9911796707
TMI Blog2014 (9) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... bject of providing leisure and hospitality services. The petitioner is the owner of a hotel/transit quarters, providing residential accommodation to the trainees/new recruits of Tata Sons Limited, another incorporated company, acting through its division Tata Consultancy Services [for brevity "TCS"]. In addition to the provision of accommodation, the petitioner maintains the said building, owned by the petitioner and provides amenities and facilities to those accommodated therein. 3. The penalty proceedings were commenced and continued on the basis of an inspection made by the CTO (LT) in the premises and verification of the various agreements entered into by the petitioner with the TCS. The agreements so verified, have been produced by the State in its counter affidavit. The terms of the various agreements indicate that the petitioner entered into an agreement with TCS to construct a building, initially to accommodate 300 persons in 150 rooms, later extended to 350 persons in 175 rooms. Non-interest bearing refundable amounts were passed on by TCS, on the basis of the agreements, to the petitioner, on condition of the petitioner leasing out the building for the aforesaid purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and other amenities and services provided thereon. Such definition is qualified, insofar as the same being applicable only when the amount of charges for accommodation for residence (rent) and other amenities and services provided, excluding charges for food and liquor is Rs. 150/- per day or more. 7. Such qualification has undergone changes and the one noticed herein is that introduced by the Kerala Finance Act, 2006 made effective from 01.07.2006. The changes were more in the way of enhancement of the amount provided; in such qualification. From 1997 to 2002, the minimum amount, so prescribed, was Rs. 75/-. A rate of 7.5% was the levy, for the rooms in which the rent and other charges ranges from Rs. 75/- to Rs. 500/- and 15% for rooms having rent and other charges of more than Rs. 500/-. Further, the provision as it existed between 1997 and 2002 provides the rent and other charges per day "per person". In 2002, by Act 7, though the rental limits were maintained, the stipulation per person was substituted with "per room". In 2004, the rate prescribed for rooms above Rs. 500/- was reduced to 10%. By Act 57/2007, the rent provided in the definition was increased to Rs. 200/- wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed and the last being (iv) the measure or value to which the rate will be applied for computing the tax liability. 10. The Act of 1976 indicates the character of imposition to be on the services which could be defined as "luxury", meaning ministering comfort and pleasure and in the case of a hotel, the accommodation for residence and the amenities and services provided therein. As is clear from section 4, the levy is on the "luxury provided" and collection "from the person enjoying the luxury". By sub-section (3) of Section 4, the proprietor of any establishment coming within the definition of a "hotel", is obliged to make such collection and pay it over to the Government. 11. The taxable event, hence, is the services offered and the receipt of consideration. The liability though on the resident, in the case of a hotel, as statutorily provided; the proprietor has the onus and obligation to collect it. The rate for the various years have been indicated earlier. The measure upon which such rates are applicable, is the rent per room, per day. The measure so provided cannot decide the levy; nor the person who is liable under the Act which is provided under the charging Section. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... room/rooms provided are of different standards or quality, attracting a lesser charge for acommodation and facilities. 15. The further contention made by the learned counsel for the assessee is that, if the charges for accommodation being lease-rent and the charges for amenities and facilities are treated separately, then the petitioner would be saved from the rigour of the enactment. As a matter of fact, the assessee, being an incorporated company, leases out such building to another incorporated company and also provides facilities and amenities in the building, for the residents housed therein. Though separate agreements provide for lease-rent and charges for amenities, the levy as per the Act of 1976 provides for combining the same to decide the coverage under the Act. 16. The learned counsel also would submit that the situation would have been different if one entity had been the lessor and another entity the provider of amenities and facilities. Then there would arise a question as to whether these could be combined or each levy should go beyond the assessable limit or alternatively the levy be apportioned to the lessor and the provider, if the combined charges go above the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vealed from the construction agreement, providing for lease for the purpose of accommodation of trainees and provision for amenities and facilities to such inmates. The fact is that the assessee did not obtain registration despite the transaction being clearly covered under the Act of 1976. This is a contumacious conduct, which attracts penalty under Section 17 of the Act. 19. However, this Court is also of the opinion that the penalty levied at the maximum rate of double the tax evaded, may not be proper in the facts and circumstances of the case. Hence, the penalty imposed for the respective years and the two months in the last year are modified and confined to the extent of the tax liability. There is also considerable force in the argument of the learned counsel for the petitioner that between 1997 and 2002, the measure on which the rate applied is to be decided, per person per day. Hence, the CTO is directed to re-do the assessment for the period upto 31.03.2002, computing the rental charges per person per day, since all the rooms provided in the petitioner's building is of double occupancy. The quantum of penalty levied would have to be as per the directions herein above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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