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2013 (1) TMI 606 - HC - VAT and Sales TaxKerala Tax on Luxuries Act, 1976 - Levy and demand of luxury tax - Whether liability for luxury tax on room rentals and other charges for accommodation and facilities provided therein is applicable only for "hotels" and not on a club to pay luxury tax on the room rent - Whether luxury tax is payable for the rent and other charges collected from guests occupying rooms and cottages attached to the club - Whether the cottages and rooms attached to the club answer the description of "hotel" within the meaning of Section 2(e) attracting liability for luxury tax - Club is specifically made liable for luxury tax for luxury provided to the members which is at the rate of ₹ 100/- per member per year payable u/s 4(2A) Held that:- The cottages and rooms attached to clubs answer the description of "hotel" attracting tax u/s 4(2) (a). In fact, even though hotels are run as a business activity for earning profit, for the purpose of levy of luxury tax there is nothing to indicate that the hotel should in fact make profit from the sales and all what is required to prove is that the rooms are rented out in excess of the charges provided in the Act attracting liability for luxury tax. The principle is same for cottages and rooms attached to clubs by virtue of the wide meaning of "hotel" contained in the definition clause and in the charging section All clubs are not providing cottages and guest rooms to their members or to guests. However, there are ever so many big clubs which extensively provide accommodation to their guests and to members of affiliated clubs. Such of the clubs which do not have rooms, cottages, auditorium or kalyanamandapam will be liable to luxury tax only on membership u/s 4(2A). On the other hand, those clubs which provide accommodation in cottages, rooms, auditorium, kalyanamandapam or halls for use of members or guests, will be liable to pay luxury tax not only for every member u/s 4(2A), but will also be liable for luxury tax as provided u/s 4(1)(i) Therefore confirm the levy of luxury tax for the rent and other charges collected for cottages and rooms by the Club – In favour of revenue
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