Fort Munnar Hotel v. Deputy Commissioner (Appeals), Department of Commercial Taxes, Kottayam; The Commercial Tax Officer (WC & LT), Department of Commercial Taxes, Idukki at Katappana, Idukki District; The Appellate Assistant Commissioner, Commercial Taxes, Kottayam; The Inspecting Assistant Commissioner, Commercial Taxes, Idukki at Katappana, Idukki District; The Sales Tax Appellate Tribunal, Kottayam

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE ANTONY DOMINIC** ## **WEDNESDAY, THE 30TH DAY OF JANUARY 2013/10TH MAGHA 1934** **WP(C).No. 20538 of 2010 (N) ---------------------------** ## **PETITIONER :** - **---------------------** **TISSAN J.THANCHANKARY, CHAIRMAN, FORT MUNNAR HOTEL, CHINNAKANAL, IDUKKI.** **BY ADVS.SRI.KKM.SHERIF SRI.LAL K.JOSEPH SRI.A.A.ZIYAD RAHMAN SRI.V.R.REKESH** ## **RESPONDENT(S):** - **----------------------------** **1. THE DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERICIAL TAXES, KOTTAYAM.** **2. THE COMMERCIAL TAX OFFICER (WC & LT), DEPARTMENT OF COMMERCIAL TAXES, IDUKKI AT KATAPPANA IDUKKI DISTRICT.** **3. THE APPELLATE ASSISTANT COMMISSIONER, COMMERCIAL TAXES, KOTTAYAM.** **4. THE INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, IDUKKI AT KATTAPANA, IDUKKI DISTRICT.** **5. THE SALES TAX APPELLATE TRIBUNAL, KOTTAYAM.** **R1 TO R5 BY SR. GOVT. PLEADER SRI. MANOJ KUNJACHAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-01-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Mn** **...2/-** ## **APPENDIX** ## **PETITIONER'S EXHIBITS :** **EXT.P1 : COPY OF THE ORDER DATED 31.8.2009 IN APPEAL NO. 138/09 TO 140/09. EXT.P2 COPY OF THE ASSESSMENT ORDERS DATED 9.7.2008 FOR THE ASSESSMENT YEARS 2003-2004 ALONG WITH THE DEMAND NOTICES. EXT.P2(a) COPY OF THE ASSESSMENT ORDERS DATED 9.7.2008 FOR THE ASSESSMENT YEARS 2004-2005 ALONG WITH THE DEMAND NOTICES. EXT.P3 COPY OF THE DEMAND NOTICE DATED 16.6.2009. EXT.P4 COPY OF THE COMMON ORDER DATED 18.5.2009 IN STA NOS. 944/2008 AND 945/2008. EXT.P5 COPY OF THE APPEAL IN T.A. 253/2009 FOR THE YEAR 2003-2004. EXT.P5(a) COPY OF THE APPEAL IN T.A. 254/2009 FOR THE YEAR 2004-2005. EXT.P6 COPY OF THE JUDGMENT DATED 5.3.2010 IN WP(C) NO. 7220/2010. EXT.P7 COPY OF THE COMMON ORDER DATED 24.5.2010 IN APPEAL NOS. 253/2009 AND 254/2009.** ## **RESPONDENT'S EXHIBITS : NIL** **//TRUE COPY//** **P.S. TO JUDGE** **Mn** ## **ANTONY DOMINIC,J** ## **-------------------------------W.P.(C) No.20538 of 2010** **------------------------------------Dated this the 30[th] day of January, 2013** **JUDGMENT** Heard the learned counsel for the petitioner and the learned Government Pleader appearing for respondents. 2. Petitioner is the Chairman of M/s.Fort Munnar, a hotel established by a company by name M/s. Thachankary Estates and Resorts Private Limited. In this writ petition, the prayer sought by the petitioner reads thus: “ _i) Declare that the income shown by the petitioner in its tax returns under the heads of Travels, Trekking, Horse riding, Lake campaign, Cultural Show, Estate visit, sight seeing etc and other similar services rendered outside the hotel are not liable to be taxed under Kerala Tax on Luxuries Act, 1976.”_ 3. Insofar as it is relevant, the facts of the case are that the assessments under the Kerala Tax on Luxuries W.P.(c) No.20538 of 2010 : 2 : Act for the years 2002-2003, 2003-2004 and 2004-2005 were completed and had become final by Ext.P1 order passed by the Tribunal dismissing the appeals filed by the petitioner. 4. Subsequently, notices were issued proposing to reopen the assessments and after considering the objections filed by the petitioner, the assessments for the years 2003-2004 and 2004-2005 were reopened and were completed by Exts.P2 and P2(a) orders. The petitioner filed appeals, which were rejected by the appellate authority as per Ext.P4 order. Further appeals filed before the Tribunal also were rejected by Ext.P7 order. It is in these circumstances, the writ petition is filed with the prayer mentioned above and also to quash Exts.P4 and P7. 5. Contention raised by the learned counsel for the petitioner is mainly that in view of the language in which luxury provided in a hotel is defined in the Act and the W.P.(c) No.20538 of 2010 : 3 : charging section is worded, only such of those luxuries which are provided in the hotel alone are liable to be taxed under the Act. It is contended that the services which are included in the prayer portion mentioned above, even if taken as luxury as defined in the Act, are rendered outside the hotel and therefore, are not taxable. It is contended that the statute itself has recognized this legal position by introducing proviso to Section 4(2), which clarifies that no luxury tax shall be payable, for charges received in respect of service rendered outside the hotel premises, such as vehicle hire, boat hire and trekking. It is stated that this contention has not been appreciated by either the assessing authority or the appellate authorities rendering the assessment illegal and untenable. 