Summarize the following court judgment. Appeal No. 1207 of 1968. Appeal by special leave from the judgment and order dated May 10	 1967 of the Punjab and Haryana High Court in Letters Patent Appeal No. 159 of 1966. V. C. Mahajan and R. N. Sachthey	 for the appellants. M. C. Setalvad	 M. C. Bhandare	 Rameshwar Nath	 T. R. Bhasin and Lalit Bhasin	 for the respondent. The Judgment of the Court was delivered by Shelat	 J. The respondent company carries on business as hoteliers and conducts several hotels including the 'Cecil Hotel ' at Simla. Besides conducting hotels	 it also carries on restaurant business. As part of its business as hoteliers	 the company receives guests in its several hotels to whom	 besides furnishing lodging	 it also serves several other amenities	 such as public and private room	 bath with hot and cold running water	 linen	 meals during stated hours etc. The bill tendered to the guest is an all inclusive one	 that is to say	 a fixed amount for the stay in the hotel for each day and does not contain different items of each of the aforesaid amenities. That is	 however	 not the case in its restaurant business where a customer takes his meal consisting either of items of food of his choice or a fixed menu. The primary function of such a restaurant is to serve meals desired by a customer	 although along with the food	 the customer gets certain other amenities also	 such as service	 linen etc. The bill which 939 the customer pays is for the various food items which he consumes or at a definite rate for the fixed menu	 as the case may be	 which presumably takes into account service and other related amenities. The respondent company	 as such hoteliers	 has been registered as a dealer under the Punjab General Sales Tax Act	 XLVI of 1948 and has been filing quarterly returns and paying sales tax under that Act. On September 2	 1958 the company applied for a declaration that it was not liable to pay sales tax in respect of meals served in the said Cecil Hotel to the guests coming there for stay. In support of its plea	 the company raised the following contentions : (1) that the	 hotel receives guests primarily for the purpose of lodging	 (2) that when so received	 the management provides him with a number of amenities incidental to such lodging and with a view to render his stay in the hotel comfortable including meals at fixed hours	 (3) that the transaction between the company and such a guest is one for the latter to stay and not one of sale of food stuffs supplied as one of the incidental amenities	 (4) that the bill given by the company and paid by the guest is one and indivisible	 that is	 a fixed amount per day during his stay in the hotel and does not consist of separate items in respect of the several amenities furnished to him including meals served to him	 and (5) that the transaction so entered into does not envisage any sale of food since the guest cannot demand a rebate or deduction if he were to miss a meal or meals	 nor is he entitled to carry away or deal with in any manner the food served at his table	 if a part of it remains unconsumed. It is	 on the other hand	 the management which has the right to deal with such unconsumed remainder as it likes. Such a position	 therefore	 is inconsistent with a sale under which the property in the whole must pass to the purchaser	 and who can deal with the remainder in any manner he likes. The Sales Tax Officer rejected the company 's application on the ground that the transaction Which takes place between the management and a resident guest takes in both lodging and boarding and the hotel charges include consideration for both. A revision under section 21 of the Act by the company to the Commissioner met the same fate. The company then filed a writ petition for an order quashing the said decision as also the notices issued by the Sales Tax authorities under the Act. The grounds put forward in the writ petition were almost the same which the company had previously urged in its application for declaration. There was no dispute regarding the facts stated in the writ petition and particularly with regard to the fact that the transac 940 tion which a visiting resident enters into with the management is one and indivisible	 that the bill charged on him is likewise one and indivisible	 that the charges are for each day of stay	 and that that being so	 the bill was incapable of being split up into separate charges for each of the amenities furnished and availed of by such a visiting resident. The dispute was as to the nature of the transaction and whether such transaction included sale of food stuff supplied at various meals supplied to such a customer. The High Court	 on a consideration of the arguments urged before it and relying mainly upon the decision of this Court in Madras vs Gannon Dunkerley and Co. Ltd.