Sodexo meal vouchers are utility goods, attract octroi, LBT: HC

The Bombay high court has held that octroi and Local Body Tax (LBT) can be levied on Sodexo Meal Vouchers as they are utility goods which are capable of being sold, delivered and possessed. A division bench of Justices A S Oka and Ajey Gadkari refused to grant relief to Sodexo SVC India Private Limited which had claimed that octroi and LBT could not be levied on the company as it didn't sell goods.

Sodexo claimed that they had obtained an authorisation certificate from the RBI to operate a payment system for issue of meal and gift vouchers in the form of paper-based vouchers and smart meal cards from 2009.

Sodexo's counsel, V V Tulzapurkar, argued that the vouchers were a medium to acquire any article for consumption, use or sale and they were not capable of consumption, use or sale by themselves. The vouchers are only payment instructions or instruments, he said.

Tulzapurkar argued: "The vouchers are meant to acquire the goods which can be consumed, used or sold. The vouchers are only a medium of payment. Under both the Octroi Rules and the LBT Rules, taxes can be collected only on goods." However, the judges were not convinced.

In its order dated March 20, 2015, the HC said, "The scheme is that the petitioner company prints the paper vouchers and sells them to the customers. The customers, in turn, provide the vouchers to their employees. On presentation of the vouchers in restaurants or eating places or any other outlets, the ready-to-eat food items and beverages of the face value printed on the vouchers is delivered to the users. Thus the vouchers are used to pay the price of the food items."

The court added, "Even going by the petitioner's scheme, the vouchers are sold by the petitioner company to its customers. Therefore, the vouchers which are printed on paper are goods within the meaning of the Maharashtra Municipal Corporations Act. The vouchers which are capable of being sold, delivered and possessed have its own utility."