State of Kerala v. Kumarakom Lake Resorts (P) Limited

WP(C) 7340 & 9148 of 2009 1 **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **TUESDAY ,THE 18TH DAY OF SEPTEMBER 2018 / 27TH BHADRA, 1940** ## **WP(C).No. 9148 of 2009** ## **PETITIONER/S:** **STATE OF KERALA REP. BY JOINT COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.** ## **BY SR. GOVERNMENT PLEADER SRI.MOHAMMED RAFEEQ** ## **RESPONDENT/S:** **M/S.KUMARAKOM LAKE RESORTS (P) LIMITED. KUMARAKOM.** **BY ADVS. SRI.K.S.HARIHARAN NAIR SRI.S.ANIL KUMAR (TRIVANDRUM)** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18.09.2018, ALONG WITH WP(C).7340/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C) 7340 & 9148 of 2009 2 ## **JUDGMENT** ## Vinod Chandran, J. Writ Petitions are by the State and the assessee from the common order of the Tribunal under the Kerala Tax on Luxuries Act, 1976. The assessment are of the years 2000-01, 2001-02 and 2002-03. The specific question raised in the Writ Petitions are with respect to the levy of luxury tax on the ayurveda services provided, boat charges, taxi charges and laundry charges received from the guests of the hotel, being included in the total turnover for the purpose of applying the rate of tax on luxury as provided under the Act of 1976. 2. The Tribunal affirming the order of the First Appellate Authority found that the boat charges, taxi charges and ayurveda charges are not provided within the building in which there is accommodation provided. The levy on such charges, taken by the hotel from the guests in the hotel, was found to be not leviable to tax under the Act of 1976. The Tribunal also noticed Section 4(2), which was introduced later in the year 2007, to find that WP(C) 7340 & 9148 of 2009 3 the above provision is clarificatory in nature. This excluded any services provided outside the hotel premises and hence cannot be brought under the computation of charges for luxury, was the ground on which the assessments were set aside. The appeal by the Revenue is against the deletion of the said charges from the computation of the receipt of charges for provision of income. 3. The Writ Petition of the assessee is with respect to the laundry charges, on which the Tribunal found against the assessee, relying on the decision reported in _**Kovalam Ashok Beach Resort v. Sales Tax Officer, (2006) 14 KTR 417 (Ker)**_ . We do not think there is any scope for taking a different view insofar as the laundry charges are concerned. We hence respectfully follow the decision in _**Kovalam Ashok Beach Resort**_ and dismiss the Writ Petition of the assessee. 4. As to the other charges of boat hire, taxi hire and ayurveda treatment, we need only refer to the decision of another Division Bench reported in _**Brunton**_ WP(C) 7340 & 9148 of 2009 4 ## _**Boatyard v. State of Kerala, 2013 (4) KLT 37**_ . We extract the following paragraphs from the aforesaid decision: _“4. Section 2(ee) defines 'luxury' to mean a commodity or service that ministers comfort or pleasure. Sub-section (2) of S.4 provides for levy of luxury tax at rates classified on the rates of charges for accommodation for residence and other amenities and services excepting those which are excluded. This, however, is put at rate applicable per day per room. The definition of 'luxury provided in a hotel' in S.2(f) means accommodation for residence and other amenities and services provided in a hotel. When these terms are taken together, the mere prescription that the rate would be per day per room cannot be held to mean that luxury tax is leviable only on rate of charges for accommodation for residence and other amenities and services attached to that room. This will give a restrictive construction for the term 'other amenities and services' and would pin down the luxury tax levy to be confined to the charges for accommodation and amenities and services which would be offered for enjoyment irrespective of the requirement of the customer concerned. In our view, that is not the manner in which the said provision stands. The rate of charges for accommodation for residence is one of the components while other amenities and services enjoyed by the customer would also be luxury provided in a hotel, though that may vary from room to room, depending upon customer's volition and requirement. While that event would not be certain, but would be dependent upon the consumption and enjoyment of the luxuries as may be made available, that is not a ground to exclude any particular amenity or service from the purview of the terms 'luxury' and 'luxury provided in a hotel' as defined in the Act. No such exclusion is possible merely on the plea that it is not part of the accommodation for_ WP(C) 7340 & 9148 of 2009 5 _residence and is not such amenity or service as is intricately connected with the accommodation for residence. The statutory provisions in hand do not attempt any such restrictive construction. The term 'luxury provided in a hotel' is defined to mean accommodation for residence and other amenities and services provided in a hotel excluding the items mentioned in S.2(f). The use of the conjunction 'and' after the phrase 'accommodation for residence' clearly spells out the legislative intent that the amenities which fall into the net of that provision are not those merely confined to providing attendant services in connection with the requirement of an occupant of the hotel for residence. Again, the use of the conjunction 'and' between the words 'amenities and services' amplifies to bring within its ambit all commodities or services that minister comfort or pleasure. Therefore, all amenities and services provided in a hotel as well as accommodation for residence amount to luxury for the purpose of S.2(ee) and would fall within the term 'luxury provided in a hotel' as defined in S.2(f) of the Act._ _5. Hence, the learned single Judge has rightly concluded that all what the charging section says is that the rate of tax will have to be determined by taking into account the total charges recovered and tax will be payable only on such amount irrespective of whether rent, amenities and services are separately charged or not. The learned single Judge was justified in holding that the Act does not make any difference as to whether charges for services and amenities are combined with rent or such charges are separately collected in addition to rent. The finding that the services rendered in a hotel need not necessarily mean services provided in the hotel building, but include services arranged by the hotel to its customers, though the service_ WP(C) 7340 & 9148 of 2009 6 _is rendered outside the hotel premises cannot also be found fault with.”_ 5. The above paragraphs specifically answer the questions posed before us insofar as the boat hire charges, taxi hire charges and ayurveda treatment charges said to be facilities availed outside the premises of the hotel. It cannot at all be contended that the charges were not received by the hotel and the services were also not provided from the hotel. The learned Counsel for the assessee then claimed that ayurveda charges are with respect to the facilities offered by a unit situated in a separate building, which has been leased out to one Ayurveda Doctor. However, it is clear that the petitioner-hotel owns the building and lease has been granted to the Doctor for providing ayurveda treatment facilities to the guests, for which charges are taken by the hotel and which is included in the total amounts received. The Assessing Officer was perfectly right in having computed, along with the charges for accommodation, for the purpose of levying luxury tax, charges for other amenities and services provided in a hotel in addition to the accommodation provided. We, WP(C) 7340 & 9148 of 2009 7 hence, reject the Writ Petition of the assessee and allow the Writ Petition of the State. No order as to costs. **Sd/-** **K.VINOD CHANDRAN** **JUDGE** **Sd/ASHOK MENON JUDGE** WP(C) 7340 & 9148 of 2009 8 ## **APPENDIX** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ORDER OF THE ASSESSING AUTHORITY FOR THE YEAR 2000-01 DATED 27.3.2006 EXHIBIT P2 TRUE COPY OF THE ORDER OF THE ASSESSING AUTHORITY FOR THE YEAR 2001-02 DATED 27.3.2006 EXHIBIT P3 TRUE COPY OF THE ORDER OF THE ASSESSING AUTHORITY FOR THE YEAR 2002-03 DATED 27.3.2006 EXHIBIT P4 TRUE COPY OF THE COMMON ORDER OF THE DEPUTY COMMISSIONER (APPEALS) DATED 20.11.2006 EXHIBIT P5 TRUE COPY OF THE COMMON ORDER OF THE TRIBUNAL DATED 27.11.2007**