TaxTMI 
TaxTMI 
2016 (7) TMI 367
X X X X Extracts X X X X
X X X X Extracts X X X X
....xhibition and conference facility in Bangalore to promote the business of machine tools manufacturing industries by having specialized exhibitions and shows, exhibiting machinery and equipment. It is named as the Bangalore International Exhibition Centre (BIEC). It has hosted several Industrial/ Trade exhibitions of machine tools, manufacturing and other industries. The items displayed at these exhibitions are high value machinery and related equipment. The establishment of BIEC was supported by a grant from the Ministry of Commerce, Government of India in a sum of Rs. 30 crores under the Industrial Infrastructure up gradation Scheme and was approved by the Government of Karnataka under its Industrial Infrastructure Policy, 1997. 3. The appellant was served with a notice dated 02.10.2008 from the 5th respondent, the Assistant Commissioner of Commercial Taxes under Section 4-A of the Act and was called upon to register itself under the provisions of the said Act and to pay luxury tax for the period 2007-08 on the ground that all the activities conducted by the appellant in BIEC falls within the purview of Section 3-C of the act read with the definition of 'Marriage Hall' as provi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t after hearing both the parties held that in the factual matrix, it is not in dispute that BIEC was considered as an exhibition-cum-sale hall to showcase the promotion of sale of various Industrial machinery manufactured by industrialists globally and not a building or part thereof where accommodation is provided for marriages or reception or matters related therewith so as to fall within the definition of the term 'marriage hall' under Section 2(5-B) chargeable to luxury tax under Section 3-C of the Act. The said judgment was not challenged and as such had attained finality. In spite of the aforesaid judgment of this Court, an ex parte assessment orders dated 01.01.2010 for assessment period from April, 2007 to March 2008 and April 2008 to October 2008 were passed against the appellant along with the consequential demand notices for payment of luxury tax. The appellant was therefore compelled to file another writ petition Nos.1636- 37/2010 before this Court where an interim order of stay was granted on January 20th, 2010 staying the assessment orders and consequent demand notices. Subsequently, the writ petition was allowed by an order dated 25th February, 2011 quashing the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts contentions. Thereafter, under the protest the appellant filed an application for registration under Section 4-A of the Act. Thereafter, the appellant filed their additional objection contesting the claim of the respondents. When they were awaiting a notice, they were shocked to note that the authorities passed a Consolidated Assessment Order under Section 4-A r/w. Section 6(3) of the Act along with an Order under Section 5-A of the Act for payment of interest and also imposed penalty equivalent to the tax demanded on the appellant under Section 7 of the Act. Subsequently, a demand notice for a sum of Rs. 2,44,33,909-00 was also served on them towards luxury tax, penalty and interest for the Assessment Year 2012-2013. Challenging the constitutional validity of the aforesaid provision as well as the demand, the writ petition was filed. An interim order was granted in the said writ petition. No recovery was done. However, after hearing both the parties, by an Order dated 16.01.2015, the learned single Judge dismissed the writ petition. Aggrieved by the said Order, the appellant has preferred this appeal. 7. The respondents have filed a detailed statement of objections contestin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....conference facilities. Then they have referred to the definition clause in the Act and also the Judgments of the Apex Court and this Court and contend that Section 3-C of the Act provides that levy and collection of tax on charges for marriage hall where charges for the luxury provided in the marriage hall are not less than Rs. 5,000-00 per day. They shall be levy and collect tax at the rate of 10% on certain terms. As the charges collected per day is more than Rs. 5,000-00, the petitioner is required to pay taxes on the charges/rent collected. Hence, the rent received nothing but charges for providing luxury in the exhibition hall of the petitioner which falls under the definition of marriage hall under Section 2(5-B) of the Act. Therefore, they contend that the petitioner is liable to pay luxury tax as per the provisions of the Act for the period from 01.04.2012 to 26.11.2012. The charging provision is valid and no grounds are made out to quash the same and therefore, sought for dismissal of them. 9. Learned Senior Counsel for the appellant assailing the impugned order of the learned single Judge contended that the charge of luxury tax under Section 3-C of the Act is attracted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appeals are as under: a) Whether Section 3-C of the Act is ultra vires the Constitution merely because it does not set-out the luxury provided in the marriage hall as in the case of the definition contained in Section 3-E of the Act dealing with a hospital, Section 3-D of the Act dealing with a club, Section 3 of the act dealing with a hotel and Section 3-B of the Act dealing with a health club? b) Whether levy of luxury tax on a marriage hall in the light of the definition of luxury as contained in Section 2(4-B) of the Act and charges for marriage hall as provided under Section 2(1-A) of the Act is unsustainable in law? 12. The Karnataka Legislature in order to augment the revenue to the State enacted the Karnataka Tax on Luxuries Act, 1979, proposing to levy tax on luxuries provided in hotels and lodging houses. The charging provision contained in the Act came into force on 31st March, 1979. The word 'luxury' provided in the hotel was also defined under Section 2(5) which reads as under: (5) "Luxury provided in a hotel' means.- (i) accommodation for lodging provided in a hotel, the rate of charges for which (including charges for air-conditioning, teleph....