KALARI KOVILAKOM V. THE COMMERCIAL TAX OFFICER(WC & LT)

WP(C)/38511/2015

AI Insights

The case involves the classification of Kalari Kovilakam, an establishment in Palakkad, under the Kerala Tax On Luxuries Act, 1976. The dispute centered on whether the establishment should be classified as a 'hotel' or a 'hospital'. The State of Kerala argued that the establishment should be classified as a 'hotel' due to its luxury offerings and lack of therapeutic treatments, while the respondents contended it was a 'hospital' as it provided ayurvedic care, fitting the inclusive definition under the Act. The High Court of Kerala, after examining the definitions and the nature of services provided, upheld the Tribunal's decision to classify the establishment as a 'hospital'.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 732773 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 23-11-2020
• Assessment Year: misc
• Other Referred Cases: Kairaly Ayurvedic Health Resort Pvt. Ltd vs. the CTO
• Laws Referred To: The Kerala Tax On Luxuries Act, 1976
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: V MARKOS; ABRAHAM MARKOS; ISAAC THOMAS; NOBY CYRIAC
• Assessee Lawyers: MOHAMMED RAFIQ
• Keywords: Luxury tax; Hospital Definition; Hotel vs Hospital Classification; Ayurvedic Care Center
• Section: 2(de)

Judgement Text

"OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI MONDAY, THE 23RD DAY OF NOVEMBER 2020 / 2ND AGRAHAYANA, 1942 OP (TAX).No.1 OF 2015(Q) AGAINST THE ORDER IN T.A.(VAT)Nos.46/2012 & 47/2012 DATED 29.10.2014 OF THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, PALAKKAD PETITIONER/S: STATE OF KERALA REPRESENTED BY THE DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, THIRUVANANTHAPURAM, PIN-695 001. BY SENIOR GOVERNMENT PLEADER SRI. MOHAMMED RAFIQ RESPONDENT/S: M/S.KALARI KOVILAKAM KOLLENGODE, PALAKKAD, PIN-678 506. R1 BY ADV. SRI.V.ABRAHAM MARKOS R1 BY ADV. SRI.ABRAHAM JOSEPH MARKOS R1 BY ADV. SRI.ISAAC THOMAS R1 BY ADV. SRI.NOBY THOMAS CYRIAC THIS OP TAX HAVING BEEN FINALLY HEARD ON 23-11-2020, ALONG WITH WP.(C).1719/2015(L), WP(C).35004/2015(A), WP(C).38511/2015(l), THE COURT ON 23-11-2020 DELIVERED THE FOLLOWING: OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI MONDAY, THE 23RD DAY OF NOVEMBER 2020 / 2ND AGRAHAYANA, 1942 WP(C).No.1719 OF 2015 PETITIONER/S: KALARI KOVILAKAM, A UNIT OF ESCAPADE RESORTS (P) LTD KOVILAKAM MUKKU,KOLLENGODE,PALAKKAD 678 506 REPRESENTED BY ITS DIRECTOR MR. MICHAEL DOMINIC BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.BINU MATHEW SRI.ISAAC THOMAS SRI.NOBY THOMAS CYRIAC SRI.TOM THOMAS (KAKKUZHIYIL) RESPONDENT/S: THE COMMERCIAL TAX OFFICER (WC & LT) COMMERCIAL TAXES,PALAKKAD 678 501 R1 SENIOR GOVERNMENT PLEADER SRI. MOHAMMED RAFIQ THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23- 11-2020, ALONG WITH OP (TAX).1/2015(Q), WP(C).35004/2015(A), WP(C).38511/2015(l), THE COURT ON 23-11-2020 DELIVERED THE FOLLOWING: OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI MONDAY, THE 23RD DAY OF NOVEMBER 2020 / 2ND AGRAHAYANA, 1942 WP(C).No.35004 OF 2015 PETITIONER/S: HOTEL & ALLIED TRADES (P) LTD UNIT-KALARI KOVILAKAM,KOVILAKAM MUKKU, KOLLENGODE,PALAKKAD 678506,REP BY ITS DIRECTOR, MR.GEORGE DOMINIC BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.BINU MATHEW SRI.ISAAC THOMAS SRI.NOBY THOMAS CYRIAC SRI.TOM THOMAS (KAKKUZHIYIL) RESPONDENT/S: