N.S.S.KARAYOGAM V. COMMERCIAL TAX OFFICER

WP(C)/371/2016

AI Insights

The case involves N.S.S. Karayogam Kunissery, represented by its president A. Sethumadhavan Nair, challenging the assessment orders and penalty orders under the Kerala Tax on Luxuries Act, 1976. The petitioner argued that luxury tax should only apply to the rent received for the auditorium and not to the separately billed items like vessels and furniture, which should only attract VAT. The authorities had rejected this view, leading to the petitioner's appeal to the High Court. The court ruled that luxury tax is applicable to all amounts received by the proprietor excluding food and liquor, and thus upheld the assessment but set aside the penalties due to lack of evidence of deliberate tax evasion.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 726968 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 16-11-2016
• Assessment Year: misc
• Laws Referred To: Kerala Tax on Luxuries Act, 1976
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: M M JASMIN
• Assessee Lawyers: HARISANKAR MENON; MEERA MENON
• Keywords: Assessment Order; Luxury tax; Penalty orders; Deliberate evasion; Separate billing
• Section: 2(f); 4; 17A; 4(1)(c)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE WEDNESDAY , THE 16TH DAY OF NOVEMBER 2016/25TH KARTHIKA, 1938 WP(C).No. 371 of 2016 (V) --------------------------------------- PETITIONER(S) : ------------------------- N.S.S.KARAYOGAM KUNISSERY, PALAKKAD DISTRICT, REPRESENTED BY ITS PRESIDENT, A.SETHUMADHAVAN NAIR. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT(S) : ---------------------------- 1. THE COMMERCIAL TAX OFFICER (LUXURY TAX), PALAKKAD-678 001. 2. KERALA AGRICULTURAL INCOME TAX & SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, PALAKKAD-678 004, REPRESENTED BY ITS ASST. SECRETARY . 3. THE INTELLIGENCE OFFICER, SQUAD NO.V, DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD-678 001. BY GOVERNMENT PLEADER SMT. M.M.JASMIN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Msd. WP(C).No. 371 of 2016 (V) --------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS : EXT.P1 COPY OF BOOKING RECEIPTS NO.16 ISSUED BY THE PETITIONER DATED 4/1/2014. EXT.P1(A) COPY OF BOOKING RECEIPTS NO.1 ISSUED BY THE PETITIONER DATED 21/4/2014. EXT.P1(B) COPY OF BOOKING RECEIPTS NO.1 ISSUED BY THE PETITIONER DATED 21/4/2014. EXT.P1(C) COPY OF BOOKING RECEIPTS NO.1 ISSUED BY THE PETITIONER DATED 21/4/2014. EXT.P1(D) COPY OF BOOKING RECEIPTS NO.9 ISSUED BY THE PETITIONER DATED 19/9/2013. EXT.P1(E) COPY OF BOOKING RECEIPTS NO.2 ISSUED BY THE PETITIONER DATED 29/4/2014. EXT.P1(F) COPY OF BOOKING RECEIPTS NO.3 ISSUED BY THE PETITIONER DATED 29/4/2014. EXT.P2 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2014-15 DATED 27/9/2014. EXT.P3 COPY OF ORDER PASSED BY THE DY.COMMISSIONER (APPEALS) ERNAKULAM DATED 1/1/2015. EXT.P4 COPY OF SECOND APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 27/6/2015. EXT.P5 COPY OF ORDER ISSUED BY THE 2ND RESPONDENT DATED 27/7/2015. EXT.P6 COPY OF ORDER ISSUED BY THE 3RD RESPONDENT DATED 29.02.2016. EXT.P6(A) COPY OF ORDER ISSUED BY THE 3RD RESPONDENT DATED 29.02.2016. RESPONDENT(S)' EXHIBITS : NIL //TRUE COPY// P.S.TO JUDGE. Msd. A.M. SHAFFIQUE, J. =============== W.P. (C) No. 371 of 2016 ================== Dated this, the 16th day of November, 2016 J U D G M E N T Petitioner has approached this Court challenging the assessment orders under the Kerala Tax on Luxuries Act, 1976 as well as the penalty orders. Orders had been issued for the assessment year 2014-15 in respect of monthly return from April, 2014 to August, 2014. Petitioner is also served with penalty orders, Exts.P6 and P6(a) under Section 17A of the Act on the ground that there is deliberate evasion of payment of tax. 2. As against Ext.P2 order, petitioner preferred appeal, which came to be rejected as per Ext.P3 order. Petitioner preferred a further appeal before the Tribunal, which came to be dismissed as per Ext.P5 order dated 27/7/2015. 3. The main contention urged by the petitioner is that petitioner is a person who gives on rent an auditorium/kalyanamandapam. While issuing bills, petitioner used to clearly indicate the rent for the hall, vessels, furniture etc., separately. Therefore, the contention urged is that luxury tax is W.P(C) No.371/16 -:2:- payable only for the rent received for the auditorium. In so far as the vessels and furniture are given on rent, the right to use alone is given, for which, at best, VAT is payable and therefore luxury tax cannot be imposed. All the authorities apparently have decided against the petitioner. However, it is urged that the said findings are absolutely baseless on account of the fact that vessels and furniture are separately billed by the petitioner. 4. Section 4 is the charging provision of which Section 4 (1)(c) indicates that in respect of a convention centre, hall, Kalyanamandapam, auditorium including those attached to hotels, clubs or places of the like nature, levy shall be made for the charges for accommodation, amenities and services provided excluding food and beverages. The proviso also indicates that any amount paid to the proprietor along with the charges for accommodation, by whatever name called, shall not be excluded from levy of tax under the clause. Section 2(f) defines luxury provided in a hotel, house boat, hall, auditorium, Kalyanamandapam or place of like nature, which reads as under:- “(f) “Luxury provided in a hotel, house boat, hall, auditorium, Kalyanamandapam or place of like nature” means accommodation for residence or W.P(C) No.371/16 -:3:- use and other amenities and services provided in a hotel or 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.” It is clear from the statutory provision itself that all amenities and services provided in a kalyanamandapam amounts to luxury and therefore, necessarily luxury tax is payable. The proviso to Section 4(1)(c) further indicates that any charges received by the proprietor for the accommodation, by whatever name called, shall not be excluded from the levy of tax. Therefore, the whole intention of the legislature was to levy luxury tax on all amounts received by the proprietor of the department excluding food and liquor. Under such circumstances, petitioner cannot justify the stand that merely for the reason that he is issuing a separate bill for vessel and furniture, the said amount has to be excluded from the levy of luxury tax. Ext.P2 and further orders passed by the authorities are justifiable and cannot be challenged on the aforesaid ground. 5. Petitioner further challenges Exts.P6 and P6(a) penalty W.P(C) No.371/16 -:4:- orders issued for the years 2012-13 and 2013-14. It is contended that petitioner bonafide believed that in so far as separate amounts are being collected for use of vessels and furniture, there is no liability to pay luxury tax. 6. Having regard to the aforesaid contention, the question to be considered is whether the petitioner should be made liable for penalty in terms with the statutory provision. There cannot be any dispute about the fact that penalty can be imposed only if there is deliberate suppression of turn over. In the present case, petitioner had clearly accounted all the amounts received by him. I do not think that there is any suppression and petitioner had paid tax for the admitted amount. Under such circumstances, there is no necessity to impose any penalty on the petitioner. Accordingly, this writ petition is disposed of as under:- Exts.P6 and P6(a) are set aside sustaining the order of assessment in terms of Ext.P2. Sd/- A.M. SHAFFIQUE, JUDGE Rp17/11/2016 //True Copy// P.S to Judge "