The Hotel-Receipts Tax Act, 1980--Explanatory notes on provisions of. Introduction - Income Tax - 313/1981

The Hotel-Receipts Tax Act, 1980--Explanatory notes on provisions of. Introduction Circular No. 313 Dated 4/9/1981 The Hotel-Receipts Tax Bill, 1980, as passed by Parliament, received the ascent of the President on 9th December, 1980, and has been enacted as the Hotel-Receipts Tax Act, 1980 (54 of 1980). The Act imposes a special tax on the gross receipts of certain categories of hotels. Section 34 of the Act empowers the Board to make, subject to the control of the Central Government, rules for carrying out the purposes of the Act. The Board has, in exercise of this power, made the Hotel-Receipts Tax Rules, 1981, which have been published in the official Gazette on 31st January, 1981 ([1981] 128 ITR (St.) 169). This circular explains the main provisions of the Act and the Rules. Scope of the levy 2.1 The hotel-receipts tax will be payable by every person carrying on the business of a hotel wherein the room charges for residential accommodation provided to any person at any time during the previous year are rupees seventy five or more per day per individual. It may be mentioned that the provisions of this Act apply only in respect of hotels situated in India. The term "hotel" has been defined to include a building or part of a building where residential accommodation is, by way of business, provided for a monetary consideration. It should be noted that the definition of "hotel" is inclusive and not exhaustive. "Hotel" thus includes every place which the word signifies according to its natural import, as also every building or part of building in which residential accommodation is provided as a business activity, whether termed as a hotel, a tourist home, guest house, etc. The levy will extend to all such hotels wherein the charges for any room at any time during the previous year are not less than Rs.75 per day per individual. Where a person owns more than one hotel and all or any of them are covered under the provisions of this Act, such person will have to file one return of chargeable receipts in respect of all or such of the hotels owned by him. In other words, such person will not be required to file a separate return for each of the hotels which is governed by the provisions of this Act. The expression "room charges" has been defined to mean the charges for a unit of residential accommodation in a hotel and includes the charges for furniture, air-conditioner, refrigerator, radio, music, telephone, television and such other services as are normally included by a hotel in room rent, but does not include charges for food, drink and any services other than those referred to earlier. Under the Explanation to section 3, it has been provided that where the room charges are payable otherwise than on daily basis or per individual, then, in such a case, the room charges shall be computed as for a day and per individual on the basis of the period of occupation of the residential accommodation for which the charges are payable and the number of individuals ordinarily permitted to occupy such accommodation according to the rules and custom of the hotel. 2.2 In certain cases, composite charges are payable in respect of the residential accommodation and food. In such cases, the room charges included in such composite charge will be determined in the manner prescribed by rule 3. Rule 3 of the Hotel-Receipts Tax Rules provides that where a composite charge is payable in respect of residential accommodation and food, the room charges included therein will be determined by deducting the charges for food from the composite charge as under:- Items of food Per cent of composite charge attributable to food Breakfast 10 Breakfast and one meal 25 Breakfast and two meals 40 Where, in addition to the food charges, the hotel includes charges for beverages (other than alcoholic drinks) with or without snacks, or the composite charge contains charges for residential accommodation and beverages (other than alcoholic drinks) with snacks only, the provisions of rule 3 will not be applicable and the room charges will have to be determined by the Income-tax Officer on a reasonable basis under section 3(3) of the Act. 2.3 In certain cases, a composite charge is payable by the person availing of the hotel facilities in respect of the room charges, food, drink and other services or some of them. Further, in certain cases, the Income-tax Officer may come to the conclusion that the composite charge has been split up in such a way that charges for the residential accommodation has been understated and the charges for food, drink and other services are overstated in order to exclude the hotel from the purview of the Act. In both these cases, the Income-tax Officer has been empowered to determine the room charges on such reasonable basis as he may deem fit. 2.4 The hotel receipts tax is levied at the rate of 15 per cent. of the chargeable receipts of the previous year. The hotel-receipts tax will be payable in respect of the chargeable receipts of a hotel of the previous year relevant to every assessment year commencing on or after 1st April, 1981. For this purpose, the expression "chargeable receipts" has been defined to mean the total amount of all charges referred to in section 6 computed in the manner laid down in section 7. 