THE COMMERCIAL TAX OFFICER (LT) OFFICE OF THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, PALAKKAD 678501 R1 SENIOR GOVERNMENT PLEADER SRI. MOHAMMED RAFIQ THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23- 11-2020, ALONG WITH OP (TAX).1/2015(Q), WP(C).1719/2015(L), WP(C).38511/2015(l), THE COURT ON 23-11-2020 DELIVERED THE FOLLOWING: OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 4 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI MONDAY, THE 23RD DAY OF NOVEMBER 2020 / 2ND AGRAHAYANA, 1942 WP(C).No.38511 OF 2015 PETITIONER/S: KALARI KOVILAKOM, A UNIT OF ESCAPADE RESORTS (P) LTD., KOVILAKAM MUKKU, KOLLENGODE, PALAKKAD - 678 506, REPRESENTED BY ITS DIRECTOR, MR.MICHAEL DOMINIC. BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.BINU MATHEW SRI.ISAAC THOMAS SRI.NOBY THOMAS CYRIAC SRI.TOM THOMAS (KAKKUZHIYIL) RESPONDENT/S: THE COMMERCIAL TAX OFFICER(WC & LT) COMMERCIAL TAXES, PALAKKAD - 678 501. R1 SENIOR GOVERNMENT PLEADER SRI. MOHAMMED RAFIQ THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23-11- 2020, ALONG WITH OP (TAX).1/2015(Q), WP(C).1719/2015(L), WP(C).35004/2015(A), THE COURT ON 23-11-2020 DELIVERED THE FOLLOWING: OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 5 JUDGMENT Dated this the 23rd day of November 2020 K.VINOD CHANDRAN, J. The O.P.(Tax) by the State, challenge the order of the Tribunal, which found the respondent assessee entitled to be classified as a 'hotel' under The Kerala Tax On Luxuries Act, 1976. The writ petition by the assessee challenge the order of the assessing authority classifying the assesse's establishment as a 'hotel' under the Act. 2. Learned Government Pleader on a reference to the definition of 'hospital' submits that the various categories included therein should have independent existence and in the case of the assessee, it is a Resort and not a hospital. It is argued that there is no therapeutic treatment offered in the establishment and the ambience and luxury afforded clearly indicates a luxury hotel and not a hospital. The learned Government Pleader specifically refers to W.P.(C).No.35004/2015; wherein the application for registration was granted as a hotel and not as a hospital. A decision of another OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 6 Division Bench in O.P.(Tax)No.33/2016,Kairaly Ayurvedic Health Resort Pvt. Ltd vs. the CTO was also relied on. 3. Learned Senior Counsel appearing for the respondent would however point out that the unique situation in W.P.(C).No.35004/2015 arose only by reason of there being a change in the corporate entity which ran the establishment. The grant of registration as a hotel was only to further the department's case. 4. The Assessing Authority, merely on the basis of the luxury afforded in the establishment carried on by the assessee and also there being no treatment for illness or sickness imparted to the residents, held the establishment to be a hotel and not a hospital. 