2020 (6) TMI 358 - HC - VAT and Sales Tax

Validity of luxury tax upheld under Kerala Building Tax Act, 1979. Legislative competence affirmed for luxury tax on residential buildings.

Ison George Versus State of Kerala, District Collector, Thasildar, Village Officer

Ison George Versus State of Kerala, District Collector, Thasildar, Village Officer - TMI Issues:1. Assessment of luxury tax on a residential building under Section 5A of the Kerala Building Tax Act, 1979.2. Validity of the luxury tax demand notice and assessment order.3. Applicability of Section 5A post the amendment of the Constitution.4. Interpretation of legislative powers regarding taxes on luxuries.Analysis:1. The petitioner, the owner of a residential building, challenged the assessment order for luxury tax based on the discrepancy in the plinth area calculation by the Tahsildar. Despite filing an appeal and remitting installment amounts, the petitioner faced challenges in receiving updates on the appeal status. The revision petition was rejected, leading to a revised assessment order imposing luxury tax. The petitioner contended that the luxury tax demand was unsustainable in law due to the repeal of the Kerala Tax on Luxuries Act, 1976, but Section 5A of the 1975 Act remained unchanged. The court analyzed the history of the legislation and previous judgments to determine the validity of the luxury tax assessment.2. The court examined the constitutional provisions related to legislative powers for taxation, emphasizing the exclusive authority of Parliament over Union List matters and the State Legislature's jurisdiction over State List subjects. The judgment delved into the changes brought about by the 101st amendment and the impact on the taxation of luxuries. It was argued that the introduction of the Central Goods and Services Tax Act led to the repeal of certain acts, including the Kerala Tax on Luxuries Act, 1976. However, the court clarified that the introduction of Section 5A in 1999 was distinct from the repealed act, thus upholding the validity of the luxury tax assessment under Section 5A.3. The court referred to a previous case challenging the constitutionality of Section 5A and highlighted the legislative competence to levy taxes on luxuries under Entry 62 of List II. The judgment emphasized the legislative discretion to levy taxes on different items through separate enactments and justified the insertion of Section 5A in the Kerala Building Tax Act for imposing luxury tax on residential buildings. The court rejected the petitioner's contention that the luxury tax assessment lacked jurisdiction, concluding that the respondents' actions were within the legislative framework and did not warrant interference under Article 226 of the Constitution.In conclusion, the court dismissed the writ petition, affirming the validity of the luxury tax assessment under Section 5A of the Kerala Building Tax Act, 1979, and upholding the legislative competence to levy taxes on luxuries, specifically on residential buildings meeting the specified criteria.