1989 (9) TMI 96

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....the money which is paid by them to the hotels in respect of the accommodation which is used by the petitioners, no tax is payable under the provisions of the Expenditure-tax Act, 1987. In order to examine the aforesaid contention, it is necessary to refer to a few provisions of the said Act. Section 4 is the charging section and this provides that there shall be charged a tax at a specified rate on the chargeable expenditure. "Chargeable expenditure" is explained in section 2(4) as meaning expenditure which is referred to in section 5. Section 5 reads as under: "5. Meaning of chargeable expenditure. For the purposes of this Act, chargeable expenditure means any expenditure incurred in, or payments made to, a hotel to which this ....

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....ision is section 7, which pertains to collection and recovery of expenditure-tax. The relevant portion of the same is as under : "(i) if such expenditure relates to any of the services, specified in clauses (a) to (d) of section 5, provided by the hotel, the person who carries on the business of such hotel ; and (ii) if such expenditure relates to any of the services, specified in clause (b) or clause (d) of section 5, provided by the other person referred to therein, such other person,. . ." It is clear that in order to determine whether a tax is chargeable or not, the important provisions are section 5 and section 7. These two provisions read together clearly show that tax is payable not on every expenditure which is incurred in ....

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....which was let out on hire or on lease. Even if clauses (a) and (c) overlap, to some extent, there is no escape from the conclusion that clause (c) clearly covers the case of the petitioners. It was then contended by learned counsel for the petitioners that no tax is leviable in respect of any expenditure which is incurred in any shop, provided that the shop is not owned or managed by the hotel. The submission was that the petitioners should be at liberty to pass on to their customers the expenditure-tax which is levied on the petitioners in respect of the hire money or the licence money which they pay. The Act does not expressly prohibit the passing on of the incidence of this tax to any other persons, including the customers of the peti....