5. We look at the definition of hospital as provided under the Act Section 2(de) which is as hereunder: “[(de) “hospital” includes a nursing home, therapy centre, rejuvenation or recuperation centre, nature care or cure centre, ayurvedic cure or care centre, sidha centre or any other treatment centre, personal care centre and beauty treatment centre, by whatever name called.]” The inclusive definition includes rejuvenation or OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 7 recuperation centre, an ayurvedic cure and care centre and even a beauty treatment centre. We cannot countenance the argument of the learned Senior Government Pleader that, there should be independent isolated existence for each of these categories. There could be an ayurvedic cure or care centre combined with a beauty treatment centre. We perfectly accept the fact that such categories coming within the inclusive definition if attached to a hotel cannot be granted exemption. Here the establishment has a independent existence. And it is revealed that there is no restaurant or bar as available in an ordinary or luxury hotel. 6. O.P.(Tax) No.33/2016 was a case in which the facts with reference to an assessee; prior to the amendment of the Luxury Tax Act in 2008, incorporating the definition of 'hospital' and providing a different rate of tax for the same, was looked into. Therein the facilities provided in the establishment, the guest registration cards and connected documents were looked into. The documents revealed declaration of majority of the guests as to the purpose of visit, being holiday, OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 8 vacation, sight seeing etc. The license obtained from the Panchayat also enabled the assessee therein to run a canteen. The Doctors were also found to have no role in the procedure carried out. It is based on these facts that the assessee therein was found to be a hotel and not a hospital. 7. In the present case, we do not see any such factual aspects having been detected from the records of the assessee. The assessee admittedly carries on an ayurvedic care centre which is included in the definition of a hospital. The mere fact that there is luxury provided which normally a hospital would not, does not warrant a departure from the categorisation made by the department itself at the time of registration. The legislature also by incorporating an inclusive definition for 'hospital', included within it, all categories of establishments where wellness or holistic treatment is carried out. This reveals the intention of the legislature to include such categories also within the definition of a 'hospital'; which takes in even a beauty care centre. There is no requirement OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 9 that there should be therapeutic treatment carried out in such 'hospital' as defined under the Luxury Tax Act. 6. We hence reject O.P.(Tax)No.1/2015, affirming the order of the Tribunal. As a consequence, we allow the other w.P.c's directing the assessment to be modified under the Luxury Tax Act as one relating to 'hospital'. In W.P.(C).No.35004/2015, the registration as a hotel was only on the change of the corporate entity managing the establishment. The original registration was as a hospital, and we direct the registration to be so granted as a hospital under the Luxury Tax Act and assessment carried out accordingly. Ordered accordingly. Respective parties to suffer their costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- T.R.RAVI JUDGE uu 23.11.2020 OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 10 APPENDIX OF OP (TAX) 1/2015 PETITIONER'S/S EXHIBITS: EXHIBIT P1 P1 : A TRUE COPY OF THE COMMON ORDER PASSED FOR THE YEARS 2008-09 AND 2009-10 DT 12-11- 