(	 ')	 to the effect that where a transaction is one and indivisible it cannot be split up so as to attract the Sales Tax Act to a part of it 	 allowed the writ petition. It held that a transaction between a hotelier and his resident visitor did not involve a sale of food when the former supplied meals to the latter as one of the amenities during his residence	 and that if there was one inclusive bill	 it was incapable of being split up in the absence of any rates for the meals agreed to between the parties as part of the transaction between the two. The High Court also held that the transaction was primarily one for lodging	 that the board supplied by the management amounted to an amenity considered essential in these days in all properly conducted hotels	 and that when so supplied	 it could not be said to constitute a sale every time a meal was served to such a resident visitor. This appeal	 by special leave	 is filed against this view of the High Court. The question in this appeal	 it would appear	 arises in the present form for the first time. There are	 therefore	 no previous decisions to guide its determination. It would	 however	 be helpful to consider certain decisions both of this Court as also of the High Courts	 in which different types of transactions which came up before them for consideration in sales tax cases have been dealt with and which might throw some light upon the problem before us. In a case arising under the Assam Sales Tax Act	 1947 though there was no express sale in respect of gunny bags in which rice	 an exempted commodity	 was supplied to Government	 they were held to form assessable turnover. There was	 however	 in that case evidence that the assessees had charged the Government for those bags (Mohanlal Jogani Rice & Atta Mills V. Assam) (2). In D. Masanda and Co. vs Commissioner of Sales Tax(3)	 the question was whether photographic materials imported and (1) ; (3) [1957] 8 S.T.C. 370. (2) [1953] 4 S.T.C. 129. 941 used in the process of manufacturing photographic work	 copies of which were supplied by the assessee to a customer	 was a transaction involving sale of those materials. The High Court held that such a transaction did not cease to be a sale merely because the materials were not sold directly in their original form but in another form	 forming the	 components of the finished product	 namely	 the copies of the photograph	 and that the transaction was not merely the performance of skilled services but the supply of finished goods. This was	 however	 a border line case. The transaction might well be considered as one of service	 during performance of which	 a transfer of certain materials	 in respect of which there was no contract for sale	 either express or implied	 may be said to have taken place. An illustration of such a kind is furnished by the case of United Bleachers Ltd. vs Madras(1). In that case the assessee bleached and dyed	 calendered	 pressed and folded unbleached yarn and cloth manufactured by his custo mer textile mills. The bills issued by the assessee contained	 (a) bleaching charges	 and (b) charges for stitching	 folding	 stamping	 baling etc.	 but did not contain separately charges for the materials used for those ' purposes. The Revenue contended that there was transfer of those materials and separately assessed the charges of those materials holding that though the assessee did not specifically deal in those materials	 a portion of the profit earned in the business of bleaching and calendering could legitimately be attributed to the packing materials and the transaction involved a sale of them for consideration. On a reference	 the High Court held that the case was one of contract of service as distinguished from a sale of a principal commodity	 such as rice in Assam case (supra) and salt in Varasuki and Co. vs Madras(1) On the other hand	 where a contract is to supply such commodity in a packed condition	 it could be inferred	 though the contract might not be express that the intention of the parties was to give and accept delivery of the goods in a packed condition and not to take the principal commodity alone so that in the contract of sale of such a commodity there was implicit the sale of packing material as well. Even in a contract of service such as bleaching and calendering where the goods after such processing are delivered packed a sale of packing	 materials is possible	 quite apart from the contract of service. The question in such cases would be one of evidence	 whether there is such a contract beside the one of service. Where however there are no such distinct contracts and the contract is one and indivisible	 the essential part of which is one of service	 packing would be part of or incidental to the service	 and unless an intention to charge for the materials used in the packing can be spelt out	 the Revenue would not be (1) [1960] 9 S.T.C. 278. (2) [1950] 2 S.T.C. 1. 