2013 (8) TMI 863 - HC - VAT and Sales Tax

Interpretation of the term luxury - appellants contend that the laundry charges charges received for boating and ayurvedic treatment charges do not come within the purview of luxury provided in a hotel as defined in section 2(f) of the Kerala Tax on Luxuries Act 1976 - Held that - Single judge has rightly concluded that all what the charging section says is that the rate of tax will have to be determined by taking into account the total charges recovered and tax will be payable only on such amount irrespective of whether rent amenities and services are separately charged or not. The learned single judge was justified in holding that the Act does not make any difference as to whether charges for services and amenities are combined with rent or such charges are separately collected in addition to rent. The finding that the services rendered in a hotel need not necessarily mean services provided in the hotel building but include services arranged by the hotel to its customers though the service is rendered outside the hotel premises cannot also be found fault with. - Decided against assessee.

Summary

Issues:
1. Whether charges for ayurvedic treatment, laundry services, and boating arrangements collected by a hotel attract luxury tax.

Analysis:
The appellants argued that the charges for ayurvedic treatment, laundry services, and boating arrangements do not fall under the definition of "luxury provided in a hotel" as per the Kerala Tax on Luxuries Act, 1976. They contended that these charges are not for luxuries provided in the hotel but for optional services provided on specific demands of customers. They emphasized that the amenities specified in the Act are limited to services like air-conditioning and hot water provided in the room, which are not optional for any specified category of rooms.

On the contrary, the Special Government Pleader argued that the definition of "luxury provided in a hotel" is comprehensive and includes all amenities and services provided in a hotel except those statutorily excluded. The definition of "luxury" itself is broad enough to encompass services that provide comfort or pleasure. The charging section of the Act determines the rate of luxury tax based on the total charges recovered, irrespective of whether services and amenities are separately charged or not.

The court analyzed the definitions of "luxury" and "luxury provided in a hotel" under the Act. It concluded that the luxury tax is not limited to charges for accommodation but also includes other amenities and services enjoyed by customers, even if they vary from room to room based on customer preferences. The court emphasized that the legislative intent was to consider all amenities and services provided in a hotel, along with accommodation for residence, as luxury for the purpose of the Act.

The judgment upheld the view that the Act does not differentiate between charges for services and amenities combined with rent or separately collected. It clarified that services provided by a hotel include those arranged by the hotel for its customers, even if the services are rendered outside the hotel premises. The court found no grounds to interfere with the judgment, ultimately dismissing the writ appeals.

In conclusion, the court affirmed that charges for ayurvedic treatment, laundry services, and boating arrangements collected by a hotel attract luxury tax as they fall within the definition of "luxury provided in a hotel" under the Kerala Tax on Luxuries Act, 1976.