TMI Blog2016 (7) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... standards. Held that:- With the facilities the appellant has already hosted an exhibition of over 1,10,000 sq.mt. of exhibit area. It has been able to cater to over 20,000 business visitors per day on several exhibition days. In this background, the argument of the learned counsel for the appellant that the word accommodation as mentioned in the other provisions which is consecutively missing in Section 3, the accommodation provided by the appellant cannot be levied with tax is without any substance Once the premises of the appellant falls within the definition of marriage hall and charges levy is more than ₹ 5,000/-, Section 3-C is attracted and luxury tax is leviable. Realising this fact, the appellant had approached the Government with a request to exempt from payment of tax. The power under Section - 2A could be exercised by the Government to exempt tax only when act is applicable. If the Act itself is not applicable, the question of exempting the appellant from payment of tax does not arise. In that view of the matter, viewed from many angle, as rightly held by the learned Single Judge, the appellant contention that the demand of tax is ultra vires and Act is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contending that it is not liable to register and pay tax under the Act. The 5 th respondent issued one more notice on 14.10.2008 stating that the appellant s contention was incorrect and the activities conducted by the appellant clearly fell within the definition of marriage hall as provided under the Act and hence, liable to get itself registered under the Act and pay the tax. The 5th respondent quantified the appellant s tax liability for the periods 2007-08 and 2008-09 up to October 2008 and also proposed to levy penalty under the provisions of Section 7 of the Act. The appellant, by a letter dated 14.10.2008 brought to the notice of the Government of Karnataka the aforesaid proceedings and requested for their intervention. In the meanwhile, the 5th respondent issued revised notices dated 01.12.2008 to the appellant, under Sections 4-A, 6(3) and 7 of the Act once again calling upon the assessee appellant to register itself under the provisions of the Act and pay the quantified tax and penalty. It was made clear that their objections for levy of tax is not convincing and they proposed to levy tax and penalty amounting to ₹ 7,43,55,940/- and ₹ 5,90,00,000/- for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, an amendment was made to Section 2(5-B) of the Act. Indeed, the Karnataka Taxation Laws [Amendment Act] 2012 with effect from 01.04.2012 and the definition of Marriage Hall was amended. It is thereafter, the 5th respondent issued a notice dated 01.04.2012 informing the appellant that it was liable to take out registration under the Act and the charges received for providing the hall/stall owned by the appellant for conferences, meetings, etc., was liable to Luxury Tax at 10% with effect from 01.04.2012. The appellant was also called upon to register as a proprietor within 7 days from the date of receipt of the said notice and pay taxes under the Act. It was made clear if the said demand is not complied with, ex-parte prosecution proceedings would be initiated. 6. The appellant by the letter dated 30.04.2012 sought sometime on the ground that they have approached the Government of Karnataka for exemption from the application of the Act. The Government of Karnataka exercising the power conferred by Section 12-A of the Act issued a Notification dated 27.11.l2012 exempting with immediate effect the tax payable under the Act on charges for luxury provided in a marriage hall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has established the Bangalore International Exhibition Centre and it is stated to be provided facility for industrial exhibitions of machine tools and conferences to promote trade and commerce. They have constructed halls in its premises for renting the same for the purpose of running exhibitions, seminars, conferences, etc. They are collecting charges of more than the prescribed limit under Section 3-B of the Act. Section 2(5-B) of the Act marriage hall is exempted by amendment with effect from 01.04.2012, which bring within its hold the premises of the petitioner. Because the premises of the petitioner falls under the definition of the marriage hall, they sought for exemption from the application of the Act and accordingly, by virtue of the power conferred under Section 12-A of the Act the Government has exempted with immediate effect the tax payable under the said Act on charges for luxury provided in the marriage hall for organizing industrial exhibition. Therefore, it is not open to them to contend their premises do not fall within the definition of the marriage hall and the said exemption is granted with immediate effect i.e., 27.11.2012 as such it is prospective and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marriage hall and the charges for luxury provided in the marriage hall and the charges collected for a marriage hall cannot be taxed under the Act as no luxury is provided. After referring to the definition, dealing with the charges for luxury provided in the hospital and luxury provided in the hotel or luxury provided in the club it was contended as Section 3-C of the Act do not contain any such explanation, the world luxury is to be understood on the basis of Section 2(4-B) of the Act as services ministering to enjoyment, comfort or pleasure extraordinary to necessities of life and therefore, levy of tax on the marriage hall is impermissible. Though there was a substantial amendment by the Karnataka Taxation Laws [Amendment] act 2012, as there was no amendment to charge under Section 3-C of the Act under the definition of luxury, the said amended provision has no impact in deciding the issue. In other words, mere rental of an empty hall cannot be said to be providing any luxury and does not attract any charge under the Act. Even otherwise, the definition of luxury and the provisions contained under Section 3-C of the Act are interpreted in the manner suggested by the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g charges for food and drinks) is not less than 2[one hundred and fifty rupees per room per day; (ii) provision in hotels, whether to residents or others of such facility as health club, beauty parlour, swimming pools, conference hall and the like for which charges are seperately made. 13. Section 3 was amended by Act 9 of 1981 by way of Karnataka Tax on Luxuries (Hotels and Lodging Houses) Amendment Act, 1981 by way of substitution providing for higher per centage of tax on the lodging house. Again by Act 18 of 1982, there was a further amendment regarding the amount of tax to be paid. By way of Act 21 of 1985, the definition of luxury provided in a hotel and also Section 3 was further amended by enhancing the per centage of tax leviable on charges. There is a further amendment by way of Karnataka Act of 1996. Similarly, amendments were carried out by Karnataka Act of 1987, Act 17 of 1989 altering the tax payable on the charges and also Act 11 of 1993. However, by Karnataka Act 6 of 1995 i.e., the Karnataka Taxation Laws Amendment Act, 1995, Marriage hall also was defined. In addition to that, taxes on luxuries like Health club was also added. The definition of Marri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is provided for marriage or reception or matters related therewith or for organizing any official, social or business function whether functions are conducted in such place regularly or not. 15. On coming into force of the substituted provision, the authorities called upon the appellant to pay luxury tax. There were several correspondences, but in the end, the appellant made an application seeking exemption from payment of luxury tax. The Government by notification dated 27.11.2012 exercising the power conferred on them under Section 10-A of the Act exempted with immediate effect, the tax payable under the Act on charges for luxury provided in a marriage hall for organizing industrial exhibitions. Therefore, now the question for consideration is: Whether the appellant is liable to pay luxury tax under the Act from 01.04.2012 to 27.11.2012? 