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TMI Blog1998 (11) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for registration under section 4-A of the Act. The petitioner is registered under the Karnataka Sales Tax Act, 1957. It is stated that the provisions of 1979 Act are not applicable. The Act of 1979 came into force on June 1, 1979 providing for levy and collection of tax on luxuries provided in hotels and lodging houses. The word hotel has been defined in section 2(4) of the Act which is as under: hotel means a building or part of a building where lodging accommodation, with or without board is by way of business provided for a monetary consideration, and includes a lodging house. Luxury provided in a hotel is defined in section 2(5) as under: luxury provided in a hotel means accommodation for lodging provided in a hotel, the rate of charges for which (including charges for air-conditioning, telephone, television, radio, music, extra beds and other amenities for which charges are compulsorily payable, but excluding charges for food and drinks) is not less than thirty-five rupees per room per day. Section 6 refers to assessment and collection of tax. Section 4-A relates to registration. Section 7-A relates to assessment of escaped tax and under section 17 po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business or was indulging in commercial activity. In this case the division Bench decision given in the case of Deputy Commissioner of Commercial Taxes v. Sri Thirumagal Mills Limited [1967] 20 STC 287 (Mad.) was referred, where it was observed that the words in connection with or incidental or ancillary to in the second part of the definition of business still preserve or retain the requisite that the transaction should be in the course of business understood in a commercial sense. The intention is not to bring into the tax net a transaction of sale or purchase which is not of a commercial character. Reliance is also placed on the judgment given in the case of Sports Club of Gujarat Ltd. v. Commissioner of Sales Tax, Gujarat, Ahmedabad [1975] 36 STC 511 (Guj) wherein it was observed: Even though supply of such catering facilities by the club to its members, which ordinarily would be under a contract of service, would be deemed to be a sale, as all doubt on that score is set at rest because of this inclusive definition of section 2(28), but in order to satisfy the definition of a dealer the club must be proved to have undertaken business of such sale of goods or such su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preting the expression business , it was observed thus: The expression business though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profitmotive, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profit-motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer . 9.. Learned counsel for the respondents relied on the decision given by the apex Court in the case of Deputy Commercial Tax Officer, Saidapet, Madras v. Enfield India Ltd. Co-operative Canteen Ltd. [1968] 21 STC 317, wherein it was observed as under: From the mere fact that the society suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monetary consideration and includes a lodging house. If all these provisions are taken into consideration, the result would be that liability has been fixed in respect of any luxury provided in a hotel. Legislature has contemplated hotel where lodging accommodation with or without board by way of business is provided for monetary consideration which includes lodging house. Even luxury provided in a hotel refers to the accommodation for lodging provided in a hotel and thus unless the luxury sought to be taxed is in respect of a hotel, there is no charge created by section 3. Lodging house has been included in the definition of hotel . Lodging facility which is the essential requisite for considering the building as a hotel may be with or without board. This facility of providing lodging accommodation must be by way of business. 11.. Hotel has been defined in Law Lexicon, page 531, as under: Hotel.-Ordinarily a hotel connotes the business carried on by a person, though sometimes the term is also used with regard to premises, but it is only owing to their association with the original business carried on by them. Where a person purchased the materials and gardens in which a hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocured only at an inn . In that case a lodging house-keeper who procured and supplied, at a small profit, provisions for her lodgers-such provisions being kept separately for the individuals for whom they were respectively procured-was the keeper of an hotel ; and in Gibson v. King 12 LJ Ex. 9 it was held that a boarding house was a fortiori, an hotel within the definition. In Devonshire v. Simmons (39 S.J. 60) hotel was contrasted with Public House . (3) A hotel-connotes a building in which the hotel business is carried on, to which the public are entitled to resort for accommodation and refreshment, and to which the edict nautaecaupones would apply. A hotel, so defined, is often contrasted with a lodging house, sometimes dubbed a guest house or a private hotel, in which control may be retained over the choice of lodgers to be admitted, and in which there is no obligation to the public generally [per Lord Thankerton in Railway Assessment Authority v. Great Western Railway (1948) LJR 244] (4) I think that the word hotel always imports a house where travellers are taken into lodge; and a licensed for the sale (inter alia) of beer [per Williams L.J. Formby v. Bark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eshment such as tea or coffee is supplied, and neither a mere tavern nor a mere coffee-house is an inn. Nor is a mere restaurant an inn. A place under the same roof as a hotel, with a separate entrance and being in fact a shop in which spirits are sold across a counter is not an inn, even though the hotel is itself an inn. A house which is not a hotel within the statutory definition cannot be an inn although it may have certain characteristics of an inn at common law and may for other purposes be a hotel. A temperance hotel may be an inn just as well as a hotel licensed for the sale of intoxicating liquor. On the other hand, a residential hotel where suites of apartments or single rooms are let to lodgers, who are also provided with food if they desire it, but in respect of which no licence is held for the sale of intoxicating liquor, and where no one other than a lodger is supplied with food, although for some purposes it is a hotel, is not an inn. Similarly, a private hotel for the reception of persons who desire to reside there does not appear to be an inn [21 Halsbury s Laws (3rd Edn) 442-444] Residential hotel means premises used for the reception of guests and travellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2] 87 STC 227, held that after the Forty-sixth Amendment of the Constitution, the clubs which supply food and drinks, to the members and guests of the members who attend the club would be a dealer and the question of supply on no-profit or no-loss basis was irrelevant. In Wainganga Club v. State of Madhya Pradesh [1979] 44 STC 268 (MP) unamended definition of business was considered and it was observed that in taxing statutes, the word business is in the sense of an occupation or profession, which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profitmotive and not for sport or pleasure. In Bengal Rowing Club v. Commissioner of Commercial Taxes, West Bengal [1993] 88 STC 389 (WBTT) where supplies were not restricted to members only, but even were made to non-members, the club was held to be a dealer . 12.. The charge is on the luxury provided in a hotel. The word hotel refers to a building or part of a building where accommodation is provided. Charging provisions have to be strictly construed. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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