1993 (2) TMI 305 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of luxury tax under the West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act, 1972.
2. Discrimination and violation of Articles 14 and 19(1)(g) of the Constitution of India.
3. Validity of assessment based on a survey report without notice.
4. Definition of "restaurant" and "luxury" under the Act of 1972.
5. Applicability of luxury tax to the bars of Globe Cinema.

Issue-wise Detailed Analysis:

1. Imposition of Luxury Tax:
The application challenges the imposition of luxury tax on the two bars of Globe Cinema under section 4 of the West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act, 1972. The assessment period is from July 25, 1972, to March 31, 1985, with a total luxury tax liability of Rs. 53,054.76. The applicants argue that similar bars in other cinema halls were not taxed, making the imposition discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution.

2. Discrimination and Violation of Articles 14 and 19(1)(g):
The applicants contend that the luxury tax imposition is discriminatory as other cinema halls with similar bars were not taxed. The respondents clarified that other cinemas did not have air-conditioning, which is a prerequisite for luxury tax under the Act of 1972. The Tribunal found no evidence to support the applicants' claim of discrimination and upheld the respondents' position, rejecting the argument of violation of Articles 14 and 19(1)(g).

3. Validity of Assessment Based on Survey Report:
The applicants argued that the assessment was based on a survey report conducted without their knowledge or notice, making it invalid. The Tribunal noted that the assessment was based on a survey report dated July 14, 1986, and that the Commissioner had conducted a local inspection in December 1991. The Tribunal found that the assessment was not arbitrary or whimsical and that the applicants' claims were considered, rejecting the argument of invalidity.

4. Definition of "Restaurant" and "Luxury":
The Tribunal examined whether the bars of Globe Cinema fall within the definitions of "restaurant" and "luxury" under the Act of 1972. The term "restaurant" includes an eating house, and the Tribunal found that the bars, where snacks and drinks are sold, qualify as restaurants. The term "luxury" means provision for air-conditioning, which was present during the relevant period. The Tribunal concluded that the bars met the definitions and were liable for luxury tax.

5. Applicability of Luxury Tax to the Bars of Globe Cinema:
The Tribunal held that the two bars of Globe Cinema were subject to luxury tax as they constituted a restaurant with provision for luxury (air-conditioning) during the assessment period. The applicants' arguments regarding the lack of a restaurant or entertainment and the discontinuation of air-conditioning in 1985 were rejected. The Tribunal affirmed the assessment and dismissed the application.

Conclusion:
The application challenging the imposition of luxury tax on the two bars of Globe Cinema was dismissed. The Tribunal found no violation of constitutional provisions, upheld the validity of the assessment based on the survey report, and confirmed that the bars met the definitions of "restaurant" and "luxury" under the Act of 1972. The interim orders were vacated, and there was no order as to costs.