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the term 'marriage hall' under Section 2(5-B) chargeable to luxury tax under Section 3-C of the Act. The appellant is not liable to pay luxury tax on such accommodation. It is after the aforesaid judgments, the Karnataka Legislature further amended the Act by Act 18 of 2012 with effect from 01.04.2012 substituted the present definition of 'Marriage Hall' which reads as under: "(5-B) "Marriage Hall" means. - (i) Kalyana Mantap, Shadi Mahal, Community Hall, a building or part of a building or a temporary structure or a property as defined in Section 3 of the Transfer of Property Act, 1882 where accommodation is provided for marriage or reception or matters related therewith or for organizing any official, social or business function whether functions are conducted in such place regularly or not; (ii) Seminar, convention, banquets, meeting or exhibition hall or a temporary structure or a property as defined in Section 3of the Transfer of Property Act, 1882 where accommodation is provided for marriage or reception or matters related therewith or for organizing any official, social or business function whether functions are conducted in such place regularly or not; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ments, bidding and gambling and it does not confer power to tax the accommodation. Therefore, it was contended that the imposition of tax is without authority of law and ultravires the Constitution of India. Elaborating the said contention, it was urged that the definition of luxuries under Section 2(4-B) only means services to enjoyment conferred or pleasure extraordinary to necessitate supply and the service provided by the appellant. The instant case do not fall within the said definition and therefore, the levy of luxury tax is ultravires. 18. In order to appreciate this contention, first it is necessary to see the definition of 'luxuries' under Section 3(4-B) of the Act which reads as under: "Luxuries" mean commodities or services specified in the Schedule ministering to enjoyment, comfort or pleasure, extraordinary to necessities of life." 19. The charges for marriage hall also is defined under Section 2(1-A) which reads as under: "2(1-A) "Charges for marriage hall" include charges for air-conditioning, chairs, utensils and vessels, shamiana, electricity, water, fuel, interior or exterior decoration and the like but do not include any charges for food and drinks. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ged to tax under the Act. 22. What is the consequence of this prescription? Does it mean only when more than Rs. 5,000/- is paid as charges for a marriage hall, does it amount to luxury to be taxed under the Act? The Constitution Bench of the Apex Court had an occasion to consider a similar question in the Express Hotels Pvt. Ltd., case. At para 15, it held as under: "We are dealing with an entry in a Legislative List. The entries should not be read in a narrow or pedantic sense but must be given their fullest meaning and the widest amplitude and be held to extend to all ancilliary and subsidiary matters which can fairly and reasonably be said to be apprehended in them. The concept of 'luxuries' as a subject of tax was not confined to those who received or enjoyed the luxury. It could be all those who provided it." 23. Then they have referred to the definition of 'luxury' in the Encyclopaedia Britannica, Webster's Comprehensive Dictionary, The New Dictionary of Thoughts and then held at para 21 as under: 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 whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e means of the price. Quality and price, in the legislative assessment, can be assumed to have a logical interrelationship. This cannot be held to suffer from the vice of irrationality. The further contention is that when the price factor is made the sole criterion for imparting the quality of luxury to the lodging, accommodation, the means of identification so adopted ceased to distinguish areas in the services which are not luxuries but are really necessities and comforts and the subject of the tax would come to include, not merely luxuries but necessities and comforts also. The answer is that in the context of lodging accommodation and the services that go with it, the concept of luxury would necessarily be a comprehensive idea taking into account the various components of the services. Differences of degree can at particular stage become differences of kind. The composite elements of lodging accommodation and services associated with it cannot be broken into components so as to distinguish some components as necessities, some others as comforts and yet others as luxuries. Even necessities and comforts which have to them the additional element of undue elegance to a point of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the States. For example would a luxury vehicle be subjected to tax under Entry 62 or Entry 57 of List II? In the latter case, the levy would be subject to provisions of Entry 35 of List III and hence capable of being over-ridden by Parliament. If it is referable to Entry 62 there would be no such concurrent power in Parliament. 83. Hence on an application of general principles of interpretation, we would hold that the word 'luxuries' in Entry 62 of List II means the activity of enjoyment of or indulgence in that which is costly or which is generally recognized as being beyond the necessary requirements of an average member of society and not articles of luxury." 28. In other words, the Constitutional Bench of the Apex Court in Godfrey's case has affirmed the view expressed by the Constitutional Bench in Express Hotel's case. 29. Now in the instant case, as stated earlier, the definition of "Luxury" means the service relating to comfort or pleasure external to necessities of life. Therefore services relating to enjoyment constitute "luxuries" under the Act. All that Section 2(1)(a) provides is what are the facilities for which charges could be levied by levying ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the nature of activities with details, it discloses that the premises includes exhibition halls, convention centre and the events conducted by them and also stated that they provide exhibition halls, conference centre/ convention centre along with helipad area to the exhibitors for conducting exhibitions. Further, the photographs produced in the case which are not in dispute and the write up shows that the exhibition and conferences facilities at the appellant's premises are the first of its kind in India which offer services and amenities of the highest quality at par with international standards. This complex, with only one purpose - to make it a preferred destination for international business exhibitions, trade fairs, congresses, international conferences, seminars and training programmes in India. It is conceptualized to meet the ever- increasing demands of India's booming economy and tremendous growth in the exhibition industry. It is located in 10th mile Tumkur Road. This multipurpose 34 acres of beautifully landscaped complex has 40,000 sqm of covered column-less air-conditioned exhibition space, a multi-facility conference centre spread over 5,600 sqm including 4 Conferenc....