942 entitled to split up the contract	 estimate approximately the charges for such materials and treat them as chargeable on the mere ground that the transaction involved transfer of packing materials	 whose value must have been taken into consideration while fixing charges for the service. Such an implied contract of supply of packing materials was inferred in a contract of service	 namely	 drying raw tobacco in Krishna and Co. Ltd. vs Andhra Pradesh But the decision in that case did not rest on there being a transfer of packing materials in favour of the customer. There was evidence that such a transfer was for consideration	 inasmuch as the amounts charged as remuneration for service also contained charges for the packing materials though such charges were not separately shown in the assessee 's accounts. In such a state of evidence it would be possible for the Court to infer a separate implied contract of sale of packing materials and not as part of the service of drying raw tobacco and delivering it in packed condition. The difficulty which the Courts have often to meet with in construing a contract of work and labour	 on the one hand	 and a contract for sale	 on the other	 arises because the distinction between the two is very often a fine one. This is particularly so when the contract is a composite one involving both a contract of work and labour and a contract of sale. Nevertheless	 the distinction between the two rests on a clear principle. A contract of sale is one whose main object is the transfer of property in	 and the delivery of the possession of	 a chattel as a chattel to the buyer. Where the principal object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel	 the contract is one of work and labour. The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale; neither the ownership of materials	 nor the value of the skill and labour as compared with the value of the materials	 is conclusive	 although such matters may be taken into consideration in determining	 in the circumstances of a particular case	 whether the contract is in substance one for work and labour or one for the sale of a chattel(1). In Patnaik and Co. vs Orissa (3)	 a difference of opinion arose because of the fine distinction between the two types of contract. The contract there was for constructing and fixing bus bodies on the chassis supplied by the Orissa Government. The contract	 infer alia	 provide that the appellants were to construct the bus bodies in the most substantial and workmanlike manner (1) [1956] 7 S.T.C. 26. (2) Halsbury 's Laws of England	 3rd Ed. 34	 6 7. (3) [1965] 16 S.T.C. 364. 943 both as regards materials and otherwise in every respect in strict compliance with the specifications and should deliver them to the Governor on or before the dates specified therein. The majority rejected the contention that that was a contract of work and labour and held that the transaction was one of sale. The question primarily was one of construction of the contract	 and the majority held that both the agreement and the sale related to one kind of property	 namely	 the bus bodies. The reason for so. holding was stated to be that it was clear from the contract that the property in the bus bodies did not pass on their being constructed on the chassis	 but only when the vehicles including the bus bodies were delivered. Such a contract was unlike a building contract or a contract under which a movable is to be fixed on to another chattel or on the land	 where the intention plainly is not to sell that article but to improve the land or the other	 chattel and the consideration is not for the transfer of the chattel but for the work and labour done and the materials furnished. The contract in question was to manufacture a bus body and fix it on the chassis supplied and transfer the bus body so constructed for consideration. In Madras vs Gannon Dunkerley and Co. Ltd.(1) the main question was as regards the vires of the Madras General Sales. Tax Act	 1939	 as amended by Madras Act XXV of 1947 which widened the definition of 'sale ' by including	 inter alia	 in it a transfer of property in the goods involved in the execution of a works contract. Under this definition	 the Sales Tax authority brought into chargeable turnover the materials used in the constructiOn works carried out by the company. This Court held that a power to enact a law with respect to tax on sale of goods under entry 48 of List 11 in the 1935 Constitution Act must	 to be intra vires	 be one relating in fact to a sale of goods and that a Provincial Legislature could not	 in the purported exercise of its power	 tax transactions which were not sales	 by enacting that they should be deemed to sales	 that to construe a transaction as sale there should be an agreement relating to goods to be supplied by passing title in those goods	 and that it was of the essence of such a concept that both the	 agreement and the sale should relate to one and the same subject matter. The conclusion arrived at was that in a building contract	 even if it were to be disintegrated	 there was no passing of title in the materials as movables in favour of the other party of the contract. The contract was one and indivisible	 there was no sale of materials	 and consequently	 there was no question of title to the materials used by the builders passing to the other party to the contract. Even where the thing produced under a contract is movable property	 the materials in (1) ; 944 corporated into it might pass as a movable. But there would be no taxable sale if there was no agreement to sell the materials as such. In arriving at this conclusion	 the Court relied upon Appleby vs Myres(1) and the observations of Blackburn	 J.	 at 659 660 of the report to show that thread stitched into a coat which is under repair becomes part of the coat	 but in a contract for repairing the coat the parties surely did not enter into an agreement of sale of that thread. In Andhra Pradesh vs Guntur Tobaccos Ltd.