TMI Blog2014 (9) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... reements, for the lease and for provision of amenities, cannot by itself take away the petitioner's coverage under the Act. Those agreements were also the result of a composite transaction as revealed from the construction agreement, providing for lease for the purpose of accommodation of trainees and provision for amenities and facilities to such inmates. The fact is that the assessee did not obtain registration despite the transaction being clearly covered under the Act of 1976. Penalty levied at the maximum rate of double the tax evaded, may not be proper in the facts and circumstances of the case. Hence, the penalty imposed for the respective years and the two months in the last year are modified and confined to the extent of the tax liability. There is also considerable force in the argument of the learned counsel for the petitioner that between 1997 and 2002, the measure on which the rate applied is to be decided, per person per day. Hence, the CTO is directed to re-do the assessment for the period upto 31.03.2002, computing the rental charges per person per day, since all the rooms provided in the petitioner's building is of double occupancy. The quantum of penalty levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acilities to the residents therein. An agreement to lease, initially for a period of ten years from the date on which the facilities are made functional, provided for lease-rent on a monthly basis, without any reference to the number of residents being accommodated at any point of time. A separate agreement was also executed, for like payment, on a monthly basis, towards amenities and facilities provided thereon. The petitioner is revealed to have conducted a restaurant also, within the premises, the food sales of which is assessed to tax under the respective sales tax enactments for the respective periods, indicating the assessee's registration under the respective enactments. 4. The assessee had not thought it fit to register under the Act of 1976, since the services provided does not come within the ambit of luxury provided by the assessee and the facility does not fall within the description of a hotel , since, according to the assessee, no separate charges are levied for each room. The lease-rent payable is of the whole bulding and for each month, as distinguished from per day, per room . 5. The State, however, seeks to sustain the coverage of the petitioner on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% levied for rooms between ₹ 200/- to less than ₹ 500/- and 15% levied for rooms above ₹ 500/-. The amendments so made are specifically noticed, since it is the contention of the assessee that at no point of time after the assessee commenced its business with TCS, was any rent levied per day or per person or per room. This alone takes the assessee out of the coverage under the Act, is the argument. 8. Going by the definitions taken note of herein, it is very evident that the assessee comes within the definition of hotel and is providing luxury as defined therein, since the services provided come within the scope of the definition of luxury provided (inter alia) in a hotel ... . According to the latter definition, there need be no examination as to whether the service of the assessee/petitioner ministers any comfort or pleasure, since luxury provided in a hotel has been given the plain meaning of accommodation for residence or use of other amenities and services provided thereon. Levy and collection of luxury tax have been provided in Section 4, which levies the tax and mandates collection in respect of any luxury provided inter alia in a hotel. Clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging Section. In providing the measure, the Government has not exempted particular persons, services or buildings; but only rooms even within an establishment, which does not, for accommodation and the facilities provided thereon, charge rent less than the prescribed limit. 12. What has been attempted by the CTO (LT) in the instant case is, computing of the measure so as to apply the levy. The monthly rent payable along with the charges payable for the amenities and facilities, for a month was divided in between the total number of rooms to arrive at the rent payable for each of the rooms, on one day. Finding the same to be above the assessable limit, tax was found to be leviable at the rates prescribed by the Act. The mere provision for payment of rent on a monthly basis does not take away the establishment from the purview of the Act. 13. Apposite is the analogy drawn by the CTO, in which he contemplates a situation in which a Corporate entity takes on rent 10 rooms in a hotel for a month and pays the rent on a monthly basis, in which event the rent paid thus could be said to be not exigible to tax for reason of it having been paid for a whole month. In the instant case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d charges go above the exempted limit. This Court would be inclined to lean in favour of the latter view, since the levy is on the person who enjoys the luxury (accommodation and amenities) and the entity who provides the same only has the duty to collect it. But, that question does not arise herein, since it is the very same entity who is the lessor and the provider of the facilities. The said question could be left open to be considered in an appropriate case. 17. One another aspect, which is to be noticed, in this context, is that, despite the assertion to the contrary, the lease of premises and providing amenities and facilities, though under separate agreements, come under the very same transaction as evident from the agreement of construction produced as Exhibit R1 (a). By Clause-6 of the said agreement, the promoter, who is the petitioner herein, agreed and undertook to give on lease the hostel facilities in the the building constructed and provide and maintain, in the hostel, the amenities and facilities set out in the agreement to that end. Hence, the composite transation of lease and provision of amenities cannot be separated only for reason of the existence of two sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the directions herein above, if the rent per day per person is above the assessable limit and not at all if found otherwise. 20. One incidental aspect, which cannot but be noticed by this Court is with respect to the finding of the CTO (LT) that the agreements executed by the petitioner are sham documents for reason of their being undervalued. That cannot be so. The officer, the appellate authorities as also this Court has looked into the terms of the said agreements to discern the exact nature of the transactions to decide upon the coverage under the Act of 1976. The consequences of undervaluation, as evident from the Kerala Stamp Act, 1959, more specifically Section 33, is the impounding of such instrument. The reliance placed on the terms is only for a collateral purpose, which need not restrain the CTO (LT) from complying with the statutory mandate under the Stamp Act. The officer may examine this aspect and after affording an opportunity to the petitioner, decide on the issue, in accordance with law. The writ petition, hence, is partly allowed, with the modification on the quantum of penalty; but, however, confirming the coverage under the Act and the liability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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