16. The argument is though in view of the substituted amendment to Marriage hall , the premises of the appellant now falls within the said definition. Correspondingly neither the definition of luxuries is amended nor the charging provision as contained in Section 3-C is amended and therefore the levy of tax on the premises of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall, such question shall be referred to the State Government and the decision of the State Government shall be final and shall not be called in question in any Court. 20. Section 3-C, the charging Section reads as under:- 3-C. Levy and collection of tax on charges for marriage hall. Subject to the provisions of this Act, where charges for luxury provided in a marriage hall are not less than five thousand rupees per day there shall be levied and collected a tax at the rate of ten percent of such charges. Provided that where charges for marriage hall are payable otherwise than on daily basis, then for the purpose of determining tax liability under this section, the charges shall be computed as for a day, based on the period of occupancy for which the charges are payable. 21. No doubt when the definition of marriage hall was substituted by Act 18 of 2012 with effect from 01.04.2012 correspondingly, neither the definition of luxuries nor the definition of Charges for marriage hall nor Section 3-C the charging Section were amended. Therefore, the point that arises for consideration is by mere expanding the definition of marriage hall there could be a levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessities; articles such as jewellery, perfume, intoxicating liquor, tobacco, etc., could be called articles of luxury. But the legislative entry cannot be exhausted by these cases, illustrative of the concept. The entry encompasses all the manifestations or emanations, the notion of luxuries can fairly and reasonably (sic) can be said to comprehend the element of extravagance or indulgence that differentiates luxury from necessity cannot be confined to goods and articles. There can be elements of extravagance or indulgence in the quality of services and activities. Further, at paras 25 27, it was held as under: The concept of luxuries in the legislative entry takes within it everything that can fairly and reasonably be said to be comprehended in it. The actual measure of the levy is a matter of legislative policy and convenience. So long as the legislation has the reasonable nexus with the concept of luxuries in the broad and general sense in which the expressions in legislative tests (sic lists) are comprehended, the legislative competence extends to all matters with respect to that field or topic of legislation. If the idea of luxuries is required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments on these contentions were not without their interesting facets, we must, however, express out inability to accept them as valid arguments against the constitutionality of the provisions. 25. A Constitutional Bench of the Apex Court in the case of G odfrey Phillips India Ltd. And another Vs. State of U.P. and others reported in (2005) 2 SCC 515 after referring to the aforesaid passages in the case of Express Hotels (P) Ltd. Vs. State of Gujarat , it was held in para 52 as under: 52. But as we have already noted and as is abundantly clear from the passages quoted, the decision was given on the assumption that articles of luxury are covered by Entry 62 List II and cannot be held to be an authority for the proposition that articles or goods are, as a matter of construction, fairly and reasonably includible in that entry. 26. Referring on this observation, it was contended that the decision in Express Hotel s case is impliedly over ruled. We are unable to accept the said submission. 27. In Godfrey s case, they did not disagree because in a judgment rendered by the Apex Court all that they have said is that a judgment cannot be held to be an authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied is referred to the Marriage is less than ₹ 5,000/-, it would be a case of bare necessity where no luxury is involved and therefore no luxury tax is leviable. 30. But Section 3-C which deals with levy and collection of tax charges for marriage hall makes a clear distinction between necessity of levy and luxury. If the charges for luxury provided in the marriage hall is less than ₹ 5,000/- it is a case of necessity. If the charges is more than ₹ 5,000/- per day, it is considered as luxury and that is precisely the Hon ble Apex Court in Express Hotels case has observed that the legislature has chosen to identify the luxury by the statutory standards prescribed by it. According to the legislative assumption, price does become evidence of the special quality on the basis of which luxuries could be distinguished and that some special quality is attributable to goods and services through the means of the price. Quality and price, in the legislative assessment, can be assumed to have a logical interrelationship. This cannot be held to suffer from the vice of irrationality. The Hon ble Apex Court in the case of Godfrey Phillips India Pvt. Ltd s case confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 7500 sqm, a machine tool Training centre and large outdoor area. It has a power supply infrastructure to distribute 10 MW, a Helipad, an Amphitheatre, VIP lounge, Business Centre attached with each hall and specialty Restaurants and many other support services. In Short, it is designed as the country s premier centralized facility for the international Exhibition and Conference industry; With the above facilities the appellant has already hosted an exhibition of over 1,10,000 sq.mt. of exhibit area. It has been able to cater to over 20,000 business visitors per day on several exhibition days. In this background, the argument of the learned counsel for the appellant that the word accommodation as mentioned in the other provisions which is consecutively missing in Section 3, the accommodation provided by the appellant cannot be levied with tax is without any substance. Once the premises of the appellant falls within the definition of marriage hall and charges levy is more than ₹ 5,000/-, Section 3-C is attracted and luxury tax is leviable. Realising this fact, the appellant had approached the Government with a request to exempt from payment of tax. The power under Section - 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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