(2)	 the transaction was for redrying tobacco entrusted to the respondent company by its customers. The process involved the keeping of the moisture content of tobacco leaf at a particular level and for that purpose the leaf had to be packed in bales	 in water proof packing material	 as it emerged from the reconditioning plant. The tobacco was then returned to the customer packed in costly packing material. In the	 company 's charges for redrying there was no separate charge for the value of such packing material. It was held that the redrying process could not be completed without the use of the packing material	 that packing formed an integral part of that process	 and that although the redried tobacco was returned together with the packing materials there was no sale of those materials as there was no intention on the part of the parties to enter into any transaction of sale as regards those materials. The mere fact that in such a contract of work or service property in goods which belonged to the party performing service or executing the work stands transferred to the other party is not enough. To constitute a taxable sale	 the Revenue has to establish that there was a sale	 distinct from the contract of work or service	 of the property so passing to the other party. Thus	 in consider whether a transaction falls within the purview of sales tax it becomes necessary at the threshold to determine the nature of the contract involved in such a transaction for the purpose of ascertaining whether it constitutes a contract of sale or a contract of work or service. If it is of the latter kind it obviously would not attract the tax. From the decisions earlier cited it clearly emerges that such determination depends in each case upon its facts and circumstances. Mere passing of property in an article or commodity during the course of the performance of the transaction in question does not render it a transaction of sale. For	 even in a contract purely of work or service	 it is possible that articles may have to be used by the person executing the work and property in such articles or materials may pass to the other party. That would not necessarily 	convert the contract into one of sale of these materials. in 	every case the Court would have to find out what was the primary (1) [1867] L.R.2C.P.651. (2) ; 945 object of the transaction and the intention of the parties while entering into it. It may in some cases be that even while entering into a contract of work or even service	 parties might enter into separate agreements	 one of work and service and the other of sale and purchase of materials to be used in the course of executing the work or performing the service. But	 then in such cases the transaction would not be one and indivisible	 but would fall into two separate agreements	 one of work or service and the other of sale. What precisely then is the nature of the transaction and the intention of the parties when a hotelier receives a guest in his hotel ? Is there in that transaction an intention to sell him food contained in the meals served to him during his stay in the hotel ? It stands to reason that during such stay a well equipped hotel Would have to furnish a number of amenities to render the customer 's stay comfortable. In the supply of such amenities do the hotelier and his customer enter into several contracts every time an amenity is furnished ? When a traveler	 by plane or by steam ship	 purchases his passage ticket	 the transaction is one for his passage from one place to another. If	 in the course of carrying out that transaction	 the traveler is supplied with drinks or meals or cigarettes	 no one would think that the transaction involves separate sales each time any of those things is supplied. The transaction is essentially one of carrying the passenger to his destination and if in performance of the contract of carriage something is supplied to him	 such supply is only incidental to that services	 not changing either the pattern or the nature of the contract. Similarly	 when clothes are given for washing to a laundry	 there is a transaction which essentially involves work or service	 and if the laundery man stitches a button to a garment which has fallen off	 there is no sale of the button or the thread. A number of such cases involving incidental uses of materials can be cited. none of which can be said to involve a sale as part of the main transaction. The transaction in question is essentially one and indivisible. namely	 one of receiving a customer in the hotel to stay. Even if the transaction is to be disintegrated	 there is no question of the