2011. EXHIBIT P2 P2 : A TRUE COPY OF THE COMMON ORDER PASSED BY THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOTTAYAM DT 10-5-2012. EXHIBIT P3 P3 : A TRUE COPY OF THE COMMON ORDER PASSED BY THE TRIBUNAL DT 29-10-2014 IN TA.NOS.46/12, 47/12, 47/13 & 48/13. OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 11 APPENDIX OF WP(C) 1719/2015 PETITIONER'S/S EXHIBITS: EXHIBIT P1 EXHIBIT P1 TRUE COPY OF ORDER DATED 29-10- 2014 PASSED BY THE KERALA AGRICULTUAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL,ADDITIONAL BENCH,PALAKKAD IN T.A NOS 46/2012 AND CONNECTED CASES EXHIBIT P2 EXHIBIT P2 TRUE COPY OF ORDER DATED 18-12- 2014 PASSED BY THE RESPONDENT EXHIBIT P3 EXHBIIT P3 TRUE COPY OF ORDER DATED 20-12- 2014 PASSED BY THE RESPONDENT OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 12 APPENDIX OF WP(C) 35004/2015 PETITIONER'S/S EXHIBITS: EXHIBIT P1 P1:-TRUE COPY OF REGISTRATION CERTIFICATE DTD 7/10/2010 ISSUED UNDER SECTION 4E F THE KERALA TAX ON LUXURIES ACT 1976 EXHIBIT P2 P2:-TRUE COPY OF COMMON ORDER DTD 29/10/2014 PASSED BY THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, PALAKKAD IN TA NOS 46/2012, 47/2012, 47/2013 AND 48/2013 EXHIBIT P3 P3:-TRUE COPY OF CERTIFICATE NO AH 2014- 0010 FOR THE PERIOD TILL JANUARY 28,2017 ISSUED BY THE CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE NATIONAL ACCREDITATION BOARD FOR HOSPITALS & HEALTHCARE PROVIDERS FOR ACCREDITATION TO THE UNIT AS A AYURVEDA HOSPITAL EXHIBIT P4 P4:-TRUE COPY OF THE REGISTRATION CERTIFICATE DTD NIL ISSUED BY THE KOLLENGODE GRAMA PANCHAYATH EXHIBIT P5 P5:-TRUE COPY OF D & O LICENSE DTD 22/9/2015 ISSUED BY THE KOLLENGODE GRAMA PANCHAYATH EXHIBIT P6 P6:-TRUE COPY OF CERTIFICATE DTD 3/10/2013 ISSUED BY THE GOVERNMENT OF INDIA-MINISTRY OF CORPORATE AFFAIRS EXHIBIT P7 P7:-TRUE COPY OF APPLICATION DTD 1/9/2015 SUBMITTED BY M/S.ESCAPADE RESORTS PVT LTD TO THE RESPONDENT EXHIBIT P8 P8:-TRUE COPY OF THE APPLICATION SUBMITTED ON 30/9/2015 BY THE PETITIONER BEFORE THE RESPONDENT EXHIBIT P9 P9:TRUE COPY OF AFFIDAVIT EXECUTED BY THE DIRECTORS OF THE PETITIONER COMPANY ON 26/10/2015 EXHIBIT P10 P10:-TRUE COPY OF REPORT DTD 3/11/2015 SUBMITTED BY THE RESPONDENT OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 13 EXHIBIT P11 P11:-TRUE COPY OF LETTER DTD 14/10/2015 ISSUED BY THE RESPONDENT OP.TAX.No.1 of 2015, W.P.(C).Nos.1719,35004 & 38511 of 2015 14 APPENDIX OF WP(C) 38511/2015 PETITIONER'S/S EXHIBITS: EXHIBIT P1 EXHIBIT P1. TRUE COPY OF ORDER DATED 29.10.2014 PASSED BY THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, PALAKKAD IN T.A.NOS.46/2012 AND CONNECTED CASES. EXHIBIT P2 EXHIBIT P2. TRUE COPY OF THE REGISTRATION CERTIFICATE DATED 07.10.2010 ISSUED BY THE RESPONDENT. EXHIBIT P3 EXHIBIT P3. TRUE COPY OF CERTIFICATE NO.AH- 2014-0010 FOR PERIOD TILL JANUARY 28, 2017 ISSUED BY THE NATIONAL ACCREDITATION BOARD FOR HOSPITALS & HEALTHCARE PROVIDERS (NABH). EXHIBIT P4 EXHIBIT P4. TRUE COPY OF REGISTRATION CERTIFICATE DATED 30.05.2007 ISSUED BY THE KOLLENGODU GRAMA PANCHAYAT TO THE PETITIONER. EXHIBIT P5 EXHIBIT P5. TRUE COPY OF INTERIM ORDER DATED 19.01.2015 ISSUED BY THIS HONOURABLE COURT IN W.P.(C)NO.1719 OF 2015. EXHIBIT P6 EXHIBIT P6. TRUE COPY OF ORDER DATED 30.11.2015 AND DEMAND NOTICE ISSUED BY THE RESPONDENT. EXHIBIT P7 EXHIBIT P7. TRUE COPY OF ORDER DATED 30.11.2015 AND DEMAND NOTICE ISSUED BY THE RESPONDENT. "