Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2014 (6) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (6) TMI 588 - HC - VAT and Sales TaxLiability in terms of section 3D of the Karnataka Tax on Luxuries Act, 1979 - Held that:- The levy is attacked mainly on the ground of legislative competence and secondly on the ground that it is misfit into the scheme of the Act; that it seeks to levy luxury tax more than once on the very facility; and thirdly on the premise that by seeking the levy on luxury not availed of or utilised, it renders itself unconstitutional in terms of the judgment of the Supreme Court in the case of Godfrey Phillips [2005 (1) TMI 391 - SUPREME COURT OF INDIA] - The activity if it is not required by an average member of the society, it can constitute luxury, is the meaning one can attribute to this paragraph. It is not as though an average member of the society cannot survive or cannot live even without such facilities as are made available in the petitionerclubs. It may be a different matter that such facilities are otherwise also available in other places, but when a facility is made available in a club and exclusively for its members and in the nature of such facilities as is defined under the Act, it can undoubtedly be termed as an activity in the nature of a luxury. There is no doubt that the expression that luxury means an activity of enjoyment or indulgence which is costly, is suggestive of only availed or utilised of the activity or indulgence in the activity. To this extent, the observation here is clearly at variance with the observations of the Supreme Court in the case of Express Hotels Private Ltd. [1989 (5) TMI 52 - SUPREME Court], wherein the Supreme Court has observed that for constituting a luxury, it need not necessarily be availed of and has a comparing situation to levy of tax on notional concept. A particular example in the case is a notional income. It is also further linked to a measure of the levy, in the sense, that a levy on special matter when it is on actual person is termed as a measure of levy so long as there is some nexus between the levy and the subject-matter. The justification is that there cannot be any reasonableness in a levy under the taxing statute and even if the tax is on a notional basis, it is an aspect of measure of levy. If there is no scope for interpretation in a taxing statute, which violates a constitutional provision it will have to be declared as unconstitutional, but in the given case, as it is found that the computation made in the case of the petitioner, being not based on a proper understanding of the provisions of section 3D of the Act, it has become necessary for the court to discuss about the scope of this charging section and to so interpret and understand the provision that it is not only effectuated but also does not violate any of provisions of the Constitution. Section 3D when understood in this manner in fact is free from any allegations of being bad either for want of legislative competence or on the ground of being discriminatory or as on imposing any unreasonable restrictions on any profession, trade or employment or such other grounds. The challenge to the validity of section 3D while fails on the grounds urged on behalf of the petitioners, the stand taken by the State Government in its counter and orders passed by the authorities under the Act to subject to tax, the petitioner-clubs on the premise that levy under section 3D is on the basis of total number of members in the club irrespective of the actual contents of section 3D is a clear wrong application and understanding of the provision and the assessment orders if have been passed on such understanding, are required to be redone to bring them, in conformity with section 3D as understood and interpreted in this decision. - Decided against appellants.
|