2.5 The "chargeable receipts" of the previous year of an assessee will be the total amount of all charges received by, or accruing or arising to, the assessee in the previous year in connection with the provision of residential accommodation, food, drink and other services in the course of carrying on the business of a hotel. The chargeable receipts will also include the hotel-receipts tax collected by the assessee, sales tax, entertainment tax and tax on luxuries. It may be mentioned that where the provisions of the Act are applicable to any hotel, it is not only the charges for the provision of residential accommodation but also all other charges, such as, charges for food, drink and other services like sauna bath, swimming pool facilities, coffee shops, gymnasium, charges for using golf courses, tennis courts or transport facilities provided by the hotel, etc., will come within the purview of the chargeable receipts. Where, however, the total charges include service charges payable by the clients at a fixed percentage of the room charges or food charges, the question whether these service charges form part of chargeable receipts will depend upon the facts and circumstances of each case. In some cases, service charges are, under agreement with the employees of the hotel, collectable by the hotel to be distributed amongst the employees subject to deduction of breakage charges. In such a case, the component of service charges as reduced by breakage charges becomes the income of the employees by virtue of overriding title and that part of the service charge will not form part of the chargeable receipts. Similarly, any charges received by the hotel on behalf of any other person, such as, tour operators, or charges for use of electricity or telephones to be paid over to the authorities, will be excluded from the chargeable receipts to the extent the charges paid by the clients represent the actual cost of the facility and does not include any profit element of the hotel. Further, the chargeable receipts will also include charges for food supplied to airlines or other organisations even though these charges are not paid by persons using the hotel facilities. It has been clarified that if any such charges have been included in the chargeable receipts of any particular previous year as charges accruing or arising to the assessee during such previous year, such charges will not be again included in the chargeable receipts of any subsequent previous year in which they are actually received by him. 2.6 Section 7 provides for the computation of the chargeable receipts, sub-section (2) of section 7 provides that in computing the chargeable receipts of a previous year, the amount of charges received by or accruing or arising to the assessee before the expiry of one month from the end of the month in which the Act comes into force will not be taken into account. Since the Act has come into force in December, 1980, the chargeable receipts for any period prior to 1st February, 1981, will not be included in the chargeable receipts for the purpose of hotel-receipts tax. 2.7 Further, the chargeable receipts will be computed after allowing deduction in respect of the following:- (i) The amount of charges which is established to have become a bad debt during the relevant previous year. The deduction in respect of bad debts will be allowed only if the following conditions are satisfied, namely:- (a) the amount of such charges has been taken into account in computing the chargeable receipts of the assessee of any earlier previous year; (b) the amount is written off as irrecoverable in the accounts of the assessee for the relevant previous year; (ii) any amount payable by way of sales tax, entertainment tax or tax on luxuries in respect of any charges included in the chargeable receipts of the previous year; and (iii) the amount of hotel-receipts tax chargeable under the Act. It should be noted that no deductions other than the deduction on account of bad debts and the taxes referred to above are allowable in computing the chargeable receipts. [Sections 3.5 (Part), 6 and 7 of the Act] Concessional tax treatment in respect of receipts in foreign exchange. 