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TMI Blog2017 (1) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Act that if the tariff is more than Rs. 1000/- per day, luxury tax @ 8% was leviable, however, if the tariff exceeded Rs. 3000/- per day, the tax is chargeable @ 10%. It is the claim of Revenue that on the basis of a survey conducted and on perusal of the profit and loss account and other details gathered it was noticed that the assessee is receiving income by way of rental of the rooms occupied by the persons staying in hotel and in addition to that the assessee had also received certain amounts during the assessment years on account of renting/leasing out of "lawn" for the purposes of marriage parties and for other occasions. It was found by the Assessing Officer that there was an under assessment as the assessee had not disclosed luxury tax payable on the renting of "lawn". A notice was said to have been issued to the respondent assessee and it is observed by the AO that the assessee was granted an opportunity by a show cause notice and though notice was duly served on the respondent assessee but none appeared on the given date and accordingly taking into consideration the material available on record and perusal by the AO of the profit and loss account, levied tax @ 8% on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hotel' are quite clear and admittedly the respondent is a luxury hotel. Learned counsel contended that the definition of "business" is wide enough to cover any other service in connection with or ancillary to such activity of providing residential accommodation by a hotelier for monetary consideration. He contends that hotel includes residential accommodation along with lawns and the definition of 'luxuries' provided in hotel means - accommodation (such as room or other place or lawn etc.), which should cover the renting of the lawn as well. Learned counsel contended that only prospective 9.3.2007 to cover all other open lands which were being let/leased out for the purposes of marriage, functions or otherwise were taken into tax net and did not affect the case of assessee because admittedly it is a luxury hotel, charging more than Rs. 1000/- per day and the reasoning reached by the AO as well as the DC(A) is well reasoned and thus supported the order of both the authorities below. Learned counsel also contended that not only interest is leviable but even penalty was just and proper as the assessee had evaded payment of tax and once there is a finding that there was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tel and which is basically for the persons who come and stay and the lawn under dispute is entirely different, has a separate access and there is no inter connection or connectivity with hotel and persons who takes lawn separately, do not enter the hotel premises or otherwise. Learned counsel also drew analogy of the pre-amended and post-amended positions and contended that after 9.3.2007 covering of the lawn or open lands were enlarged by the Act and, therefore, these proceedings being prior to 9.3.2007, the Tax Board found as a finding of fact that luxury tax was not leviable and thus supported the order of Tax Board. Learned counsel contended that there is no question of charging interest or penalty u/s 21(5) of the Act as it is a case of reopening and the Tax Board was well justified in deleting the penalty when the very levy of the said tax was deleted. Learned counsel also contended that the AO was not able to prove as to what was the evasion in this regard, and relied upon following judgments :- Cooperative Company Ltd. v. Commissioner of Trade Tax, U.P. (2007) 4 SCC 480, Virtual Soft Systems Ltd. v. CIT, Delhi-I (2007) 9 SCC 665, State of Uttar Pradesh & Others v. Aryaver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of respondent prior to Finance Act 2007 i.e. before 09.03.2007. (ii) Whether in the facts and circumstances of the case the Rajasthan Tax Board was justified in law in deleting tax, interest and penalty under the Rajasthan Tax on Luxuries (in Hotel and Lodging Houses) Act 1990 holding that the tax could not be levied as the definition of "Hotel" and "Business" was amended w.e.f. 9.3.2007 without appreciating that the tax was leviable even prior to that date. (iii) Whether in the facts and circumstances of the case, the Rajasthan Tax Board was justified in deleting the tax, interest and penalty without appreciating the provision of the Act including definition of luxuries as contemplated u/s 2(i) of the Act. 11. Insofar as reopening of the assessment is concerned, all the three authorities have come to a concurrent finding that the AO was justified in issuing notice u/s 17(10) of the Act, which gives power to the AO to reassess an assessee and it prescribes "for any reason", and admittedly on the basis of inspection / survey the AO gathered further information from the books of account and in particular profit and loss account, that the assessee had received in additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, by a hotelier for monetary consideration, whether or not such activity of providing residential accommodation is carried on with motive to make gain or profit and "business" includes the activity of providing residential accommodation or any place for the purpose of organizing parties, ceremonies or functions and any other service in connection with, or ancillary to, such activities for monetary consideration, whether or not such activities are carried on with motive to make gain or profit and whether or not any gain or profit accrues from such activity: whether or not any gain or profit accrues from such activities; (g) "hotel" includes a residential accommodation along with the lawns therefore, a lodging house, an inn, a public house or a building or part of a building, where a residential accommodation is provided by way of business; "hotel" includes a residential accommodation along with the lawns therefore, a lodging house, an inn, a public house or a building or part of a building or any place, where a residential accommodation or a space for the purpose of organizing parties, ceremonies or functions is provided by way of business; (i) "Luxuries provided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets, namely Hotel and Lawn are owned and possessed by the assessee. On perusal of the definition of "hotel" as given in subclause (g) supra, a hotel includes residential accommodation along with "lawns", therefore, once a lawn having been prescribed as a part of the hotel, the assessee was certainly liable to pay Luxury Tax on giving lawns on hire to the various persons for marriage and for diverse other purposes. 15. On perusal of sub-clause (i) supra, which provides "luxuries provided in the hotel", includes accommodation such as room or other place or lawn etc., by whatever name called and other services, in my view should also cover the case of assessee in the same footing, and what should be a luxury, is that the room charges in the hotel is per day or part thereof is Rs. 1000/- or more and again in Explanation (ii) in subclause (i), includes lawn to be part of room, though this may be the lawn which is said to be attached to the hotel. Sub-clause (u) defines "turnover" to include aggregate of the amounts of monetary consideration receivable by the hotelier in respect of luxuries provided in a hotel and the receipts by way of lawn is also a turnover of the assessee. 16. Taki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly well that it has been receiving huge amounts of rent on hiring lawns, and admittedly it was charging Rs. 1000/- per day, then the assessee was certainly required to pay Luxury Tax which was due against the assessee and such being a case of evasion of tax clearly proved that u/s 21(5) of the Act, the AO was well justified in imposing penalty as the words used is "a hotelier is found to evade tax in any form or any method" should cover a case like this and the Tax Board was unjustified in deleting the same. 19. Admittedly, it is a case of reassessment and the original assessment was completed and thereafter on the basis of material gathered, the case was reopened and it is not a case of imposition of penalty as material was available before the AO even during the course of the return originally having been submitted. The assessee had a reasonable apprehension and bona fide belief that insofar as renting of lawns is concerned, it will affect only on and from 9.3.2007 and this being a debatable issue, at-least penalty in my view is not leviable and has rightly been deleted by the Tax Board. 20. Accordingly, in my view, insofar as the Luxury Tax liability and interest are concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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