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of <h1>Court quashes tax notices on clubs, clarifies they're not hotels under Karnataka luxury tax law</h1> <h3>Bangalore Golf Club Versus Assistant Commissioner of Luxury Taxes</h3> The court allowed the writ petitions, quashing the notices and assessment orders issued under the Karnataka Tax on Luxuries Act, 1979. It clarified that ... - Issues Involved:1. Applicability of the Karnataka Tax on Luxuries Act, 1979 to clubs.2. Definition and interpretation of 'hotel' under the Act.3. Whether the activities of the clubs can be considered as carrying on business in a hotel.4. Validity of notices and assessment orders issued to the clubs.Detailed Analysis:Issue 1: Applicability of the Karnataka Tax on Luxuries Act, 1979 to ClubsThe writ petitions were filed by registered societies under the Societies Registration Act, 1860, challenging the notices issued under section 7-A of the Karnataka Tax on Luxuries Act, 1979. The petitioners argued that the provisions of the 1979 Act are not applicable to them as they are not carrying on any business and the facilities provided to their members or guests cannot be considered as a business activity.Issue 2: Definition and Interpretation of 'Hotel' under the ActThe Act defines a 'hotel' as a building or part of a building where lodging accommodation, with or without board, is provided by way of business for a monetary consideration. The court examined various definitions and interpretations of 'hotel' from legal dictionaries and previous judgments. It was emphasized that a 'hotel' must provide lodging accommodation by way of business for monetary consideration, which includes a lodging house but does not extend to clubs.Issue 3: Whether the Activities of the Clubs Can Be Considered as Carrying on Business in a HotelThe court considered the main activities of the clubs, which include promoting sports and providing recreational facilities to their members. It was argued that the incidental activity of providing lodging and food to members or guests on a reciprocal basis does not constitute carrying on business in a hotel. The court referred to several precedents, including the cases of State of Andhra Pradesh v. Sri Bhramaramba Mallikarjuna Swamy Devasthanam and Sports Club of Gujarat Ltd. v. Commissioner of Sales Tax, where it was held that incidental activities integral to the main non-commercial objective do not amount to business.Issue 4: Validity of Notices and Assessment Orders Issued to the ClubsThe court concluded that the notices and assessment orders issued to the clubs under the Karnataka Tax on Luxuries Act, 1979, were without jurisdiction. It was held that the clubs are not carrying on the business of a hotel, and their incidental activities of providing lodging and food to members do not attract the provisions of the Act. The court quashed the notices and assessment orders, stating that unless a club ceases to carry on its primary activities and converts into a hotel, it cannot be subjected to the luxury tax under the Act.ConclusionThe court allowed the writ petitions, quashing the notices and assessment orders issued under the Karnataka Tax on Luxuries Act, 1979. It was clarified that the Act does not apply to clubs as their primary activities do not constitute carrying on the business of a hotel. The assessing authority was directed that if in any particular case, it is found that a club has converted into a hotel or its main activity is that of a hotel, appropriate action can be taken under the Act.
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