2018 (9) TMI 2143 - HC - Indian Laws

Levy of luxury tax - ayurveda services provided, boat charges, taxi charges and laundry charges received from the guests of the hotel, being included in the total turnover for the purpose of applying the rate of tax on luxury as provided under Kerala Tax on Luxuries Act, 1976 - HELD THAT - The boat hire charges, taxi hire charges and ayurveda treatment charges said to be facilities availed outside the premises of the hotel. It cannot at all be contended that the charges were not received by the hotel and the services were also not provided from the hotel. The assessee then claimed that ayurveda charges are with respect to the facilities offered by a unit situated in a separate building, which has been leased out to one Ayurveda Doctor. However, it is clear that the petitioner-hotel owns the building and lease has been granted to the Doctor for providing ayurveda treatment facilities to the guests, for which charges are taken by the hotel and which is included in the total amounts received. The Assessing Officer was perfectly right in having computed, along with the charges for accommodation, for the purpose of levying luxury tax, charges for other amenities and services provided in a hotel in addition to the accommodation provided. Appeal of Revenue allowed.

Summary

Issues:
1. Levy of luxury tax on ayurveda services, boat charges, taxi charges, and laundry charges.
2. Interpretation of provisions under the Kerala Tax on Luxuries Act, 1976.
3. Inclusion of charges for amenities and services provided outside the hotel premises in the total turnover for tax calculation.

Analysis:
1. The Writ Petitions involved challenges to the Tribunal's order regarding the levy of luxury tax on various services provided by the hotel. The Tribunal found that charges for boat hire, taxi hire, and ayurveda treatment, which were provided outside the hotel building, were not liable for luxury tax under the Act. The Tribunal referred to Section 4(2) introduced in 2007, clarifying that services provided outside the hotel premises are excluded from luxury tax computation. The Revenue appealed against the exclusion of these charges from income computation, leading to a detailed analysis of the legislative intent behind the Act's provisions.

2. The judgment referred to the definition of 'luxury' under Section 2(ee) and the provisions of Section 4 regarding the levy of luxury tax. It emphasized that the Act does not restrict luxury tax solely to charges for accommodation but includes amenities and services provided in a hotel. The court highlighted that amenities and services contributing to comfort and pleasure fall under the definition of 'luxury provided in a hotel.' The decision in Brunton Boatyard v. State of Kerala was cited to support the interpretation that all amenities and services in a hotel, along with accommodation, constitute luxury for tax purposes.

3. Regarding laundry charges, the Tribunal's decision against the assessee was upheld, citing precedent from Kovalam Ashok Beach Resort. The court agreed with the Tribunal's stance on laundry charges but differentiated between charges for amenities provided within the hotel building and those offered outside. It was concluded that charges for amenities like ayurveda treatment, even if provided in a separate building on the hotel's premises, are subject to luxury tax when included in the total amounts received by the hotel. The judgment favored the State's position, rejecting the assessee's Writ Petition while upholding the inclusion of such charges in the tax calculation.

In summary, the judgment delves into the intricacies of luxury tax applicability on various hotel services, emphasizing the broad scope of 'luxury provided in a hotel' and the inclusion of amenities and services beyond accommodation in the tax computation. The decision provides a comprehensive analysis of the legislative intent behind the Act's provisions and clarifies the treatment of charges for services provided both within and outside the hotel premises.