2013 (2) TMI 614 - HC - VAT and Sales Tax

Liability to pay tax on a club - contention of the petitioner that the club paying tax under Section 4(2A) is not liable to pay tax under Section 4(2) Kerala Tax on Luxuries Act, 1976 - Held that - Provision of Section 4(2A) renders members of clubs also liable for tax at the rate as indicated therein and the tax liability of the members is in addition to the liability of the clubs under Section 4 of the Act. Therefore, this provision will not be of any assistance to the petitioner. The judgment of this Court was confirmed by the Division Bench in Trivandrum Club v. Sales Tax Officer(2013 (1) TMI 606 - KERALA HIGH COURT) - against the petitioner/ assessee.

Summary

Issues:
1. Challenge to notices issued under the Kerala Tax on Luxuries Act, 1976.
2. Interpretation of Section 4(2A) of the Act regarding tax liability of clubs and members.

Analysis:
1. The petitioner, a club, challenged notices (Ext.P1 and P3) issued under the Kerala Tax on Luxuries Act, 1976. The petitioner contended that as they were paying tax under Section 4(2A) of the Act, they were not obligated to pay the tax demanded in the notices. The petitioner sought to challenge these notices based on this argument.

2. The Court referred to a previous judgment in Trivandrum Club v. Sales Tax Officer (Luxury Tax) where the interpretation of Section 4(2A) was discussed. Section 4(2A) imposes a luxury tax of Rs. 100 per year per member on clubs providing specific facilities and with a minimum membership strength. The Court held that this provision makes both clubs and their members liable for tax, with members having additional tax liability apart from the club's liability under Section 4 of the Act.

3. The Division Bench in Trivandrum Club v. Sales Tax Officer (Luxury Tax) upheld the interpretation that members of clubs are also individually liable for tax under Section 4(2A) in addition to the club's tax liability under Section 4 of the Act. Therefore, the Court concluded that the petitioner's argument, based on paying tax under Section 4(2A), was not valid, as the provision does not exempt the club from the tax demanded in the notices.

4. Given the precedents and the clear interpretation of the law regarding the tax liability of clubs and members under Section 4(2A) of the Kerala Tax on Luxuries Act, the Court dismissed the writ petition challenging the notices issued to the club. The judgment emphasized that the petitioner's case was fully covered against them based on the existing legal provisions and previous court decisions.

In conclusion, the judgment reaffirmed the tax liability of clubs and their members under Section 4(2A) of the Act, dismissing the challenge to the notices issued to the club under the Kerala Tax on Luxuries Act, 1976.