TaxTMI 
TaxTMI 
2012 (10) TMI 975
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Commissioner, Palakkad. They have also obtained registration as a private hospital from the Chalissery Grama Panchayat and also licence under the Kerala Panchayat Raj Act, 1994. 3. By the Finance Act, 2008 (Act 21 of 2008), with effect from April 1, 2008, certain amendments were made to the Kerala Tax on Luxuries Act, 1976 (hereinafter referred to as "the Act", for short). By this amendment, hospitals were brought within the purview of the Act and "luxury provided in hospitals" was also made taxable. Thereupon, allegedly under compulsion, the petitioner took out registration as provided under section 4(1)(III) of the Act and started complying with the requirements thereunder. It is stated that, while so, the fifth respondent conducted an inspection of the petitioner's hospital and thereafter issued exhibit P3 notice calling upon them to produce their certificate of registration and other documents and the relevant part of this notice reads thus: "Documents to be produced (1) The certificate of registration you have obtained, if any, from the Department of Commercial Taxes related with your business. (2) The details of treatment/therapy/other services/packages/ acti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9. In so far as this issue is concerned, I am of the view that there is no substance in what the respondents contend. Even in exhibit P3 notice issued, the respondents themselves have described the establishment of the petitioner as a "hospital". Once the respondents themselves have chosen to initiate proceedings on the basis that it is a hospital, they cannot turn around and contend before this court that establishment of the petitioner is a hotel and not a hospital. Therefore, the first contention raised by the petitioner deserves acceptance. Consequently, the Act cannot have application to the petitioner's hospital for any period prior to April 1, 2008 and hence the demand for production of documents and details for any prior period is illegal. 10. The second contention regarding absence of legislative competence was argued mainly relying on the apex court judgment in Godfrey Phillips India Ltd. v. State of U. P. [2005] 139 STC 537 (SC); [2005] 4 RC 186; [2005] 2 SCC 515. Before proceeding further, it is necessary to understand the principles laid down by the apex court in the aforesaid judgment. Godfrey Phillips [2005] 139 STC 537 (SC); [2005] 2 SCC 515 was a case where ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red to be legislatively incompetent. . ." (vide paragraph 93). 11. Thus, from the principles laid down by the apex court it is clear that entry 62, List II, does not authorise State Legislature to levy luxury tax on goods or articles and that luxury tax can be levied only on activities of indulgence, enjoyment or pleasure. 12. Having understood the scope of the relevant legislative entry, I shall proceed to survey the important provisions of the Act, sections 2(de) and (fb) of the Act, as amended by Act 21 of 2008, define the expressions "hospital" and "luxury provided in a hospital" thus: "2. (de) 'hospital' includes a nursing home, therapy centre, rejuvenation or recuperation centre, nature care or cure centre, ayurvedic cure or care centre, sidha centre or any other treatment centre, personal care centre and beauty treatment centre, by whatever name called. 2. (fb) 'luxury provided in a hospital' means accommodation for residence for use of amenities and services provided in a hospital the rate of charges of which, excluding charges of food, medicine and professional services, is one thousand rupees per day or more." 13. Section 4(1)(III) provides ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed is whether the amenities and services provided in a hospital can be defined to be an activity of indulgence, enjoyment or pleasure to be within the legislative competence of the State Legislature under entry 62, List II. The petitioner contended that their hospital is providing ayurvedic treatment to both inpatients and outpatients and that the amenities enjoyed or services provided to the patients are incidental to their treatment for various ailments and therefore is not an indulgence, enjoyment or pleasure or beyond the requirement of an average member of the society, to be taxed as a luxury under the Act. This again, in my view, is an untenable contention. 18. Competence of the Legislature under entry 62, List II to levy tax on luxuries cannot be and was not disputed. It is trite that in deciding the question of legislative competence, the legislative entries in the relevant List should not be narrowly interpreted and that the interpretation should be broad and liberal. Subject to the limitations provided in the Constitution itself, Legislature is supreme in its own sphere under the Constitution and it is for the Legislature to decide as to when and in what respect and on....