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2016 (9) TMI 970 - KERALA HIGH COURT

2016 (9) TMI 970 - KERALA HIGH COURT - TMI - Imposition 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 .....

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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 .....

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) 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. - W.P.(C) Nos. 20226 & 24497 of 2011 - Dated:- 5-8-2016 - A.M. SHAFFIQUE, J. FOR THE PETITIONER : ADVS.SRI.V.ABRAHAM MARKOS, SRI.MATHEWS K.UTHUPPACHAN, SRI.BINU MATHEW, SRI.TERRY V.JAMES, SRI.B.J.JOHN PRAKASH, SRI.TOM THOMAS (KAKKUZHIYIL). FOR THE RESPONDENT : SR. GOVT. PLEADER SRI.C.K. GOVINDAN JUDGMENT These writ petitio .....

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ry same issue. 2. The question that had arisen for consideration in the appeals, was regarding the bifurcation of luxury tax as far as the usage of Banquet Hall and Poolside area for serving food as well as conducting other services are concerned. By an amendment which had come into force on 28.7.2006, Rule 3 C had been incorporated in the Kerala Tax on Luxuries Rules, 1976. By virtue of the aforesaid provision, rough estimate had been made with respect to the services rendered while serving foo .....

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21791 of 2009. This Court, as per judgment dated 29.5.2015 held that the assessment proceedings can be completed by verifying whether any differential amount has to be paid to the Government on account of such bifurcation of the total charges levied. It was observed that insofar as the petitioner was charging VAT on the total amount collected from the customer, even if there was no bifurcation, substantial loss will not be suffered by the Government. However, direction was issued to complete the .....

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ore the Deputy Commissioner (Appeals), the penalty for the year 2005-2006 was set aside. Further it was found that there was no reason to impose penalty on the amount involved as far as the Poolside area is concerned whereas, the penalty imposed for not levying luxury tax in respect of the Banquet Hall was confirmed. Appeals were filed before the Tribunal by the State ie, T.A.Nos.387/2009 and 388/2009 were dismissed and appeal No.386/2009 in respect of penalty order for assessment years 2005-06 .....

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cerned, 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. Under such circumstances, I am of the view that the Tribunal was not justified in imposing penalty on the petitioner as far as assessment year 2005-06 is concerned on this ground its .....

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vernment in this regard. Even assuming that there was a bifurcation, still the difference in tax would be of a minor percentage. Therefore, there was no intention on the part of the petitioner to evade any tax whereas only issue was regarding bifurcation of the tax, viz; VAT as well as luxury tax. It is submitted that after initiation of proceedings, the petitioner had already corrected the same and presently, it is being done in accordance with the statutory format. 7. On the other hand, learne .....

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J. v. State of Kerala and others [2014 KHC 3123] and Brunton Boatyard (M/s.), Fort Kochi and another v. State of Kerala [ 2013 KHC 605] in order to contend that there is suppression of the services rendered and hence the authorities are justified in imposing penalty on the petitioner. 9. Having heard the learned counsel on either side and having perused the records, it is true that there is deficiency on the part of the assessee in bifurcating the luxury tax as well as VAT, even after the Rule .....

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finite procedure as contemplated under Rule 3C for determination of luxury tax in the year 2005, it does not divest the petitioner from any liability to pay luxury tax in the light of non obstante clause under Section 4(2) of the Act. There is no dispute that the petitioner charged a consolidated amount as food bill, including service charges of banquet hall. The petitioner has failed to provide any other evidence to delineate the components of charges levied on the food bill. In that view of th .....

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given credit by bifurcating rent and food sale. I do find merit in this argument. Since the petitioner has already paid VAT on full value on banquet sales, excess VAT paid has to be set off against luxury tax payable. Accordingly, the impugned order is set aside. Fresh assessment shall be made after giving credit to the excess VAT paid. 10. Though it was contended by the learned Senior Government Pleader that there is suppression, I do not think that the facts involved in the present case would .....

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