TMI Blog2023 (11) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... to hold in favour of the petitioner on this score. When one reverts to the facts of the case, it is evident that the Act as it stood during the assessment period in question extended its application also to the providing of residential accommodation in a club and in any case did not at the relevant time exclude the provisioning of accommodation to members of a club from the expression luxury . In fact, the word luxury did not even exist on the statute book prior to its insertion by virtue of the 2012 Amendment Act. In view of the above and bearing in mind the statutory position which prevailed at the time when the assessment orders came to be passed, there are no justification or ground to interfere with the ultimate conclusion arrived at by the first respondent. The decision of the Commissioner assailed shall not be liable to be treated as a precedent for any assessment period post the promulgation of the 2012 Amendment Act. Any assessments made or proceedings pending would have to be considered bearing in mind the observations rendered - Application disposed off. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nless the context requires otherwise: xxx xxx xxx b) business includes the activity of providing residential accommodation and any other service in connection with, or incidental or ancillary to such activity of providing residential accommodation, by a hotelier for monetary consideration; 6. It also defined the words club , establishment , hotelier , luxury provided in a hotel in the following terms:- 2. Definition. In this Act, unless the context requires otherwise: xxx xxx xxx (c) club includes both an incorporated and unincorporated association of persons , by whatever name called; xxx xxx xxx (g) establishment includes a residential accommodation, a lodging house, an inn, a club, a resort, a farm house, a public house or a building or part of a building, where a residential accommodation is provided by way of business ; xxx xxx xxx (h) hotelier means the owner of the establishment and includes the person who for the time being is in charge of the management of the establishment; xxx xxx xxx (i) luxury provided in a hotel means accommodation and other services provided in a hotel, the rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1975). (6) For the purposes of this Act. tax collected separately by the hotelier shall not be considered to be part of the receipt or the turnover of receipts of the hotelier 9. As would be manifest from the aforesaid provisions enshrined in the Act and as it stood in its unamended avatar, the statute appears to have concentrated the levy of a luxury tax on the activity of providing residential accommodation by a hotelier for monetary consideration. Undisputedly, the petitioner would fall within the ambit of Section 2(c) of the Act by virtue of being an incorporated club. The word establishment as defined in Section 2(g) puts in place an inclusive definition and which extended to a residential accommodation, an inn, a lodging house, a club, a resort, a farm house, a public house or a building or a part thereof, where residential accommodation has been provided in the course of business. 10. The expression hotelier was defined to mean the owner of an establishment, and which would by extension have to be read alongside Section 2(g), which included a club within the meaning of an establishment. Section 3 envisaged the levy of tax on the turnover of receipts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coration, music, orchestra, live telecast and the like; (ii) Services provided in a gymnasium or health club, which includes services of trainer or personal trainer, steam, sauna and the like; (iii) Accommodation and other services provided in a hotel, the rate or charges for which, including the charges for air cooling, air conditioning, radio, music, extra beds, television and the like, is seven hundred fifty rupees per room per day or more whether such charges are received collectively or separately per room per day; (iv) Facilities or services provided in a spa which includes beauty treatment, manicure, pedicure, facial, laser treatment, massage shower, hydrotherapy, steam bath, saunas or cuisine, medispa and the like; 14. The word receipt as defined in Section 2(m) and as amended vide the 2012 Amendment Act is reproduced hereinbelow:- 2. Definition. In this Act, unless the context requires otherwise: xxx xxx xxx (m) receipt means the amount of monetary consideration received or receivable by a proprietor or by his agent for any luxury provided in the establishment; 15. Section 3 and which speaks of the incidence and levy of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll. Further, and in terms of Section 2(g), the word establishment was defined to extend to residential accommodation, lodging house, an inn, a club, resort, farm house, public house or a building or a part thereof, where residential accommodation is provided by way of a business. 17. However, when we turn our gaze to the word luxury as defined, we find that the same brought within its ambit accommodation or space provided in a banquet hall, services provided in a gymnasium or health club or accommodation and other services provided in a hotel or facilities and services provided in a spa. Undisputedly, the petitioner association would not fall within either of those clauses as set out in Section 2(i). 18. It becomes pertinent to note that while the petitioner may be said to fall within the meaning of the expression establishment as defined in Section 2(g), the receipts generated from its activities would not perhaps fall within the scope of Section 2(m), since that provision ties the monetary consideration received or receivable by a proprietor on the provision of any luxury provided in that establishment. The word receipt has been defined in that provision as moneta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tax would be leviable by virtue of the provisions of Articles 366(29-A)(f) of the Constitution. It was this argument which came to be negatived with the Supreme Court observing as follows:- 41. This is further reinforced by the last part of Article 366(29-A), as under this part, the supply of such goods shall be deemed to be sale of those goods by the person making the supply, and the purchase of those goods by the person to whom such supply is made. As Young Men's Indian Assn. case [CTO v. Young Men's Indian Assn., (1970) 1 SCC 462] and the doctrine of mutuality state, there is no sale transaction between a club and its members. As has been pointed out above, there cannot be a sale of goods to oneself. Here again, it is clear that the ratio of Young Men's Indian Assn. [CTO v. Young Men's Indian Assn., (1970) 1 SCC 462] has not been done away with by the limited fiction introduced by Article 366(29-A)(e). xxxx xxxx xxxx 49. A reading of the aforesaid provisions makes it clear that when profits and gains of a mutual insurance company are sought to be brought to tax, they are so done by express reference to the fact that the business of insur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ader, relying on the decisions of the division bench of this court in Lotus Club v. State of Kerala - [Neutral Citation Number :2018/KER/40520] and Madhavaraja Club v. The Commercial Tax Officer (Luxury Tax) - [Neutral Citation Number : 2013/KER/9816], that in the former judgment, this court has clearly held that the incidence of tax is on the person enjoying the luxury and hence, although the luxury is provided to a member of the club by the club itself, the doctrine of mutuality will have no application, and that in the latter judgment, another division bench of this court has, in the appellant's own case under the KTL Act for an earlier assessment year, clearly held that the doctrine of mutuality is not apposite in the context of the KTL Act. We have gone through the said judgments cited by the learned government pleader. In Lotus Club, the Division Bench essentially followed an earlier division bench judgment of this Court in Trivandrum Club v. Sales Tax Officer (Luxury Tax) - [(2012) 3 KLT 682] that unambiguously held that under the KTL Act, the charging section recognised the club as the person liable to luxury tax. The Division Bench therefore recognised the club as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he KTL Act cannot be seen as laying down the correct law in the light of the subsequent judgment of the Supreme Court in Calcutta Club Ltd. where the doctrine of mutuality was held applicable in the context of legislations regulating the levy of indirect taxes such as VAT and Service Tax. We are of the view that the principle recognised in Calcutta Club Ltd., that the absence of two distinct persons to a transaction viz. a supplier/provider of goods/services/amenities/luxuries and a recipient thereof, makes the transaction a supply to oneself, which cannot be taxed under the statute, applies equally to the KTL Act which contemplates the levy of tax whenever a luxury is provided by one specified person to another. 16. We therefore find that the mutuality principle will apply to insulate the petitioner club from the levy of tax under the KTL Act, save under Section 4(2A) thereunder, on charges collected from its members for amenities provided to them. Since it is not in dispute that the petitioner club has paid the tax in terms of Section 4(2A) during the assessment years in question, we allow O.P. (Tax). No. 9 of 2016 and O.P. (Tax). No. 23 of 2016 by setting aside the orders o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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