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TMI Blog2016 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... 996. The petitioner is an association of Banquet Hall Owners. According to its pleadings a large majority of its members are registered dealers under the Delhi VAT Act, 2004. The existing VAT regime in Delhi requires dealers who report return of an annual turnover of more than Rs. 20 lakhs, to comply with its provisions and file quarterly returns purporting the details of the transaction for the particular periods. The grievance in these proceedings is that the Delhi Tax on Luxury Act, 1996 (the Luxury Act), which according to the petitioners clearly bars levy and recovery of luxury tax "in respect of turnover of receipts for supply of food, drinks and goods such as cosmetics, medicines, nutritional supplements etc. on the sale of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the banquet hall that also includes air cooling, air conditioning and other furniture etc., the rule cannot be characterised as ultravires. It is further submitted that though VAT amounts are excluded by virtue of Section 3 (5), its language states that tax amount would not be levied to the extent "turnover of receipts for supply of food, drinks and goods"; however, the remaining turnover of receipts is liable to luxury tax. It is submitted that in effect Rule 3 (2) (b) (i) and (ii) constitute dimensions of the mechanism for recovery of luxury tax and cannot be per se characterised as ultravires. 3. The revenue elaborates that the impugned rule only clarifies the peculiar situation where a consolidated bill is charged by banquet hal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditioning, chairs, tables, linen, utensils and vessels, shamiyana, tent, pavilion, electricity, water, fuel interior or exterior decoration, music, orchestra, live telecast and the like; (ii) services provided in a gymnasium or health club, which includes services of trainer or personal trainer, steam, sauna and the like; (iii) accommodation and other services provided in a hotel, the rate or charges for which, including the charges for air cooling, air conditioning, radio, music, extra beds, television and the like, is seven hundred fifty rupees per room per day or more whether such charges are received collectively or separately per room per day. (iv) facilities or services provided in a spa which includes beauty treatment, manicure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wnership thereof, subjects proprietor and firm to the levy of Luxury Tax. 8. Rule 3 of the Luxuries Act reads as follow: 3. Incidence of levy of tax and maintenance of accounts (1) The proprietor shall be liable for collection and payment of tax for luxury as defined under clause (i) of Section 2 of the Act, provided at the establishment to a customer either directly or indirectly through any person or agency. (2) The tax shall be levied and collected by a proprietor- (a) in respect of luxury provided in the establishment (other than banquet hall) on the tariff rate, (b) in respect of luxury provided in a banquet hall in the manner prescribed below- (i) where the hiring charges hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner or any officer duly authorized by him in this behalf" 9. It is evident that the levy of luxury tax is upon all those incidents which are defined as luxury under Section 2 (i). The provisions of the Act lay out the manner of recovery which is through an obligation on the part of the proprietor or firms which provides luxury to register itself and collect luxury tax charges, from its customers in respect of the luxury service provided by it. At the same time Section 3 (5) incorporates an important exclusionary principle. Given that the legislature was conscious of an element of overlap in the broad nature of the levy and also the circumstance that the overlap can be in respect of two different heads of taxation which are with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the context of conflict between two legislatures - classically Federal & State or Provincial Legislatures. It has never been resorted to in case of legislation by the State under two heads. It is ofcourse quite likely that one activity may itself lead to two taxing incidents. But what is confronted here is the setting up of a subordinate legislation against a parent enactment. It is here that the general principle that rules can only supplement but never supplant the provisions of the Act is squarely applied. Whilst the general submissions of the revenue with respect to autonomy as regards the mechanism and the policy connected with it for the recovery are undoubtedly correct, in this instance its submission that such mechanism in nowhere c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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