Sodexo Meal Vouchers are not 'goods'- Supreme Court

By Vijay Kumar

THE Supreme Court delivered an interesting order yesterday which may have some impact on Service Tax.

The appellant company is conducting the business of providing pre-printed meal vouchers which are given the nomenclature of 'Sodexo Meal Vouchers'. As per the appellant, it enters into contracts with its customers for issuing the said vouchers. These customers are establishments/companies having number of employees on their rolls. They provide food/ meals and other items to their employees up to a certain amount. It is for this purpose that the agreement is entered into by such establishments/companies with the appellant for issuing the vouchers. After receiving these vouchers for a particular denomination, some are distributed by the companies to its employees. For utilisation of these vouchers by such employees, the appellant has made arrangements with various restaurants, departmental stores, shops, etc. ('affiliates'). From these affiliates, the employees who are issued the vouchers can procure the food and other items on presentation of the said vouchers. The affiliates, after receiving the said vouchers, present the same to the appellant and get reimbursement of the face value of those vouchers after deduction of service charge payable by the affiliates to the appellant as per their mutual arrangement. In this manner, the appellant, by issuing these vouchers to its customers, gets its service charge from the said companies. Likewise, the appellant also takes specified service charges from its affiliates.

The question is as to whether these vouchers can be treated as ' goods ' for the purpose of levy of Octroi or Local Body Tax (LBT) or the activity only amounts to rendering service by the appellant. The issue was examined as per the relevant provisions of the Maharashtra Municipal Corporation Act under which the Municipal Corporation is entitled to levy and collect Octroi or LBT.

The High Court had held that these vouchers are goods.

Now the Supreme Court has held that Sodexo Meal Vouchers are not 'Sgoods' within the meaning of Section 2(25) of the Act and, therefore, not liable for either Octroi or LBT.

We bring you this order today. Please see Breaking News

Please also see our article Meal Vouchers - How Good(s) is it? And case law 2013-TIOL-1838-CESTAT-MUM