2001 (11) TMI 988 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of the Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses Act, 1987, as amended by the Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses (Amendment) Act (Amendment Act 28 of 1996), concerning the levy of luxury tax on corporate hospitals.
2. Legislative competence of the State Legislature to enact the Amendment Act.
3. Whether air-conditioned accommodation in hospitals can be considered a luxury.
4. Allegation of arbitrariness and unreasonableness of the Amendment Act, violating Article 14 of the Constitution.

Detailed Analysis:

1. Constitutional Validity of the Amendment Act:
The petitioner challenged the constitutional validity of the amendment to the Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses Act, 1987, which included corporate hospitals under the purview of luxury tax. The court examined the amendments made by Act No. 28 of 1996, which defined 'corporate hospital' and expanded the definition of 'luxury' to include services provided in corporate hospitals, such as air-conditioning, television, radio, and other amenities.

2. Legislative Competence:
The petitioner argued that the State Legislature lacked the competence to enact the Amendment Act under Article 246(3) of the Constitution, read with Entry 62 of List II (State List) of the Seventh Schedule. The court referred to Article 246, which outlines the distribution of legislative powers between the Union and State Legislatures. The court held that the State Legislature is competent to enact laws on taxes on all kinds of luxuries, including those provided in corporate hospitals. The court emphasized that the legislative power under Entry 62 of List II is not restricted to specific entities like hotels or clubs but extends to all kinds of luxuries.

3. Air-conditioned Accommodation as Luxury:
The petitioner contended that air-conditioned accommodation in hospitals is an indispensable necessity, not a luxury, and thus should not be taxed. The court referred to the Supreme Court's judgment in A.B. Abdul Kadir v. State of Kerala, which defined 'luxury' as something that conduces enjoyment over and above the necessaries of life. The court concluded that air-conditioned accommodation in hospitals cannot be considered an absolute indispensable necessity and can be classified as a luxury. The court also noted that whether providing such accommodation is a necessity or luxury is a question of fact that can be raised before the Assessing Authority.

4. Allegation of Arbitrariness and Unreasonableness:
The petitioner argued that the Amendment Act is arbitrary and unreasonable, violating Article 14 of the Constitution. The court reiterated that an enactment can only be struck down on two grounds: lack of legislative competence and violation of fundamental rights or other constitutional provisions. The court emphasized that an enactment cannot be declared invalid solely because it is capable of being misused or abused. The court referred to the Supreme Court's judgment in State of Andhra Pradesh v. McDowell & Co., which stated that a law can only be struck down if it violates a constitutional provision. The court found no constitutional infirmity in the Amendment Act and held that the petitioner's argument of arbitrariness and unreasonableness was not a valid ground to challenge the Act's validity.

Conclusion:
The court upheld the constitutional validity of the Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses Act, 1987, as amended by the Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses (Amendment) Act (Amendment Act No. 28 of 1996), concerning the levy of luxury tax on corporate hospitals. The writ petition was dismissed with no order as to costs.

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