3.1 The proviso to sub-section (1) of section 5 has provided for a rebate of 5 per cent. in respect of the charges received in foreign exchange as against the usual charge of 15 per cent. in respect of chargeable receipts received in Indian currency. The expressions "foreign exchange" and "Indian currency" will have the meanings respectively assigned to them in clauses (h) and (k) of section 2 of the Foreign Exchange Regulation Act, 1973. Under section 2(h) of that Act, the expression "foreign exchange" means foreign currency and includes- (i) all deposits, credits and balances payable in any foreign currency and any drafts, travellers' cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency; and (ii) any instrument payable, at the option of the drawee or holder thereof or any other party thereto, either in Indian currency or in foreign currency or partly in one and partly in the other. 3.2 The expression "Indian currency" as defined in section 2(k) of the Act means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one-rupee notes issued under section 28A of the Reserve Bank of India Act, 1934. In this connection, it may be mentioned that the special bank notes and special one-rupee notes issued under section 28A of the said Act are not legal tender in India. Further, where a special bank note on its face is expressed to be payable at a specified office or the branch of the bank, the obligation can be discharged only by the specified office or branch. Under rule 4 of the Hotel-Receipts Tax Rules, 1981, the payments made in Indian currency after its conversion from foreign exchange will, in the following cases and circumstances be regarded as payments made in foreign exchange, namely:- (1) Where the payment in respect of chargeable receipts of a hotel are made out of Indian currency which has been obtained by conversion of foreign exchange brought into India through an authorised dealer by a travel agent on behalf of a foreign tourist or a group of foreign tourists; (2) Where the payment in respect of chargeable receipts of the hotel has been made in the manner referred to in (1) above by an airline on behalf of a foreign tourist or a group of foreign tourists. 3.3 It is, however, necessary that the travel agent or the airline furnishes a certificate in Form No. 1 to the hotel at the time of making the payment with a view to availing of the concessional tax treatment. For the purpose of this rule, the expressions "airline" and "travel agent" respectively mean an airline or travel agent which holds a valid licence granted under section 32 of the Foreign Exchange Regulation Act, 1973. Further, the expression "authorised dealer" means a person for the time being authorised under section 6 of that Act to deal in foreign exchange. [Section 5(1) of the Act read with rule 4 of the Rules] Anti-avoidance measure 4.1 Where, under an arrangement made between a person carrying on the business of a hotel and any other person who is closely connected with him, any food, drink or other services is or are provided on the premises of the hotel by the latter, and the Income-tax Officer is of the view that this arrangement has been made with a view to enabling the former to avoid or reduce the liability to hotel-receipts tax, the person providing such food, drink, or other services will also be liable to hotel-receipts tax in respect of charges received by him. In other words, although such other person has not provided any residential accommodation to any person by way of business, he would still be regarded as an assessee for the purposes of the Act and all the proceedings will be taken against him as if he was the owner of a hotel to which the provisions of the Act apply. 4.2 For this purpose, a person will be deemed to be closely connected with a person carrying on the business of a hotel, if, in relation to the person carrying on such business he is the person referred to in clause (b) of section 40A(2) of the Income-tax Act. Further, for the purposes of this provision, food, drink or other services will be deemed to have been provided on the premises of the hotel if they are provided in any part of the building in which the hotel is situate or at any place appurtenant thereto. [Section 5(2) of the Act] Return of chargeable receipts 5.1 Section 8 of the Act contains provisions for the furnishing of return of chargeable receipts which are broadly on the lines of the provisions in section 7 of the Interest-tax Act, 1974. Every person who during the previous year carried on the business of a hotel to which the provisions of the Act apply, or is assessable in respect of the chargeable receipts of any other person in a representative capacity, is required to furnish voluntarily a return of chargeable receipts of the hotel of the relevant previous year before 30th June of the assessment year, or within a period of four months from the end of the previous year, whichever is later. The Income-tax Officer will also have the power to require any person who owns a hotel or who is chargeable to tax in respect of chargeable receipts of any other person in a representative capacity, by notice in writing, to furnish a return of the chargeable receipts in respect of the hotel within thirty days of the service of the notice. The time allowed for furnishing the return can be extended by the Income-tax Officer in appropriate cases. It will be open to the assessee to furnish at any time before the assessment is made, a return or a revised return even though the time allowed for furnishing the return may have expired. 