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TMI Blog2021 (3) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... n to come to the conclusion as to the rate at which the accommodation is provided by the respondent. In other words, the reasoning of its Tribunal rightly points out the mistakes of authority under the Act in levy penalty. Petition is rejected on the ground that in the case on hand, no assessment determining the obligation/liability under the Luxuries Act is made, penalty proceedings are taken up, and by notionally calculating the amount the penalty is imposed. The Tribunal, has given liberty to department to first proceed to initiate assessment proceedings in accordance with law, subject to the period of limitation, if sufficient materials are available for doing so and consequently penalty proceedings could be contemplated. Petition dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer under the Luxuries Act had imposed the following penalty on the respondent by treating 70% of the treatment charges as representing luxury or service provided by the respondent. "(2012-13) - ₹ 6,02,900/- (2013-14) - ₹ 7,38,714/- (2014-15) - ₹ 6,62,500/- " The Deputy Commissioner (Appeals) on appeal by respondent treated 30% of treatment charges as charges towards amenities and services under Section 2(fb) of the Luxuries Act. The respondent filed Tax Appeal Nos.86, 87, and 88 of 2018 before the Tribunal. The Tribunal through the common order impugned in the petitions allowed the appeals filed by the respondent. Hence the petitions 5. The assessing officer noted that the respondent was provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has submitted an untrue or incorrect return; or (b) has failed to comply with all or any of the terms of any notice issued to him by or under the provisions of this Act or the rules made thereunder or; (c) has prevented or obstructed inspection, entry search or seizure by any officer, or (d) has acted in contravention of the provisions of this Act or any rules made thereunder, for the contravention of which no express provision or payment of penalty or punishment is made by this Act, such authority may direct that such person shall pay, by way of penalty, an amount not exceeding twice the amount of luxury tax or other amount sought to be avoid where it is practicable to quantity such evasion, or, an amount not exceeding five thousan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible. The Division Bench of this Court referred to the judgment of the apex Court in State of Rajasthan v. Rajasthan Chemists Association 2006 (6) SCC 773. The operative portion of the judgment reads thus: "The subject of tax being sale, it was held, the measure of tax for the purpose of quantification must retain the nexus with sale which is the subject of tax. Hence, the measure of tax cannot be determined on a notional basis and cannot at all be on a hypothetical value. Section 4A was held to be designed to bring the levy on a value which was divorced from the sale (first point sale) and subjecting such value to tax under the Act and hence was held to be beyond the legislative competence under Entry 54 of List II of the Seventh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to its customers and to ascertain whether the appellant has collected any amount other than professional charges and included the same under the head Ayuvedic treatment charges. It is settled by the decision of the Hon'ble High Court of Kerala in M/s.U.K Monu Timbers Vs. State of Kerala = (2012) (3) KHC 111 (DB) that the enquiry authority has no power to make an estimation of turnover for the purpose of determining the penalty. It is true that the said decision has been passed by the Hon'Ble High Court of Kerala while considering the powers of the enquiry authority u/s. 67 of KVAT Act 2003. However, the same principle can be applied in the case in hand as well. It has been held by the Hon' ble High Court in the said case that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority for notionally determining and assuming that 30% of gross charges would represent the luxury provided by respondent under Section 2(fb) of the Luxuries Act and that there is no material even to come to the conclusion as to the rate at which the accommodation is provided by the respondent. In other words, the reasoning of its Tribunal rightly points out the mistakes of authority under the Act in levy penalty. 10. We find two substantial reasons for rejecting the prayer of petitioner; firstly, in the case on hand, no assessment determining the obligation/liability under the Luxuries Act is made, penalty proceedings are taken up, and by notionally calculating the amount the penalty is imposed. The Tribunal, in the portion excerpted a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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