6. I have considered the submissions made. 7. Luxury has been defined in Section 2(e) of the Act as a commodity or service that ministers comfort or : 4 : W.P.(c) No.20538 of 2010 pleasure. Luxury provided in a hotel is defined in Section 2(f), which reads thus: “ _Luxury provided in a hotel, house boat, hall auditorium, Kalyanamandapam or place of like nature” means accommodation for residence or use and other amenities and services provided in a hotel or a house boat or hall or auditorium or Kalyanamandapam or place of like nature(the rate of charges of accommodation for residence and other amenities and services provided excluding charges of food and liquor is one hundred and fifty rupees per day or more.)_ 8. The charging section is Section 4 and Section 4 (2)(a) provides that luxury tax shall be levied and collected in respect of a hotel, for charges of accommodation for residence and services provided “in the hotel”. It is taking advantage of these provisions of the Act which says that luxury should be provided in the hotel that the contention is raised that for services rendered outside the hotel, luxury tax is not leviable. W.P.(c) No.20538 of 2010 : 5 : 9. However, I am unable to accept this contention. As already stated above, luxury is a commodity or service that ministers comfort or pleasure. If a service is rendered in a hotel and the benefit of which is derived outside the hotel, the service thus rendered outside the hotel is within the purview of the Act. Therefore, if trekking is arranged from inside the hotel and the trekking is at a far away place, the arrangement of trekking is the service for comfort or pleasure and it is that service which is a luxury. If that be the logical manner in which the provision is to be understood, there need not be any relation between the rendering of service and the place where the service is enjoyed. Consequently, the contention of the petitioner is that the turnover for arranging travels, Trekking, Horse riding, Lake campaign, Cultural Show, Estate visit, sight seeing and similar activities should be outside the purview of the Act. This view taken is fully supported by the principles laid down W.P.(c) No.20538 of 2010 : 6 : by this Court in **Casino Hotel v. State of Kerala [(2007)15 KTR 485]** . In that judgment, dealing with the contention that arranging of boat riding, which also is outside the hotel, is not exigible to luxury tax, this Court held thus: “ _So far as the charges collected from the customers for arranging boating it is seen that the hotel has arranged boating for the customers and charged the customers along with rent and charges for other services. Even though counsel for the petitioner contended that boating cannot be provided by the hotel, and it is only arranged by the hotel, it is clear from the orders that there is no contract between the customer and the boat owner. On the other hand, boats are arranged by the hotel and its own cost and boating charges are collected from the party. The charges paid for the boat by the hotel has nothing to do with charges recovered from the customers. Services rendered in a hotel need not necessarily mean services provided in the hotel building, but include services arranged by the hotel to it's customers, though the_ W.P.(c) No.20538 of 2010 : 7 : _service is rendered outside the hotel premises. In the circumstances, I hold that boating arranged by the hotel for staying guests also attracts luxury tax. In the circumstances, the challenge against demands are rejected and the impugned orders of the Tribunal are upheld.”_ ## 10. Insofar as the proviso to Section 4(2) relied on by the learned counsel for the petitioner is concerned, this proviso reads thus: “ _Provided that no luxury tax shall be payable, for such charges received in respect of service rendered outside the hotel premises, such as vehicle hire, boat hire and trekking._ _Provided further that the hire charges received in respect of house boats owned or possessed with right to use it by the hotels shall be liable to tax under the Act.”_ ## 11. This proviso was added by the Kerala Finance Act, 2007 with effect from 01.04.2007. There is no indication whatsoever in the Act to suggest that this W.P.(c) No.20538 of 2010 : 8 : proviso is a clariificatory one to have retrospective effect. Therefore, this proviso cannot have any application concerning any assessment year prior to 01.04.2007. If that be so, reliance on the proviso also cannot improve the case of the petitioner. In such circumstances, I do not find any substance in the writ petition. The writ petition fails and it is dismissed. Sd/- **ANTONY DOMINIC, JUDGE** ln