5.1 The return of chargeable receipts will be in Form No. 2 prescribed under the Hotel-Receipts Tax Rules, 1981. [Section 8 of the Act] Self-assessment 6.1 Section 9 of the Act provides for the payment of hotel-receipts tax by the assessee on the basis of his own assessment. Where the assessee has furnished a return of chargeable receipts and the hotel-receipts tax payable on the basis of the return exceeds any hotel-receipts tax already paid for the relevant assessment year, he will be required to pay the excess before furnishing the return. 6.2 In case of default in payment of hotel-receipts tax or any part thereof on the basis of self-assessment, the assessee would be liable to pay penalty at the rate of 2 per cent. of such tax or part thereof for every month of default. Before levying the penalty, the Income-tax Officer will be required to give a reasonable opportunity to the assessee of being heard. 6.3 The assessee will be given credit for the hotel-receipts tax paid on self-assessment against his liability under the regular assessment. [Section 9 of the Act] Assessment 7.1 Section 10 of the Act lays down the procedure to be followed in a regular assessment. The provisions in section 10 are broadly on the lines of the provisions of section 8 of the Interest-tax Act, 1974. 7.2 The Income-tax Officer has been empowered to serve a notice on any person who has furnished a return of chargeable receipts or upon whom a notice has been served under section 8(2) (irrespective of whether a return has been furnished or not) requiring him to produce or cause to be produced such accounts, documents, or evidence as the Income-tax Officer may require for the purposes of the Act. The notice will specify a date on which the accounts, documents or evidence should be produced. It will be open to the Income-tax Officer to serve further notices from time to time requiring the production of accounts, documents, etc. After considering the evidence produced by the assessee and the relevant materials that the Income-tax Officer may have gathered, the Income-tax Officer will pass an order in writing, determining the chargeable receipts and the amount of the hotel-receipts tax payable by the assessee. 7.3 It may, however, be mentioned that the Income-tax Officer will pass an order under this section only in a case where the assessee has furnished the return of chargeable receipts. In a case where the return has not been furnished, the Income-tax Officer will be competent to complete the assessment on ex parte basis as discussed in paragraphs 8.1 and 8.2. [Section 10 of the Act] Best judgment assessment 8.1 Section 11 of the Act empowers the Income-tax Officer to make an assessment of the chargeable receipts to the best of his judgment in the following circumstances, namely:- (a) where the person has failed to make the return required by any notice given to him under section 8(2) and has not made a return or a revised return u/s. 8(3); or (b) where any person having made a return, has failed to comply with all the terms of a notice issued to him u/s. 10(1); or (c) the Income-tax Officer is not satisfied about the correctness or the completeness of the accounts of the assessee. 8.2 The Income-tax Officer is required to make a best judgment assessment after taking into account all the relevant material which he has gathered during the course of the assessment proceedings. The provisions of section 11 are in certain respects analogous to those of section 144 of the Income-tax Act. [Section 11 of the Act] Reopening of the best judgment assessment 9.1 Where an assessee has been assessed to hotel-receipts tax on the basis of a best judgment assessment under section 11, he can make an application to the Income-tax Officer within one month from the date of service of notice of demand issued to him, for the cancellation of the assessment if the following conditions are satisfied:- (i) he was prevented by sufficient cause from furnishing the return under section 8(2); or (ii) he did not receive the notice issued to him under section 10(1); or (iii) he did not have a reasonable opportunity to comply with or that he was prevented by sufficient cause from complying with the terms of the notice under section 10(1). 9.2 The Income-tax Officer is empowered to cancel the best judgment assessment if he is satisfied about the existence of any of the grounds referred to in the immediately preceding paragraph. Thereafter, the Income-tax Officer is required to make a fresh assessment in accordance with the provisions of section 10 or section 11. 