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TMI Blog1994 (11) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... for any unit of residential accommodation at the time of the incurring of such expenditure are four hundred rupees or more per day per individual. (2) Where a composite charge is payable in respect of residential accommodation and food, the room charges included therein shall be determined in the prescribed manner. (3) . . . . " It was provided by section 4 that the tax was 20 per cent. of the chargeable expenditure. Section 5 contained the meaning of " chargeable expenditure ", section 7 provided that in respect of a hotel in relation to which chargeable expenditure was incurred, the hotelier was responsible for collection, section 15 dealt with the penalty for failure to collect or pay the expenditure-tax. The constitutionality of the Act fell for consideration before a Consti tution Bench of the Supreme Court in Federation of Hotel and Restaurant Association of India v. Union of India [1989] 178 ITR 97. On three grounds the Act was attacked : (i) In its true nature and character, it is not an Act relating to expenditure-tax, but in pith and substance, it is a tax on luxuries falling within entry 62 of List II of the Seventh Schedule or a tax envisaged in entry 54 of Lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns the collection and recovery of expenditure-tax, sub-section (1) deals with chargeable expenditure incurred in a hotel. Sub-section (2) says : " (2) where any chargeable expenditure is incurred in a restaurant referred to in clause (2) of section 3 in relation to any services specified in clause (2) of section 5 and where such services are,--- (a) provided by the restaurant, the person who carries on the business of such restaurant ; and (b) provided by the other person, such other person, shall collect the expenditure-tax at the rate specified in clause (b) of section 4. " Sub-section (3) mandates that the tax collected during any calender month in accordance with the provisions of sub-sections (1) and (2) shall be paid to the credit of the Central Government by the 10th of the month immediately following the said calendar month. Sub-section (4) lays down : " Any person responsible for collecting the tax, who fails to collect the tax in accordance with the provisions of sub-section (1) or sub-section (2) shall, notwithstanding such failure, be liable to pay the tax to the credit of the Central Government in accordance with the provisions of sub-section (3). " Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hotels and restaurants ensure a pollution-free atmosphere. The petitioner in Writ Petition No. 14175 of 1991 is a young practising advocate, a bachelor living in a room taken on rent, in Puthlibowli area of Hyderabad city. According to his affidavit filed in support of the writ petition, he went to Shanbagh Hotel, Basheer Bagh, on October 21, 1991, and ordered food and also a parcel of four rotis. When he checked up the bill, he found that the cost was increased by Rs. 4.60 and on enquiry, he was told that the addition was because of the expenditure-tax imposed with effect from October 1, 1991. There are two portions in the hotel, one is air-conditioned and other an ordinary one and the food he consumed was in the ordinary section. Sri Firdos, appearing for the petitioner, says that collection of tax from customers who are not given the facility of airconditioning is unreasonable. Although Sri Moorthy has not seriously pressed the contention relating to Parliament's lack of legislative competence, since the other counsel have reiterated the same contention we are inclined briefly to advert to this. As the tax is imposed and collected under the impugned provisions only in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure aspect of the transaction fell within the Union power and is clearly distinguishable from the legislative competence to impose a tax thereon, the contention based on want of legislative power was negatived. In view of this authoritative pronouncement on the question of legislative competence of Parliament to enact a law imposing a tax on expenditure, we unhesitatingly reject the contention relating to the competence of Parliament. The second contention is based on article 14 ; air-conditioned restaurants unconnected with any hotel are brought within the sweep of the Act while the separate expenditure incurred in air-conditioned restaurants situated within the premises of a hotel where the daily room tariff for residential accommodation is more than Rs. 400 is excluded. This contention is based on a misapprehension. Even prior to the amendment in question such type of expenditure was brought to tax under the principal Act of 1987. Sub-section (1) of section 3 says that this Act shall apply in relation to any chargeable expenditure incurred in a hotel wherein the room charges for any unit of residential accommodation at the time of incurring of such expenditure are four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary even for ordinary people in order to enjoy the facility of pollution-free atmosphere and if expenditure-tax is levied the persons who would otherwise enjoy that facility would be deprived of it and as the right to live guaranteed under article 21 includes the right to live with dignity and comfort, the impugned legislation is bad in law, in our considered view, are based upon imaginary and fanciful notions of the content of the right guaranteed under article 21. By no stretch of reasoning can it be said that in our society air-conditioned restaurants but for the expenditure tax would have been within the reach of ordinary people. The object of the Act is to curb unproductive expenditure. It is the potentiality of the individuals to incur expenditure in air-conditioned restaurants that is brought to tax. It matters little whether at a particular point of time because of power failure the restaurant was not in a position to provide the facility of air-conditioning. People of higher economic status alone can afford to go to air-conditioned restaurants. The possibility of enjoying air-conditioning facility even if such facility is not available by reason of power failure is subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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