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Sodexo SVC India Pvt. Ltd. v. State of Maharashtra & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 4385-4386 of 2015)Decided 9 Dec 2015
Civil Appeal Nos. 4385-4386 of 2015
Justice A.K. Sikri · Justice Rohinton Fali Nariman

Background

Sodexo issues pre-printed meal vouchers to companies, which give them to employees to buy food at partner restaurants and shops. The shops redeem the vouchers with Sodexo at face value, minus Sodexo's service charge. A municipal corporation in Maharashtra sought to levy Octroi or Local Body Tax on the vouchers as "goods" entering the city, and the High Court agreed, reasoning that the vouchers were printed, sold and capable of being traded.

Decision Breakdown

The Supreme Court allowed the appeal and set aside the High Court's judgment, holding that the Sodexo meal vouchers are not "goods" under the Act, so neither Octroi nor LBT applies. The Court said the High Court wrongly assumed the vouchers were sold; in reality, they are issued for a particular customer, cannot be transferred, and are not the commodity sold. The actual food is supplied by the affiliated restaurants, while Sodexo is a facilitator that earns service charges. The Court also relied on the RBI's regulation of the scheme as a payment system and on the employee-benefit context, both of which point to a service rather than a sale of goods.

Lesson Learnt

Whether something counts as "goods" for tax purposes depends on its real character, especially whether it can be bought and sold separately, not on how the transaction is labelled. A company that provides a service through vouchers or similar instruments may not be taxable as a seller of goods.

Official source (sci.gov.in)View Judgment (PDF)

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