9.3 The application made by the assessee for reopening of a best judgment assessment is required to be disposed of by the Income-tax Officer within a period of 90 days from the date of its receipt. However, in computing the period of 90 days, any delay in disposing of the application which is attributable to the assessee will be excluded. [Section 12 of the Act] Reassessment 10.1 Section 13 of the Act contains provisions for assessment or reassessment of chargeable receipts in cases where such receipts have escaped assessment. These provisions are broadly on the lines of the provisions in section 10 of the Interest-tax Act, 1974. 10.2 It should be noted that, as in the case of interest-tax, there is no limitation for issuing a notice under section 13 of the Act in cases where the assessee had failed to furnish a return of chargeable receipts under section 8 or where there was concealment of material facts on his part. In cases where there is no omission or failure on the part of the assessee, a notice under section 13 can be served within four years of the expiry of the relevant assessment year. [Section 13 of the Act] Advance payment of hotel-receipts tax 11.1 Section 14 of the Act provides for payment of hotel-receipts tax in advance during the financial year immediately preceding the assessment year. Under this provision, an assessee is required to pay advance tax in two instalments which will be respectively due on 15th September and 15th March of the financial year. For this purpose, he will be required to furnish an estimate of the instalment of hotel-receipts tax payable by him in advance in respect of the chargeable receipts accruing or arising during the first half or, as the case may be, the second half of the previous year. The estimate will be furnished in Form No.3 prescribed under the Hotel-Receipts Tax Rules, 1981, and the assessee will be required to pay the amount of hotel-receipts tax on the basis of such estimate on or before the relevant date. 11.2 In case of default in payment of any instalment of hotel-receipts tax payable in advance, the assessee shall be deemed to be an assessee in default in respect of such instalment and the arrears would he recoverable in accordance with the procedure laid down under the Income-tax Act for the recovery of income-tax. [Section 14 of the Act] Penalty for failure to furnish returns, comply with notices, concealment of chargeable receipts, etc. 12.1 Section 15 of the Act provides for imposition of the penalties for delay or default in furnishing of returns of chargeable receipts, non-compliance with notices under section 10(1) and for concealment of chargeable receipts. 12.2 In a case where the assessee, without reasonable cause, delays or defaults in furnishing the return of chargeable receipts under section 8(1) or section 8(2) or section 13 of the Act or where the return is not furnished in the required manner, the quantum of penalty imposable would be 2 per cent. of the 'assessed tax' for every month during which the default continued subject to a maximum of 50 per cent. of the 'assessed tax'. For this purpose, 'assessed tax' would mean hotel-receipts tax chargeable under the provisions of the Act as reduced by the hotel-receipts tax paid in advance under section 14. 12.3 Where the assessee fails, without reasonable cause, to comply with a notice under section 10(1) of the Act, the minimum penalty leviable will be 10 per cent. and the maximum 50 per cent. of the amount of hotel-receipts tax which would have been avoided if the return had been accepted as correct. 12.4 In a case where the assessee has concealed the particulars of his chargeable receipts or furnished inaccurate particulars of such receipts, the minimum penalty imposable will be equal to the amount of hotel-receipts tax which would have been avoided if the return had been accepted as correct and the maximum penalty will be equal to twice the said amount. Before imposing the penalty for concealment of particulars of chargeable receipts, however, the Income-tax Officer will obtain the prior approval of the Inspecting Assistant Commissioner. Before levying a penalty under section 15, the Income-tax Officer will have to hear the assessee or give him a reasonable opportunity of being heard. [Section 15 and 17 of the Act] Penalty for false estimate of, or failure to pay, hotel-receipts tax in advance 13.1 Section 16 of the Act provides for imposition of penalty for defaults relating to payment of hotel-receipts tax in advance. 13.2 In a case where the assessee furnishes under section 14 an estimate of hotel-receipts tax payable in advance by him which he knew or had reason to believe to be untrue, the minimum penalty imposable will be equal to 10 per cent. of the amount by which the hotel-receipts tax paid in advance during the financial year immediately preceding the assessment year falls short of 85 per cent. of the hotel-receipts tax chargeable under the provisions of the Act and the maximum penalty will be equal to one and one-half times of such shortfall. 