perquisite given by the customer to its employees by adopting the methodology of vouchers and for its proper implementation, services of the appellant are utilised .
27) For all the aforesaid reasons, we are of the opinion that the judgment of the High Court has not discussed and decided the issue correctly and warrants interference. We, thus, allow these appeals and set aside the judgment of the High Court by holding that Sodexo Meal Vouchers are not ‘ goods ‘ within the meaning of Section 2(25) of the
Act and, therefore, not liable for either Octroi or LBT .
The Judgement has come as a major relief to the trade and industry, thereby stalling the revenue authorities from assuming that everything is a good and liable for taxes.