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2016 (9) TMI 970 - HC - VAT and Sales TaxImposition of penalties - Luxuries Act, 1976 - bifurcation of luxury tax - Banquet Hall - Poolside area for serving food as well as conducting other services - Rule 3 C of Kerala Tax on Luxuries Rules, 1976 - 25% of the total charges treated as eligible for luxury tax - services rendered while serving food, drink and other services in a hotel, hall, auditorium and other similar places - payment of VAT on entire amount without bifurcation of the Luxury Tax Component - whether there was any necessity to impose penalty on the petitioner for not having bifurcated the assessment to tax with reference to VAT and luxury tax for the years 2005-06, 2006-07 and 2007-08? - Held that: - As far as the assessment year 2005-06 is concerned, there is no dispute about the fact that the amendment to the Rules had come into effect only on 28.07.2006. Under such circumstances, there was no necessity to initiate any penalty proceedings against the petitioner for having not complied with the bifurcation so contemplated during the said assessment year - Tribunal not justified in imposing penalty on the petitioner as far as assessment year 2005-06 is concerned. There is deficiency on the part of the assessee in bifurcating the luxury tax as well as VAT, even after the Rule had been amended. However, it is to be noticed that when the entire VAT amount has been paid for the total amount received which includes the rent for Banquet Hall or the Poolside, there is no deliberate attempt to evade payment of VAT or luxury tax. There is no suppression of facts. It is apparently a mistake being committed by the assessee while imposing tax and insofar as no loss has been caused to the Government - imposition of penalty not justified. If at all there is any deficit in the collection of tax, the same can be recovered by assessment proceedings. As far as the charging of luxury tax on the Poolside area is concerned, the Deputy Commissioner (Appeals) had come to a finding that the luxury tax is not leviable as far as the Poolside is concerned. - penalty not imposed. Petitions disposed off - decided against Revenue.
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