supply of meals during such stay constituting a separate contract of sale. since no intention on the part of the parties to sell and purchase food stuff supplied during meal times can be realistically spelt out. No doubt	 the customer	 during his stay	 consumes a number of food stuffs. It may be possible to say that the property in those food stuffs passes from the hotelier to the customer at least to the extent of the food stuffs consumed by him. Even if that be so	 mere transfer of property	 as aforesaid	 is not conclusive and does not render the event of such supply and con 946 sumption a sale	 since there is no intention to sell and purchase. The transaction essentially is one of service by the hotelier in the performance of which meals are served as part of and incidental to that service	 such amenities being regarded as essential in all well conducted modem hotels. The bill prepared by the hotelier is one and indivisible	 not being capable by approximation of being split up into one for residence and the other for meals. No doubt	 such a bill would be prepared after consideration of the costs of meals	 but that would be so for all the other amenities given to the customer. For example	 when the customer uses a fan in the room allotted to him	 there is surely no sale of electricity	 nor a hire of the fan. Such amenities	 including that of meals	 are part and parcel of service which is in reality the transaction between the parties. Even in the case of restaurants and other such places where customers go to be served with food and drink for immediate consumption at the premises	 two conflicting views appear to prevail in the American courts. According to one view	 an implied warranty of wholesomeness and fitness for human consumption arises in the case of food served by a public eating place. The transaction	 in this view	 constitutes a sale within the rules giving rise to such a warranty. The nature of the contract in the sale of food by a restaurant to customers implies a reliance	 it is said	 on the skill and judgment of the restaurant keeper to furnish food fit for human consumption. The other view is that such an implied warranty does not arise in such transactions. This view is based on the theory that the transaction does not constitute a sale inasmuch as the proprietor of an eating place does not sell but "utters" provisions	 and that it is the service that is predominant	 the passing of title being merely incidental( '	 '). The two conflicting views present a choice between liability arising from a contract of implied warranty and for negligence in tort	 a choice indicative of a conflict	 in the words of Dean Pound	 between social interest in the safety of an individual and the individual interest of the supplier of food. The principle accepted in cases where warranty has been spelt out was that even though the transaction is not a sale	 the basis for an implied warranty is the justifiable reliance on the judgment or skill of the warrant or and that a sale is not the only transaction in which such a warranty can be implied. The relationship between the dispenser of food and one who consumes it on the premises is one of contractual relationship	 a relationship of such a nature that an implied warranty of wholesomeness reflects the reality of the transaction involved and an express obligation understood by the parties in the sense that the customer does	 in fact	 rely upon such dispenser (1) Corputs Juris Section	 Vol 77	1215 1216. 947 of food for more than the use of due care. (see Cushing v Rodman(1). A representative case propounding the opposite view is the case of F. W. Woolworth Co. vs Wilson(2)	 citing Nisky vs Childs Co.(3)	 wherein the principle accepted was that such cases involved no sales but only service and that the dispenser of food	 such as a restaurant or a drug store keeper serving food for consumption at the premises did not sell and warrant food but uttered and served it and was liable in negligence	 the rule in such cases being caveat emptor. In England	 a hotel under the Hotel Proprietors Act	 1956 is an establishment held out by the proprietor as offering food	 drink	 and if so required	 sleeping accommodation	 without special contract	 to any traveller presenting himself and who appears able and willing to pay a reasonable sum for the services and facilities provided. This definition	 which is also the definition	 of an inn	 still excludes	 as formerly	 boarding houses	 lodging houses and public houses which are merely alehouses and in none of which there is the obligation to receive and entertain guests. An innkeeper	 that is to say	 in the present days a hotel proprietor	 in his capacity as an in keeper is	 on the other hand	 bound by the common law or the custom of the realm to receive and lodge in his inn all comers who are travellers and to entertain them at reasonable prices without any special or previous contract unless he has some reasonable ground of refusal (4) . The rights and obligations of hotel proprietors are governed by statute which has more or less incorporated the