TMI Blog1993 (1) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... below A/c. No extra charge for children below 10 years and no extra bed will be 10 years and no extra bed will be provided for children. provided for children. Plus Luxury Tax 10% Plus Luxury Tax 10% CHECK OUT TIME 24 HOURS CHECK OUT TIME 24 HOURS The learned Asstt. Commissioner of Income-tax issued notice under section 8(2) of the Expenditure Tax, 1987 (the " Act " in short) calling upon the assessee to furnish the return in the prescribed form. The assessee furnished a 'nil' return contending that the provisions of the Act are not applicable in its case. Certain enquiries conducted by the assessing officer made him believe that the assessee was charging room rent in a sum exceeding 400 rupees per day per individual in some cases, and, therefore, the provisions of the Act are applicable to it in terms of section 3 of the Act. In the course of examination of the records he found that there was discrepancy between the number of persons as recorded by the customer in the registration card and the number of persons mentioned in the accommodation report maintained by the staff in respect of suite room, i.e., room No. 39. The details of such discrepancies are given in Annexure I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 400 per day per individual for the whole year. On the contrary the CIT (Appeals) found that prior to 22-10-1990 the assessee was actually charging only Rs. 390 per day per individual for Room No. 39 (suite room). This conclusion he arrived at on the basis of the records. As a result, he excluded the chargeable expenditure incurred upto 22-10-1990 from the purview of them Act and sustained the assessment in relation to the expenditure incurred after 22-10-1990 by the persons staying in the hotel irrespective of the fact whether the rooms occupied by them carried charges of Rs. 400 or more or less than Rs. 400 per day per individual. Incidentally it may be mentioned that the learned first appellate authority accepted the contention of the assessee that the telephone charges and the sale proceeds of empty bottles cannot be included in the chargeable expenditure. Thus, the appeal of the assessee was partly allowed. The revenue is not in appeal before us. It is the assessee who is on second appeal. 3. Shri K. S. Viswanathan, the learned counsel for the assessee submitted that the provisions of Expenditure Tax, 1987 are applicable only in the case of hotels wherein the room charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice that the word " any " has been used twice in the same section ; once when it refers to chargeable expenditure and another when it refers to the unit of residential accommodation. The revenue while taking the word " any " occurring before the words " chargeable expenditure " to mean " all " chargeable expenditure as given in section 5 of the Act, has conveniently abandoned the same meaning in respect of the same word in the very same section when used in the context of unit of accommodation. This the revenue is not permitted to do. Therefore, in the context in which the word " any " has been used in section 3 of the Act, it has to be understood only in the sense of " all " and not " one " or " some ". 4. Sri K. S. Viswanathan, referred to the decision of the Supreme Court in the case of Federation of Hotel Restaurant Association of India v. Union of India [1989] 178 ITR 97 and submitted that constitutional vires of the Expenditure Tax Act, 1987 was upheld by the Apex court on the ground that the incidence of tax is on the person who incurred the chargeable expenditure in the class of hotels to which the Act applies and the room charges of Rs. 400 per day per individual sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s certainly a wasteful expenditure and the purpose of the Act is to discourage such expenditure. Therefore, a strict construction must be adopted and even if one room is priced at Rs. 400 per day per individual tax cannot be avoided. On the other hand, if the construction as suggested by the learned counsel for the assessee is preferred, it will open flood gates of evasion of expenditure tax, as for instance in a hotel where except one room the rent of which is below Rs. 400 per day per individual, all other rooms are priced at a rent of Rs. 400 or more per day per individual. In other words the converse case of the assessee would also escape taxation. Thus, the interpretation placed by the assessee would defeat the very purpose of the legislation. As for the alternative suggestion that it is only in respect of the expenditure in connection with a room in a hotel which priced at Rs. 400 per day per individual, that the provisions of the Act should be invoked, he submitted that there is no warrant for such a view. The tax is not on the room rent. The tax is in connection with the expenditure in certain categories of hotels identified by a room rent of Rs. 400 or more per day per ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial or otherwise ; or (b) food or drink by the hotel, whether at the hotel or outside, or by any other person at the hotel ; or (c) any accommodation in such hotel on hire or lease ; or (d) any other services at the hotel, either by the hotel or by any other person, by way of beauty parlour, health club, swimming pool or other similar services, but does not include-- " (i) any expenditure which is incurred, or the payment for which is made, in foreign exchange ; (ii) any expenditure incurred by persons within the purview of the Vienna Convention on Diplomatic Relations, 1961, or the Vienna Convention on Consular Relations, 1963 ; (iii) any expenditure incurred in any shop or in any office which is not owned or managed by the person who carries on the business of a hotel ; (iv) any expenditure by way of any tax, including tax under this Act. " Therefore, the expression any occurring before the words " chargeable expenditure " in section 3(1) should cover all the items to be included therein except those items which are specifically not to be included therein. Thus the word " any " in the context in which it appears should be construed as meaning " all ". Shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystal clear. However, in appropriate circumstances, in cases of ambiguity in order to gather the intention of the Legislature in enacting the provisions useful reference can be had to such speeches. On a reference to the Finance Minister's budget speech two things stand out clear, viz., (i) that Expenditure Tax Act was conceived to tax the persons patronising high class hotels and (ii) the tax is on expenditure in expensive hotels. Such being the purpose of the legislation it would be straining the language of section 3 to identify such high class hotels merely on the touch-stone of a single and solitary unit of accommodation being priced at Rs. 400 or more per day per individual as against all other units of accommodation being priced below Rs. 400 per day per individual. 9. Sri K. S. Viswanathan's alternative submission is that if his main contention is not acceptable atleast the section should be read down so as to levy tax on expenditure incurred by a person in a hotel wherein the unit of accommodation occupied by him is priced at Rs. 400 or more per day per individual. In the view we have taken of the meaning of the word " any " occurring in section 3, it is not necessary fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prised as it had the bona fide belief that tax would not be attracted in its case. One of the partners scrutinised the records and found that there were discrepancies between the number of persons as entered by the customer in the registration card and the number of persons mentioned in the admission register maintained by the staff. In this connection, Sri Viswanathan submitted that according to rule 3 of the Hotel Regulations in case the guest or servant fails to vacate the room after 11 p.m. they will be treated as extra persons in the same room and will be charged accordingly. It may be that the hotel staff noticing guests or servants in the room staying beyond the stipulated time might have charged the customer for more than one occupancy and accordingly might have corrected the entries in the accommodation register as well as in the registration card. Sometimes such corrections might have taken place due to genuine mistakes. Whatever might have been the case, the partner of the firm wanted to go by the entries made by the customer in the registration card which is filled in by no less a person than the customer himself. In order to preserve custom and good relation, the hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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