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2017 (5) TMI 79 - HC - VAT and Sales TaxPenalties imposed under Section 17A of the Kerala Tax on Luxuries Act, 1976 - whether the facilities availed by the members of the unique, newly developed “Time-share arrangements” can be brought under the definition of “luxuries” and taxed under the LT Act - Held that:- The petitioners are having Resorts where residential accommodation is by way of a business and renting out of rooms is for monetary consideration. The Resorts maintained by the assessee within the State of Kerala, hence, comes within the definition of “Hotel”. “Luxury” is defined as a commodity or service that ministers comfort or pleasure and that provided in a hotel is accommodation for residence or use and other amenities and services provided in a hotel. The right to enjoy a holiday, the members of a timeshare arrangement, by their membership is entitled to, is crystallized in the fundamental facility provided of accommodation in the various Resorts. The enjoyment is relative and what a member gets assured, is the facility of accommodation; which is the luxury as per the definition. The charge is also on any luxury provided in a hotel, meaning the accommodation provided for residence and the rate varies with the charges for such an accommodation. What comes out from the above is that the assessee itself has been treating the membership, resulting in an obligation, continued over the years in which the timeshare arrangement or membership remains valid. The promise to be fulfilled by and the obligation of, the assessee is to provide accommodation to the member who books his holiday in any one of the resorts of the assessee. There can be no confusion in finding the measure. It is also pertinent that the assessee has not offered details of the amounts received from each of the members, to compute the charges for accommodation for the period in which they enjoyed the stay within the State of Kerala. In such circumstances, there can be no fault found in adopting the fixed room rent or tariff per day for the purpose of levying the tax. In this context, it is also to be noticed that the tax applied under the LT Act is one on the person who enjoys the accommodation and the assessee could collect such tax from the members. The mere fact that advance payment was taken as membership fee cannot lead to a conclusion that the accommodation provided/offered to the member is free of cost. The assessee itself, as contended before the IT Appellate Tribunal, splits up the membership fees to the subsequent years to cover the obligation of providing for an accommodation for residence or use. On the penalty imposed this Court found that the turnover having been disclosed and there being a bona fide debatable issue, there could not have been an imposition of penalty. SeeM/s. Chakkiath Brothers Versus The Assistant Commissioner, Commercial Taxes Special Circle-1, Ernakulam [2014 (6) TMI 974 - KERALA HIGH COURT] This Court has answered the issue of coverage under the L T Act against the assessee; but on the imposition of penalty it is answered against the Department
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