13.3 In case of default in furnishing the estimates of hotel-receipts tax the minimum penalty will be equal to 10 per cent. of the amount equal to 85 per cent. of the hotel-receipts tax chargeable under the provisions of the Act and the maximum penalty will be equal to one and one-half times of 85 per cent. of the hotel-receipts tax so chargeable. 13.4 Before imposing the penalty under section 16, the Income-tax Officer will have to hear the assessee or give him a reasonable opportunity of being heard. [Sections 16 17 (part) of the Act] Appeals, Revisions, Rectifications and Reference Applications 14.4 The provisions relating to appeals, revisions, rectifications and reference applications in respect of hotel-receipts tax are broadly similar to the corresponding provisions of the Interest-tax Act, 1974. 14.2 The Hotel-Receipts Tax Rules, 1980, have prescribed the following forms for presentation of appeals, etc (a) Form No. 4 for appeal to the Commissioner of Income-tax (Appeals) under section 18 of the Act; (b) Form No. 5 for appeal to the Appellate Tribunal against the order of the Commissioner of Income-tax (Appeals) or Commissioner of Income-tax; (c) Form No. 6 for filing a memorandum of cross-objections to the Appellate Tribunal. [Sections 18, 19, 20, 22, 23 and 24 (Pt.) of the Act] Hotel-Receipts Tax to be deductible in computing taxable income under the Income-tax Act. 15. The hotel-receipts tax payable by a person owning a hotel to which the provisions of this Act apply for any assessment year will be deductible in computing the income of the hotel chargeable under that Act under the head "Profits and gains of business or profession" for that assessment year. [Section 21 of the Act] Recovery of hotel-receipts tax, penalty, etc. 16.1 The hotel-receipts tax or penalty levied under the Act will be recovered in the same manner as arrears of income-tax. For this purpose, the provisions relating to collection and recovery of the income-tax have been referentially applied to the proceedings under the Act. 16.2 Where any tax, penalty or fine or any other sum is payable in consequence of any order passed under the Act, the Income-tax Officer will be required to serve a notice on the assessee in Form No. 7 prescribed under the Hotel-Receipts Tax Rules, 1981. 16.3 The provisions of sections 237 to 242, 244 and 245 relating to refunds under the Income-tax Act have also been applied to the proceedings under the Act. An application for refund under the Act will, however, be filed in Form No. 8 prescribed under the Hotel-Receipts Tax Rules, 1981. [Sections 24 (Pt.) of the Act] Income-tax papers to be available for the purposes of the Act 17. Any information contained in the income-tax records of the assessee will be available for the purposes of the Act. Likewise, the information contained in the hotel-receipts tax records will be available for the purposes of the Income-tax Act. [Section 25 of the Act] Prosecution and punishment for offences 18.1 Section 26 makes a wilful attempt to evade any tax, penalty or interest chargeable or imposable under the Act or to evade the payment of such tax, penalty or interest punishable under the law. Wilful attempt as noted above includes a case where any person- (a) has in possession or control of any books of account or other documents (being books of account or other documents relevant to any proceeding under the Act) containing a false entry or statement; or (b) makes or causes to be made any false entry in such books of account or other documents; or (c) wilfully omits or causes to be omitted any entry or statement in such books of account or other documents; or (d) causes any other circumstances to exist which will have the effect of enabling such person to evade any tax or payment thereof. Where the amount sought to be evaded through wilful attempt exceeds Rs. 1 lakh, the punishment will be rigorous imprisonment for a minimum term of six months and a maximum term of 7 years and fine. In any other case, the punishment will be rigorous imprisonment for a minimum term of three months and maximum term of three years and fine. Punishment for wilful attempt to evade the payment of tax, penalty or interest shall be rigorous imprisonment for a minimum term of three months and maximum term of three years and also liability to fine, at the discretion of the court. 