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TMI Blog2024 (7) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding the service to customers, for sharing of the revenue earned by the latter - As rightly found by the Appellate Tribunal, the revenue sharing arrangement, between the assessee on the one hand and the independent third persons on the other, had to be seen as an arrangement providing for the receipt of rent by the assessee for letting out space within its hotel premises for the business activities of the independent third persons - it is found against the petitioner on the said issues by confirming the impugned order of the Tribunal. Levy of luxury tax on the amounts received by the assessee for the use of the Convention Centre - HELD THAT:- There are force in the submission of the learned Senior Counsel for the assessee that prior to the amendment of Section 4(2)(c) of the Act, there was no levy envisaged for charges collected in connection with the use of a Convention Centre. The levy was introduced for the first time only through the amendment brought in through the Kerala Finance Act, 2006 with effect from 01.07.2006. Being an amendment to a substantive provision that introduced a new levy, the levy can operate only prospectively and not retrospectively - it is found again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the First Appellate Authority allowed the claim of the assessee regarding non taxability of the charges received by them in connection with the operation of the Ayurveda Centre and Beauty Parlour for the various assessment years (except for 2003-04 when the charges received by the Ayurveda Centre was subjected to tax), it confirmed the levy of luxury tax in respect of the charges collected for use of the Convention Centre for the assessment years 2006-07 and 2007-08, but allowed the contention of the assessee with regard to the non taxability of the said income for the assessment years 2004-05 and 2005-06 respectively. The said findings of the First Appellate Authority were affirmed by the Appellate Tribunal in the orders that are presently impugned before us in these Original Petitions. For the sake of completion of facts, we might also note that for the assessment year 2003-04, the order of the First Appellate Authority rejecting the contention of the assessee with regard to non taxability of the income received through the Ayurveda Centre and the Beauty Parlour was reversed by the Appellate Tribunal in an appeal preferred by the assessee before it. 5. Before us, it is the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) KLT 475]. Going by the said decision, the tax on the enjoyment of a luxury as envisaged under the Act is attracted at a point in time when such luxury is provided by a proprietor of the hotel to another person for the latter's enjoyment. In that sense, therefore, it is only in cases where the hotel is actually providing the Ayurvedic treatment service or the Beauty Parlour service directly to a customer, without the intervention of an independent entity, and raising invoices directly to the said customers, that the service/luxury could be seen as provided by the hotel. HE points out that in the instant case, as rightly found by the Appellate Tribunal, the service/amenity in question was provided by independent third persons, who were invoicing their customers directly for the services rendered by them, although in some instances the customers made the payment for the said services, against the invoices so raised, through the asessee hotel at the time of settlement of their bills with the hotel. He points out that the mere collection by the assessee hotel, of the amounts due to the independent service providers, could not entail a tax liability on the assessee hotel when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts the tax? (ii) who has to pay the tax? (iii) how much tax has to be paid and (iv) how does one pay the tax?. The answers to the above questions must be found in the taxing statute concerned for, in the absence of a clear charge or machinery to levy and assess tax in the primary legislation, the imposition of tax cannot be done [(See: Commissioner, Central Excise and Customs, Kerala v. Larsen and Toubro Limited Anr. (2015 (3) KLT Suppl. 75 (SC) + (2016) 1 SCC 170)) 6. The answer to question (i) is usually provided by the charging section of the statute concerned. It could be the earning of income as in the Income Tax Act, the manufacture of goods as in the Central Excise Act, the import of goods as in the Customs Act or the supply of goods and services as in the GST Act. Section 4 of the Kerala Tax on Luxuries Act is the charging section thereunder and it provides for the levy of a luxury tax on luxury provided by various entities and hence the taxable event under that Act is the providing of luxury . Question (ii) seeks to find the person who is made responsible under the statute concerned to pay the tax to the Government. Under the Kerala Tax on Luxuries Act, Section 4(3) ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent third persons, also show that the services were provided by them and not by the assessee hotel. No doubt, the petitioner has a case that there was an agreement between the assessee hotel and the independent third persons who were providing the service to customers, for sharing of the revenue earned by the latter. This, in our view, would not affect the levy of tax under the Act. As rightly found by the Appellate Tribunal, the revenue sharing arrangement, between the assessee on the one hand and the independent third persons on the other, had to be seen as an arrangement providing for the receipt of rent by the assessee for letting out space within its hotel premises for the business activities of the independent third persons. At any rate, through the said arrangement, it could not be said that the assessee hotel was providing those services directly to its clients for the purpose of attracting the levy of luxury tax. We therefore find against the petitioner on the said issues by confirming the impugned order of the Tribunal. 9. As regards the levy of luxury tax on the amounts received by the assessee for the use of the Convention Centre, we find force in the submission of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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