Luxury tax under Kerala law applies only to luxury actually provided by proprietor; prospective amendment blocked pre-2006 Convention Centre levy.

Luxury tax under the Kerala Tax on Luxuries Act applies only when the proprietor actually provides the taxable luxury, so charges for Ayurveda Centre and Beauty Parlour services supplied by independent third parties and billed directly to customers are not taxed as hotel luxury charges. Convention Centre receipts were outside the pre-01.07.2006 charging provision, and the 2006 amendment creating that levy was treated as prospective only, so the earlier assessment years could not be taxed on that basis. The note also states that ejusdem generis could not be used to widen the pre-amendment levy.

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Issues: (i) Whether charges collected by the assessee from customers in respect of services rendered by independent Ayurveda Centre and Beauty Parlour operators in the hotel premises were liable to luxury tax under the Kerala Tax on Luxuries Act, 1976; (ii) Whether charges collected for use of the Convention Centre were liable to luxury tax under the Kerala Tax on Luxuries Act, 1976 for the assessment years prior to 01.07.2006.

Issue (i): Whether charges collected by the assessee from customers in respect of services rendered by independent Ayurveda Centre and Beauty Parlour operators in the hotel premises were liable to luxury tax under the Kerala Tax on Luxuries Act, 1976.

Analysis: The charging scheme under Section 4 of the Kerala Tax on Luxuries Act, 1976 fastens liability on the proprietor for luxury actually provided by the hotel. The materials showed that the Ayurveda Centre and Beauty Parlour services were provided by independent third parties, with invoices raised by them directly on the customers. The revenue-sharing arrangement was treated as consideration for letting out space within the hotel premises and did not convert the assessee into the provider of the taxable luxury. The taxable event was therefore not established against the hotel.

Conclusion: The issue was decided in favour of the assessee and against levy of luxury tax on those charges.

Issue (ii): Whether charges collected for use of the Convention Centre were liable to luxury tax under the Kerala Tax on Luxuries Act, 1976 for the assessment years prior to 01.07.2006.

Analysis: Before the amendment introduced by the Kerala Finance Act, 2006 with effect from 01.07.2006, Section 4(2)(c) of the Kerala Tax on Luxuries Act, 1976 did not provide for levy on Convention Centre charges. Since the amendment introduced a new substantive levy, it was held to operate prospectively. The principle of ejusdem generis was held inapplicable to enlarge the charging provision for the prior period.

Conclusion: The issue was decided in favour of the assessee and against levy of luxury tax for the pre-amendment assessment years.

Final Conclusion: The impugned tribunal order was upheld and no interference was warranted with the deletion of tax on the disputed service charges and the pre-amendment Convention Centre receipts.

Ratio Decidendi: A luxury tax under the Kerala Tax on Luxuries Act, 1976 is attracted only when the luxury is actually provided by the proprietor, and a substantive amendment introducing a fresh levy cannot be applied retrospectively.

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