The Kerala Fine Arts Society v. State of Kerala & Others (WA Nos. 203 & 284 of 2013 in WPC 5623/2009)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON** **MONDAY, THE 2ND DAY OF JULY 2018 / 11TH ASHADHA, 1940** **WA.No. 203 of 2013 IN WPC. 5623/2009 ------------------------------------** **AGAINST THE ORDER/JUDGMENT IN WP(C) 5623/2009 of HIGH COURT OF KERALA DATED 10-12-2012** ## **APPELLANT(S)/PETITIONER:** **-----------------------** **THE KERALA FINE ARTS SOCIETY, FINE ARTS AVENUE, ERNAKULAM-682 016, REPRESENTED BY ITS SECRETARY T.P.RAMESH.** **BY ADVS.SRI.K.ANAND (SR.) SMT.LATHA KRISHNAN** ## **RESPONDENT(S)/RESPONDENTS:** **-------------------------** **1. STATE OF KERALA** **REPRESENTED BY CHIEF SECRETARY, SECRETARIAT, TRIVANDRUM.** **2. DY. COMMISSIONER (COMMERCIAL TAXES), ERNAKULAM, KOCHI-15.** **3. INTELLIGENCE OFFICER** **SQUAD NO.II, COMMERCIAL TAXES, ERNAKULAM.** **R1-R3 BY SR.GOVERNMENT PLEADER SRI.MOHAMMED RAFIQ** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 02-07-2018 ALONG WITH W.A.NO.284/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------W.A.Nos. 203 & 284 of 2013 ------------------------------------------Dated this the 2[nd] day of July, 2018 ## J U D G M E N T Vinod Chandran, J. The appeals arise from the judgments in the Writ Petitions, in which the petitioners were held to be covered under the Kerala Tax on Luxuries Act, 1976 (for short 'the Act'). The two Writ Appeals are with respect to the assessment and penalty imposed for the years 2005-06 to 2008-09. Both the appellants are Societies registered under the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, 1955. Both of them own separate auditoriums, one in Muvattupuzha and the other in Ernakulam. They rent it out for functions both public and private. However, they do not rent out any rooms for accommodation, as is done in a hotel. They would not come under the term 'luxury' for reason of there being no rooms for rent, is the compelling contention. _WA Nos.203 & 284 of 2013_ 2 2. The impugned judgment noticed the contention of the appellants that Section 4 and Section 2(f) would only apply in cases of auditoriums, where there is accommodation provided for residence; for consideration. The impugned judgment extracted the definition, the charging section as also the provision for computation and held that there is no ambiguity in the provisions and they do not exclude an auditorium, which offers itself for rent for public and private functions even if the auditorium does not have any rooms for residence. The amenity provided by the petitioners was found to be a 'luxury' as defined in Section 2(f) of the Act, attracting the charging section being Section 4. 3. The learned Senior Counsel again took us through the definition. It is pointed out that Section 2(f) speaks of “accommodation for residence” or “use” and “other amenities and services”. The charging section, which is Section 4, again speaks of hotels, halls, etc., which are “rented out for accommodation for residence” or “used for conducting functions”. However, the provision for computation as available in Section 4(2)(c) reads as _WA Nos.203 & 284 of 2013_ 3 under: “In respect of a convention centre, hall, Kalyanamandapam, auditorium including those attached to hotels, clubs or places of the like nature, for the charges for accommodation, “amenities and services” provided excluding food and beverages.” Hence, there is no computation possible of the use to which an auditorium is put or the rent of such halls or auditoriums. Computation is possible only as against the charges for residence and that for other amenities or services. If the auditorium does not rent out rooms for accommodation, then it should fall outside the scope of assessment as permissible under the Act, argues the learned Senior Counsel. 4. The learned Senior Counsel would also place reliance on 128 ITR 294 (SC), Commissioner of Income Tax, Bangalore v. B.C.Srinivasa Setty and 40 ITR 142 (SC), Commissioner of Income Tax, Bombay City v. Elphinstone Spinning and Weaving Mills Co.Ltd . Relying on Srinivasa Setty , the learned Senior Counsel would argue that the charging section, as also the computation provision, forms an integral code and if computation is not possible, there could be no assessment made. The fiscal statute has to be _WA Nos.203 & 284 of 2013_ 4 strictly construed and there can be no taxation effected or an assessee be absolved from the liability when the words employed in the statute does not speak of such a liability. 5. We have given anxious consideration to the contentions raised and read through the decisions. But however we are not satisfied that there could be any interference caused to the impugned judgment. We do not think that the decisions relied on by the learned Senior Counsel would help the appellants in any manner. The distinction sought to be drawn with respect to “accommodation for residence” and “for other uses”, according to us, is not sustainable on a plain reading of the various provisions in the Act. As has been held in Ephinstone Spinning and Weaving Mills, the provisions have to be read as a whole and if there is no ambiguity the plain meaning has to be adopted. 6. In the present case, the definition clause indicates very specifically and categorically as to what a luxury taxable under the provisions of the Act is. The 'luxury' as provided in the various establishments enumerated in the definition clause, refers to “accommodation for residence or use” and “other amenities and _WA Nos.203 & 284 of 2013_ 5 services provided thereon”. Hence, the accommodation could be for residence or for use. The accommodation for use could be, for a day or a part of the day or for more than one day, for a private or public function, as held in such auditoriums. In the case of a hotel, which offers accommodation for residence, then the provision specifically provides that there should be more than five rooms, charging rent in excess of the specified amount, for such rent to be assessed. However, even in a hotel where there are less than five rooms, if there is a hall rented out for public or private functions, the same would fall within the definition of 'luxury' as defined in the statute. The definition clause, in fact, without any ambiguity, as has been noticed in the impugned judgment, put the 'luxury', which is sought to be taxed under the Act in a very definite and precise perspective. The charging section also speaks of “accommodation for residence or use”, wherein the use is for conducting functions whether public or private. The computation provision speaks of the charges for accommodation, amenities and services and the word 'accommodation' includes, the “accommodation for residence” and “accommodation for use”. _WA Nos.203 & 284 of 2013_ 6 7. The word 'accommodation' has been defined in the Oxford Advances Learner's Dictionary as “somewhere to live or stay, often also providing food or other services” and “an arrangement between people, acceptable to everyone”. Black's Law Dictionary defines the term as “An arrangement or engagement made as a favour to another, not upon a consideration”. There can be no dispute that the 'accommodation' as used in the subject statute does not eschew consideration. The levy is on the “charges for accommodation”, which is the the measure of tax. On the renting out of the hall for a public or a private function, essentially the accommodation provided is for use of the hall, for a consideration. Admittedly, the renting out is for a charge and for the period it is rented out, the rentee could use it for the function for which it has been rented out as per the agreement between the two parties. In such circumstances, we are of the opinion that the computation provision also provides for a determination of the tax, which is on the charges for accommodation taken by the appellants from the person, who uses the hall for a public or a private function. _WA Nos.203 & 284 of 2013_ 7 8. We, hence, do not see any reason to interfere with the impugned judgments. We dismiss the appeals, but, without any interference to the reservation made by the learned Single Judge to avail of the statutory remedy. If the statutory remedy has not been availed as of now, then necessarily, the appellants would be entitled to avail the same within two weeks from the date of receipt of the certified copy of the judgment and in that circumstances, the appeals would be taken to the files without considering the delay. The Writ Appeals would stand rejected, making it clear that the appeals would only survive for deciding on the quantum and not for interpretation as has been answered by us in the above Writ Appeals. No order as to costs. Sd/K. VINOD CHANDRAN Judge Sd/ASHOK MENON Judge dkr