Non-profit residential facilities were not a hotel for tax purposes where accommodation supported cultural and educational objects.

Residential accommodation and allied facilities run by a society for cultural and educational purposes, maintained on a no profit no loss basis and available mainly to members and invited persons, were not treated as a hotel for Hotel Receipts Tax Act purposes. Mere charging for use of the accommodation did not convert the institution into a commercial hotel, and the inclusive statutory definition could not be stretched to cover facilities ancillary to its non-profit objects. The receipts were therefore outside hotel receipts taxation, and the assessment was cancelled.

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Issues: Whether the residential accommodation and allied facilities run by the society on a no profit no loss basis could be treated as a hotel so as to attract tax under the Hotel Receipts Tax Act, 1980.

Analysis: The centre was established for cultural and educational objectives, with limited residential accommodation available only to members, cognate bodies, and specially invited non-members. The facility was to be maintained as far as possible on a no profit no loss basis. On this factual and constitutional setting, the mere charging of amounts for use of the accommodation did not convert the activity into the running of a hotel. The inclusive definition of hotel in the taxing statute could not be stretched to cover an institution whose dominant purpose was not commercial profit-making. The statutory notifications and exemptions available under the Income-tax Act also supported the character of the institution as one falling outside the mischief of hotel receipts taxation.

Conclusion: The receipts from the centre were not taxable as hotel receipts and the assessment was rightly cancelled.

Ratio Decidendi: A statutory definition of hotel, even if inclusive, cannot be expanded to include a whose residential facilities are ancillary to its charitable or educational objects and are maintained on a no profit no loss basis without commercial intent.

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