Luxury tax on banquet halls upheld where State competence extends to accommodation and related amenity charges under the Act.

Entry 62 of List II, read with Article 265, permits a State to tax luxuries, and the expression "luxury" is broad enough to cover services and activities involving comfort or pleasure. The Haryana Tax on Luxuries Act, 2007 validly brought banquet-hall accommodation and related amenity charges within the taxable base where the statutory threshold was met. The Explanation to Section 2(k) was treated as clarificatory because it only set out the mode of computation by including amenity charges recovered by or on behalf of the proprietor for facilities provided within the banquet hall premises. No lack of legislative competence, arbitrariness, discrimination, or other constitutional infirmity was shown, so the challenge failed and the levy was upheld.

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Issues: Whether the levy of luxury tax on banquet halls under the Haryana Tax on Luxuries Act, 2007, including the Explanation to Section 2(k), was beyond legislative competence or unconstitutional.

Analysis: Entry 62 of List II of the Seventh Schedule, read with Article 265 of the Constitution of India, authorises the State to levy taxes on luxuries. The expression "luxury" is of wide import and may extend beyond tangible goods to services and activities involving enjoyment, comfort or pleasure. The statutory definitions of "banquet hall", "charges for banquet hall", "luxuries" and "luxury provided in a banquet hall" show that the levy is directed at accommodation or space provided for marriage and related functions where the prescribed threshold is met. The Explanation to Section 2(k) is clarificatory and merely provides the mode of computation by including amenity charges whether recovered by the proprietor or on his behalf, if such amenities are provided within the banquet hall premises. No constitutional infirmity, lack of legislative competence, arbitrariness or discrimination was shown.

Conclusion: The provisions were held to be within legislative competence and constitutionally valid; the challenge to the levy failed.

Final Conclusion: The petition was rejected, and the levy of tax on banquet halls under the Act was upheld.

Ratio Decidendi: A State Legislature competent to tax luxuries under Entry 62 may validly include banquet-hall accommodation and related amenity charges within the taxable base, and a clarificatory computation provision will not be struck down absent demonstrated constitutional infirmity.

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