TMI Blog2017 (1) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... “lawns”, therefore, once a lawn having been prescribed as a part of the hotel, the assessee was certainly liable to pay Luxury Tax on giving lawns on hire to the various persons for marriage and for diverse other purposes. The definitions of “business”, “luxuries provided in the hotel” and “turnover”, even prior to the amending Act of 2007 which is under consideration, in my view envisages and make it amply clear that lawns are included in the Explanation (ii) of sec.2(1)(i) for the purposes of levy of Luxury Tax in a hotel, therefore, lawn being part of hotel or even rooms, it should mean to cover up such lawns as well. The definition of “business” is also wide enough as observed earlier, that it includes “in connection with or ancillary to” should cover the renting / giving on hire of the lawn. The “lawn” having been prescribed in sub-clause (g), (i), has certainly got a definite meaning for the purposes of levy of tax under the Act, and in my view, the Tax Board is unjustified in holding that receipts by way of renting of “lawn” could not be covered prior to 9.3.2007. The Tax Board has not even adverted to the various sub-clauses of sec. 2 as referred to hereinbefore, and wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticed are that the respondent is a luxury hotel and as per the provisions of the Act, was subjected to levy of luxury tax. It is prescribed under the Act that if the tariff is more than ₹ 1000/- per day, luxury tax @ 8% was leviable, however, if the tariff exceeded ₹ 3000/- per day, the tax is chargeable @ 10%. It is the claim of Revenue that on the basis of a survey conducted and on perusal of the profit and loss account and other details gathered it was noticed that the assessee is receiving income by way of rental of the rooms occupied by the persons staying in hotel and in addition to that the assessee had also received certain amounts during the assessment years on account of renting/leasing out of lawn for the purposes of marriage parties and for other occasions. It was found by the Assessing Officer that there was an under assessment as the assessee had not disclosed luxury tax payable on the renting of lawn . A notice was said to have been issued to the respondent assessee and it is observed by the AO that the assessee was granted an opportunity by a show cause notice and though notice was duly served on the respondent assessee but none appeared on the given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions prior and later and contended that even prior to 9.3.2007 the definitions of 'business', 'hotel', and 'luxuries provided by the hotel' are quite clear and admittedly the respondent is a luxury hotel. Learned counsel contended that the definition of business is wide enough to cover any other service in connection with or ancillary to such activity of providing residential accommodation by a hotelier for monetary consideration. He contends that hotel includes residential accommodation along with lawns and the definition of 'luxuries' provided in hotel means accommodation (such as room or other place or lawn etc.), which should cover the renting of the lawn as well. Learned counsel contended that only prospective 9.3.2007 to cover all other open lands which were being let/leased out for the purposes of marriage, functions or otherwise were taken into tax net and did not affect the case of assessee because admittedly it is a luxury hotel, charging more than ₹ 1000/- per day and the reasoning reached by the AO as well as the DC(A) is well reasoned and thus supported the order of both the authorities below. Learned counsel also conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the hotel but the lawn is separate and distinct. Learned counsel contended that there are two lawns with the respondent assessee, one which is attached to the hotel and which is basically for the persons who come and stay and the lawn under dispute is entirely different, has a separate access and there is no inter connection or connectivity with hotel and persons who takes lawn separately, do not enter the hotel premises or otherwise. Learned counsel also drew analogy of the pre-amended and post-amended positions and contended that after 9.3.2007 covering of the lawn or open lands were enlarged by the Act and, therefore, these proceedings being prior to 9.3.2007, the Tax Board found as a finding of fact that luxury tax was not leviable and thus supported the order of Tax Board. Learned counsel contended that there is no question of charging interest or penalty u/s 21(5) of the Act as it is a case of reopening and the Tax Board was well justified in deleting the penalty when the very levy of the said tax was deleted. Learned counsel also contended that the AO was not able to prove as to what was the evasion in this regard, and relied upon following judgments :- Cooperat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law :- (i) whether in the facts and circumstances of the case of Rajasthan Tax Board was justified in law in holding that there is no tax liability of the luxury tax on lawn in the case of respondent prior to Finance Act 2007 i.e. before 09.03.2007. (ii) Whether in the facts and circumstances of the case the Rajasthan Tax Board was justified in law in deleting tax, interest and penalty under the Rajasthan Tax on Luxuries (in Hotel and Lodging Houses) Act 1990 holding that the tax could not be levied as the definition of Hotel and Business was amended w.e.f. 9.3.2007 without appreciating that the tax was leviable even prior to that date. (iii) Whether in the facts and circumstances of the case, the Rajasthan Tax Board was justified in deleting the tax, interest and penalty without appreciating the provision of the Act including definition of luxuries as contemplated u/s 2(i) of the Act. 11. Insofar as reopening of the assessment is concerned, all the three authorities have come to a concurrent finding that the AO was justified in issuing notice u/s 17(10) of the Act, which gives power to the AO to reassess an assessee and it prescribes for any reason , and admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l No.3 of 2007. Provisions after the Amendment by Finance Bill No.3 of 2007. business includes the activity of providing residential accommodation and any other service in connection with, or ancillary to, such activity of providing residential accommodation, by a hotelier for monetary consideration, whether or not such activity of providing residential accommodation is carried on with motive to make gain or profit and business includes the activity of providing residential accommodation or any place for the purpose of organizing parties, ceremonies or functions and any other service in connection with, or ancillary to, such activities for monetary consideration, whether or not such activities are carried on with motive to make gain or profit and whether or not any gain or profit accrues from such activity: whether or not any gain or profit accrues from such activities; (g) hotel includes a residential accommodation along with the lawns therefore, a lodging house, an inn, a public house or a building o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the lawn is integral part of the hotel. Argument of the learned counsel for respondent that lawn is separate and has separate access and there is no connection or co-relation or interference in between the hotel as such and the lawns and that there is a separate lawn for the occupants residing in the hotel, in my view it also does not make any difference whether there is a separate entrance/access or there is no interference of the hotel vis a vis the lawn as long as it is within the same boundary wall in the ownership of the respondent. Admittedly, the assets, namely Hotel and Lawn are owned and possessed by the assessee. On perusal of the definition of hotel as given in subclause (g) supra, a hotel includes residential accommodation along with lawns , therefore, once a lawn having been prescribed as a part of the hotel, the assessee was certainly liable to pay Luxury Tax on giving lawns on hire to the various persons for marriage and for diverse other purposes. 15. On perusal of sub-clause (i) supra, which provides luxuries provided in the hotel , includes accommodation such as room or other place or lawn etc., by whatever name called and other services, in my vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties/ceremonies or functions has been added, which makes it clear that insofar as luxury hotels like the assessee, is concerned, it is unaffected by the luxury as admittedly the room rent is exceeding ₹ 1000/- or more even prior to 9.3.2007. Thus, in my view, the finding of taxability of renting of lawn by the assessee is found in order. Consequently, levy of interest is also upheld, being automatic and goes with the levy of tax. 18. Insofar as imposition of penalty is concerned, though the learned counsel for Revenue vehemently contended that the assessee knowing fully well that it has been receiving huge amounts of rent on hiring lawns, and admittedly it was charging ₹ 1000/- per day, then the assessee was certainly required to pay Luxury Tax which was due against the assessee and such being a case of evasion of tax clearly proved that u/s 21(5) of the Act, the AO was well justified in imposing penalty as the words used is a hotelier is found to evade tax in any form or any method should cover a case like this and the Tax Board was unjustified in deleting the same. 19. Admittedly, it is a case of reassessment and the original assessment was completed and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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