2022 (3) TMI 1531 - HC - Indian Laws

Levy of Luxury Tax - internet facility provided to the guests of the Hotel concerned - HELD THAT - Even though it is submitted by the learned Government Advocate for respondents that, they decided to prefer appeal against the said orders, of course belatedly, that may not preclude this Court from following the earlier orders based on the same subject or same point, where, those writ petitions have been allowed in a similar circumstances by giving interpretation to the concerned provision of law viz., luxury tax and therefore, the orders are followed and if the said principle enunciated in the said orders is applied to the present facts of the case, this Court has no hesitation to hold that the impugned orders cannot be sustained. The impugned orders are quashed and the writ petitions are allowed.

Summary

Issues:
1. Whether the internet facility provided by a Star Hotel to its guests can be subjected to luxury tax.
2. Whether the imposition of luxury tax on the internet facility by the Assessing Authority is lawful.
3. Whether the orders of the Appellate Authority and Revisional Authority confirming the luxury tax imposition are justifiable.
4. Whether the penalty levied by the Assessing Authority is in accordance with the relevant legal provisions.
5. Whether the writ petitions challenging the imposition of luxury tax on internet services by the hotel should be allowed.

Issue 1:
The petitioner, a Star Hotel, provided various services including internet facility to guests, leading to the imposition of luxury tax for assessment years 2008-09 and 2009-10. The legality of subjecting internet services to luxury tax was contested.

Issue 2:
The petitioner argued that internet services do not fall under the definition of luxury as per relevant legal provisions. Citing a previous judgment, it was highlighted that internet services are akin to basic necessities and not luxuries, thus challenging the imposition of luxury tax.

Issue 3:
The orders of the Assessing Authority, Appellate Authority, and Revisional Authority confirming the luxury tax on internet services were challenged in the writ petitions. The petitioner sought to set aside these orders based on the interpretation of luxury tax laws.

Issue 4:
Regarding the penalty imposed by the Assessing Authority, it was noted that the levy was based on incorrect provisions of the Tamil Nadu Value Added Tax Act. Since the additions on merits were set aside, the question of penalty imposition did not arise, leading to the setting aside of the impugned assessments.

Issue 5:
The High Court considered previous judgments where similar issues were addressed and allowed the writ petitions, quashing the impugned orders and holding that the imposition of luxury tax on internet services by the hotel was not sustainable. The petitioner was entitled to a refund of the tax paid.

This comprehensive analysis of the judgment highlights the legal arguments, interpretations of relevant provisions, and the ultimate decision of the High Court in setting aside the imposition of luxury tax on internet services provided by the Star Hotel.