18.2 Section 27 provides for the punishment for wilful failure to furnish returns of chargeable receipts under section 8(1) or in response to notices under sub-section (2) of section 8 or section 13. The punishment under this section will depend on the amount of tax which would have been evaded if the failure had not been discovered. Where the amount of such tax exceeds Rs. 1 lakh, the punishment shall be rigorous imprisonment for a minimum term of six months and a maximum term of seven years and fine and, in any other case, rigorous imprisonment for a minimum term of three months and a maximum term of three years and fine. These provisions will not apply if the return is furnished before the end of the relevant assessment year or if the tax payable on the chargeable receipts on assessment as reduced by advance tax paid, if any, does not exceed Rs. 3,000. 18.3 Section 28 provides that in case of failure of an assessee to produce books of account, documents, etc., that may be called for by the Income-tax Officer by a notice issued under section 10(1), the assessee shall be liable to punishment with rigorous imprisonment for a term which may extend to one year or with fine or with both. 18.4 Section 29 provides for the punishment for a false verification in a statement or for delivery of a false account or statement. Where the amount of tax which would have been evaded if the statement of account had been accepted as true exceeds Rs. 1 lakh, the punishment shall be rigorous imprisonment for a minimum term of six months and a maximum term of seven years and fine. In any other case, punishment shall be rigorous imprisonment for a minimum term of three months and a maximum term of three years and fine. 18.5 Section 30 provides for the punishment for abetment in making and delivery of a false account, statement or declaration relating to the chargeable receipts as also the abetment of wilful attempt to evade tax. Under this provision, the abetment of the aforesaid offence in cases where the amount of tax, penalty or interest which would have been evaded if the account, statement or declaration had been accepted as true, or which is wilfully attempted to be evaded exceeds Rs. 1 lakh, the punishment shall be rigorous imprisonment for a minimum period of six months and a maximum period of seven years and fine. In any other case, the punishment shall be rigorous imprisonment for a minimum term of three months and a maximum term of three years and fine. 18.6 Section 31 provides that where a person who has been convicted of an offence under section 26(1) or section 27 or section 29 or section 30 is again convicted for an offence under any of these provisions, he shall be punishable for the second and every subsequent offence with rigorous imprisonment for a minimum term of six months and a maximum term of seven years and fine. 18.7 Section 32 provides that notwithstanding anything contained in the provisions of the Code of Criminal Procedure, 1973, the offence referred to in sections 26, 27, 29 or 30 shall be deemed to be non-cognizable within the meaning of that Code. 18.8 Section 33 provides that no person shall be proceeded against for any offence under section 26, section 27, section 28, section 29 or section 30 or for any offence under the Indian Penal Code relating to any matter connected with or arising out of this Act, except at the instance of the Commissioner. However, the Commissioner has been empowered to compound any offence punishable under any of the aforesaid sections either before or after the institution of proceedings. [Sections 26 to 33 of the Act] Powers to make rules and remove difficulties 19.1 The Central Board of Direct Taxes has been empowered to make rules for carrying out the purposes of the Act. The power to make rules will, on the first occasion of the exercise thereof, be available for making rules with retrospective effect also, so, however, that no retrospective effect will be given from a date earlier than the coming into force of the Act. 19.2 The Central Government have been empowered to make an order for the removal of any difficulty that may arise in the operation of the Act provided the order is not inconsistent with the provisions thereof. This power will be exercisable during the period of two years from the coming into force of the Act, that is, before 8th December, 1982. [Section 34 and 36 of the Act] Power to exempt 20. The Central Government has been empowered to exempt any hotel or any class of hotel from the levy of hotel-receipts tax where it is satisfied that it is necessary or expedient to do so either in the public interest or having regard to the peculiar circumstances of the case. [Section 35 of the Act] Consequential amendment in other enactments 21.1 With a view to enabling the Board to administer the Act, the Central Boards of Revenue Act, 1963, has been amended so as to include the hotel-receipts tax in the list of direct taxes. 21.2 The Economic Offences (Inapplicability of Limitation) Act, 1974, has been amended so as to make provision as to limitation contained in Chapter XXXVI in the new Code of Criminal Procedure inapplicable to offences under the Act. [Section 37 of the Act] S.N. Shende, Director, Central Board of Direct Taxes.