According to me, intervening paid holidays or paid offs in between any kind of leave shall be considered as leave of that kind and not as paid holidays or paid offs.
If both the sides are loss of pay, obviously paid holiday will be loss of pay.
Hope no one will differ to it.
What you practice is quite a general practice. This is to discourage employee to sandwich the holidays and hence go on leave together.
In your case, if the person has applied for leave from 30th april till 2nd may and is to resume on 3rd may, the leave is for 3 days - 30 apr, 1 may and 2nd may.
If the person is applying a leave for 30 apr and is to resume on 2nd may, i think only 1 leave for 30 apr is to be deducted. 1st may was a holiday.
so if there are any holidays in between the leaves taken, the holiday is considered as leaves.
Same thing is validated in bombay shops and establishment act as well.