TaxTMI 
TaxTMI 
2016 (2) TMI 550
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.... facts relevant for the decision of the controversy involved as narrated in the petition may be noticed. The petitioner is engaged in letting out open space for marriage functions. The activity being carried out by the petitioner has been brought under the head "luxury" and subject to tax under the Act inspite of the fact that it does not provide luxury in terms of sections 2(j) and 2(k) of the Act. In terms of Section 2(k) of the Act, the cost of amenities/services provided by the persons other than the petitioner are to be added for the purpose of computing the luxury tax notwithstanding that these are provided by persons other than the proprietor of the banquet hall. The levy and collection of tax is governed by Section 9 of the Act. The petitioner is required to register itself under the Act by virtue of Section 11 of the Act. The petitioner is further required to deposit security on the basis of anticipated tax payment under Section 11(4) of the Act. Under Section 12 of the Act, every proprietor shall declare the normal rate for luxury provided by him in such manner and within such period as may be prescribed. According to the petitioner, the services provided by the proprieto....
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....sing 'luxury tax' on banquet halls, which simply let out the space for conducting marriages. According to the petitioner, the services provided by it are not liable to levy of tax. Reliance was placed on judgments in M/s Sandley Industries vs. Union of India and others, CWP No.10564 of 2014, decided on 20.8.2015 and Bidhannagar (Salt Lake) Welfare Association vs. Central Valuation Board and others, (2007) 6 SCC 668. Reference in the petition has also been made to judgments in Godfrey Phillips India Limited and another vs. State of UP and others, (2005) 2 SCC 515, Govind Saran Ganga Saran vs. Commissioner of Sales Tax and others, 1985(Supp.) SCC 205 and Tamil Nadu Kalyana Mandapam Association vs. Union of India, AIR 2004 SC 3757. 5. Elaborating his submissions further, learned counsel for the petitioner argued that the letting out of space for the marriage functions in a banquet hall would not constitute 'luxury' under the Act specially when the petitioner has been letting out the open space for marriages without providing any facility like air conditioning, air cooling, chairs, tables, utensils and vessels, shamiana, tent, pavilion, electricity, water, fuel, interi....
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..... 9. We have heard learned counsel for the petitioner and do not find any merit in the contentions raised by him. 10. The State legislature derives its power under Entry 62 of List II of Schedule VII of the Constitution of India to enact law in respect of 'Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling'. With that constitutional sanction, Haryana Tax on Luxuries Act, 2007 was enacted to provide for the levy and collection of tax on luxuries and for matters incidental thereto and connected therewith. The relevant statutory provisions incorporated under the Act needs to be scrutinized. Section 2 of the Act provides definition of various expressions used in the Act which read thus:- "2 (c) "banquet hall" means any premises or part of premises, garden or part of the garden or farm house or part of farm house where accommodation or space is provided, by way of business for a monetary consideration, for marriage, reception, or matters related therewith, seminar, convention, banquet, kittyparty, meeting, or exhibition cum sale or such other hall as may be specified by the Commissioner, whether functions or events are conducted in such ha....
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.... hall are twenty thousand rupees or more with in the meaning of clause (k) of section 2. (2) The tax levied under sub- section (1) shall be paid by every proprietor in such manner as may be prescribed. Registration of proprietors . 11. (1) Every proprietor liable to pay tax shall get himself registered under this Act in such manner and within such period as may be prescribed and shall pay such registration fee as may be prescribed. (2) Every proprietor registered under sub-section (1) shall be granted a registration certificate and the same shall be valid until cancelled. (3) The assessing authority may for good and sufficient reasons, demand from a proprietor liable to pay tax, security for securing payment of tax and on such demand, the proprietor shall furnish security within a period of ten days from the date of receipt of the order demanding security. (4) The amount of security payable under sub-section (3) shall not exceed an amount equivalent to one-fourth of tax anticipated for the year from the proprietor. The assessing authority may demand an additional security, if it has reason to believe that the security furnished already is inadequate. (5) The security f....
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....ely construed. The rule of interpretation requires that an entry in either of the lists in 7th Schedule should not be read in a narrow or pedantic sense but it should be allocated fullest meaning and the widest amplitude so as to extend to all ancillary and subsidiary matters which can fairly and reasonably be said to be comprehended in them. 14. The Constitution Bench of the Supreme Court in the case of Express Hotels Private Limited vs. State of Gujarat, (1989) 74 STC 157 while examining the scope of Entry 62 of List II of Schedule VII of the Constitution of India under similar circumstances held that the concept of tax on "luxury" cannot be limited merely to tax things, tangible and corporeal in their aspect as "luxuries". The relevant observation reads thus:- "The concept of a tax on 'luxuries' in Entry 62, List II cannot be limited merely to tax things tangible and corporeal in their aspect as 'luxuries'. It is true that while frugal or simple food and medicine may be classified as necessities; articles such as jewellery, perfume, intoxicating-liquor, tobacco, etc., could be called articles of luxury. But the legislative entry cannot be exhausted by these ca....
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....between the giver and the receiv- er of the luxuries, entertainments, or amusements and both may, with equal propriety, be made amenable to the tax ..... " (Emphasis supplied) The concept of 'luxuries' as a subject of tax was not con- fined to those who received or enjoyed the luxury. It could be on those who provided it." 16. Further, referring to another Constitution Bench judgment in A.B.Abdul Kadir and others vs. State of Kerala, AIR 1976 SC 182 = (1976) 2 SCR 690, it was noticed that an expenditure on something which is in excess of what is required for economic and personal well being would be expenditure on luxury although the expenditure may be of a nature which is inclined by a large number of people, including those not economically well off. It was recorded thus:- " .... The word "luxury" in the above context has not been used in the sense of something pertaining to the exclusive preserve of the rich. The fact that the use of an article is popular among the poor sections of the population would not detract from its description or nature of being an article of luxury. The connotation of the word "luxury" is something which conduces enjoyment over and above th....
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....person on his behalf when such amenities are provided within the precincts of such banquet hall. It can by no stretch of imagination on taking hypothetical illustration be declared to be ultra vires without showing lack of legislative competence of the State to enact such a provision or there being violation of any constitutional mandate. 18. Nothing has been shown by the learned counsel for the petitioner to substantiate that the State legislature was not empowered to define the expression 'luxury in the banquet hall' under Section 2(k) in the statute. The definitions of various expressions under Section 2 of the Act and other substantive provisions of the Act are within the legislative competence and have not been shown to be contrary to any constitutional mandate. The services provided by the petitioner do fall under the said definition so as to be liable to levy of tax. Once there exists legislative competence in the State legislature to enact a provision, in the absence of the learned counsel for the petitioners to demonstrate that the same is arbitrary, discriminatory or violative of Article 14 of the Constitution of India, it cannot be declared to be unconstitutiona....