Meal vouchers cannot be treated as goods for levying Octroi: SC

The Sodexo Meal Vouchers, given by the employers to its employees for free foods and non-alcoholic beverages, cannot be termed as goods to attract Octroi or Local Body Tax (LBT), the Supreme Court has held.

The LBT or Octroi is a tax ‘on the entry of goods into the limits of the city’, which are meant for ‘consumption, use or sale therein’.

A bench of Justices A K Sikri and R F Nariman set aside a Bombay High Court order which had treated ‘Sodexo Meal Vouchers’ as goods liable for Octroi and LBT.

The court allowed an appeal by Sodexo Svc India Pvt Ltd challenging the Maharashtra government’s decision to levy Octroi on its coupons, which are purchased by certain establishments or companies for distribution to its employees for having food/ meals and other items up to a certain amount.

“No doubt, vouchers bear a particular value and for such value, goods are provided to the employees. However, these goods are not provided by the appellant, but by the affiliates. The appellant is only a facilitator and a medium between the affiliates and customers and is providing these services,” the bench said.

The court noted the intrinsic and essential character of the entire transaction is to provide services by the appellant through the means of said vouchers. The petitioner company only take service charges on its customers and affiliates.

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, the company submitted.

“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,” the bench said.