common law. The contract between such a hotel proprietor and a traveller presenting himself to him for lodging is one which is essentially a contract of service and facilities provided at reasonable price. The transaction between a hotelier and a visitor to his hotel is thus one essentially of service in the performance of which and as part of the amenities incidental to that service	 the hotelier serves meals at stated hours. The Revenue	 therefore	 was not entitled to split up the transaction into two parts	 one of service and the other of sale of food stuffs and to split up also the bill charged by the hotelier as consisting of charges for lodging and charges for food stuffs served to him with a view to bring the latter under the Act. The conclusion arrived at by the High Court is one with which we agree. Consequently	 the appeal fails and is dismissed with costs. V.P.S. Appeal dismissed. (1) 104 American L.R. 1023; Srs. 864	 868. (2) Srs. (3) 103 N.J. Law 464. (4) Halsbury 's Laws of England	 3rd Ed.	 Vol. 21	 445 446.

The respondent company was running the business of a hotelier and was registered as a dealer under the Punjab General Sales Tax Act	 1948. It applied for a declaration that it was not liable to sales tax in respect of meals served to the guests staying in the hotel on the grounds that : (1) the hotel receives guests primarily for the purpose of lodging; (2) when so received the management provides him with a number of amenities including meals at fixed hours	 incidental to such lodging and with a view to render hi 	 stay comfortable; (3) the transaction between the respondent and the guests is one for the latter to stay and not one of sale of food stuffs supplied; (4) the bill given by the respondent and paid by the guest is one and indivisible	 being a fixed amount per day during his stay in the hotel and does not consist of separate items in respect of the several amenities furnished to him	 and (5) the transaction does not envisage any sale of food since the guest cannot demand a rebate or deduction if he were to miss a meal or meals nor is he entitled to carry away or deal with	 in any manner	 the food served on his table if a part of it is not consumed. The department rejected the company 's application but the High Court allowed its writ petition. Dismissing the appeal to this Court	 HELD : The transaction is one essentially of service in the performance of which and as part of the amenities incidental to that service	 the hotelier serves meals at stated hours. The Revenue	 therefore	 was not entitled to split up the transaction into two parts one of service and the other of sale of food stuffs and to split up the bill charged as consisting of charges for lodging and charges for food stuffs served with a view to bring the latter under the Act. [947 F G] The distinction between a contract of sale and a contract of work and service is fine especially when the contract is a composite one involving both. In considering whether a transaction is a sale falling within the purview of sales tax it is necessary to determine the nature of the contract involved on the facts of each case. A contract of sale is one whose main object is the transfer of property and delivery of possession of a chattel to the buyer; but the mere passing of property in an article or commodity during the course of the performance of a transaction does not render it a transaction of sale when there is no intention to sell and purchase. When the principal object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel the contract is one of work and labour. The test is whether or not the work or labour bestowed ends in anything that can properly become the subject of sale; neither the ownership of the materials nor the value of the skill 938 and labour as compared with the value of materials is conclusive	 although such matters may be taken into consideration. In every case the court would have to find out what is the primary object of the transaction and the intention of the parties while entering into it. [942 D G: 944 F G. H] The transaction in the present case is one and indivisible	 namely	 one of receiving a customer in the hotel to stay. The bill is not capable of being split up into one for residence and another for sale of meals. Amenities including meals	 are part and parcel of the service which	 in reality	 is the transaction between the parties. Even if it was to be disintegrated the supply of meals during such stay does not constitute a separate contract of sale	 since no intention on the part of the parties to sell and purchase the food stuffs supplied during meal time can be spelt out. [945 G H; 946 A C] Madras vs Gannon Dunkerley & Co. Ltd.	 ; 	 Mohanlal Jogani Rice & Atta Mills. vs Assam [1953] 4 S.T.C. 129	 Masanda & Co. vs Commissioner of Sales tax	 [1957] 8 S.T.C. 370	 United Bleachers Ltd. vs Madras	 (1960) 9 S.T.C. 278	 Krishna & Co. Ltd. vs Andhra Pradesh	 [1956] 7 S.T.C. 26	 Patnaik & Co. vs Orissa	 [1965] 16 S.T.C. 364	 Andhra Pradesh vs Guntur Tobaccos Ltd. ; and English Law and United States Law	 referred to.