Madras High Court
Itc Limited vs Assistant Commissioner ... on 3 March, 2022
W.P.Nos.4719 & 4721 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.03.2022
CORAM :
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
W.P.Nos.4719 & 4721 of 2022
ITC Limited
Sheraton Chola {Welcomhotel Chennai}
Represented by its General Manager,
Mr.Virender Thapa,
13, Cathedral Road,
Chennai – 600 086. ... Petitioner in both WPs
Vs.
1.Assistant Commissioner (CT)(FAC)
Mylapore Assessment Circle,
46, Greenways Road,
Chennai – 600 028.
2.Appellate Deputy Commissioner (CT)
Chennai (East)
C.T. Building, Annexe
Greams Road, Chennai -600 006.
3.Additional Commissioner
(Revenue Collection and Monitoring)
Office of the Commissioner of Commercial Taxes
Ezhilagam, 4th Floor,
Chepauk, Chennai – 600 005.
... Respondents in both WPs
Prayer in WP.No.4719/2022 : Petition filed under Article 226 of the
Constitution of India praying for issuance of a Writ of Certiorarified
Mandamus calling for the records on the file of the third respondent
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W.P.Nos.4719 & 4721 of 2022
herein, in R.P.No.68/2015 dated 11.08.2021 confirming the proceedings
of the first respondent in TNTLH/189/2008-09 dated 31.10.2013 and
quash the same and direct the first respondent to grant to the petitioner
refund of a sum of Rs.4,32,980/-.
Prayer in WP.No.4721/2022 : Petition filed under Article 226 of the
Constitution of India praying for issuance of a Writ of Certiorarified
Mandamus calling for the records on the file of the third respondent
herein, in R.P.No.69/2015 dated 11.08.2021 confirming the proceedings
of the first respondent in TNTLH/190/2009-10 dated 31.10.2013 and
quash the same and direct the first respondent to grant to the petitioner
refund of a sum of Rs.5,94,470/-.
In both WPs
For Petitioner : Mr.K.A.Parthasarathy
For Respondents : Mr.V.Prasanth Kiran
Government Advocate
COMMON ORDER
Since the issue raised in these writ petitions is common, with the
consent of the learned counsel appearing for both sides, these writ
petitions were heard and are being disposed of by this common order.
2. The petitioner is a Star Hotel and it is provided various services
to the guests who come to the hotel which includes the internet facility.
The said internet facility provided for the assessment years 2008-09 and
2009-10 has been now levied luxury tax by the impugned orders dated
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W.P.Nos.4719 & 4721 of 2022
31.10.2013 by the Assessing Authority and when the said order was
appealed, the same also has been confirmed by the order of the Appellate
Authority dated 19.02.2015. As against which, further revision was filed
before the Revisional Authority, who also has confirmed the same, by
order dated 11.08.2021. Challenging these orders, the present writ
petitions have been filed.
3. Heard Mr.K.A.Parthasarathy, learned counsel appearing for the
petitioner who pointed out that, the issue as to whether the internet
facility provided to the guests of the Hotel concerned like the petitioner,
whether can be levied for the purpose of luxury tax or not is no more res
integra as that issue has been considered in more than one judgment by
this Court, where, he relied upon a decision of the Writ Court made in
W.P.Nos.21206 & 21207 of 2014, where, by order dated 01.11.2019 in
the matter of M/s.Adyar Gate Hotel Limited Vs. The Assistant
Commissioner (CT), Chennai, a learned Judge has passed an order to
the following effect:
“3.On merits, two additions have been made. The
petitioner collects charges towards Internet facilities provided
through the telephone, in terms of Section 2(g) of the Act.
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W.P.Nos.4719 & 4721 of 2022
Section 2(g) of the Act is extracted below:
'2(g) “luxury provided in a hotel” means accommodation
for residence provided in a hotel, the rate of charges for
which (including charges for air-conditioning, television,
radio, music, extra beds and the like but excluding charges
for food, drink and telephone calls) is [five hundred rupees or
more].'
4.The petitioners' case is that the Internet connection
has been provided via telephone that stands specifically
excluded from the ambit of 'luxury', as per the definition
above. I agree. Moreover, Internet facility can hardly be
considered as a luxury and has come to be regarded as a
basic necessity, equatable to telephone facility. This addition
is deleted.
5.The second addition is made in terms of Section 4-A
of the Act. Section 4-A is extracted below:
'4-A. Intimation of revised rate to the Assessing
Authority.- Where any proprietor intends to revise any rate
of charge for any luxury provided in a hotel, he shall intimate
in writing to the assessing authority seven days prior to the
date of giving effect to such revised rates. The proprietor
shall be liable to pay tax at the revised rate after the expiry of
seven days from the date of receipt of such intimation by the
assessing authority.'
6.In the present case, admittedly the petitioner has put
into operation the revised rates within a period of 7 days and
prior to intimation of the revision to the Department. This is
not called into dispute by Mr.Haribabu, learned Additional
Government Pleader appearing for the respondent. Tax has
thus been remitted by the petitioner on the revised, enhanced
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rates. Thus, there can be no prejudice caused to the
Department, since it has, in fact received the tax on the
enhanced rates as per the timelines stipulated in Section 4-A
above though intimation of the revision was belated. This
ground is allowed and the modification deleted.
7.Coming to the aspect of penalty, the provisions of
Section 8(d) of the Luxury Tax Act, if at all, would be
applicable in the present case. However, the Assessing
Authority has levied penalty in terms of the provisions of the
Tamil Nadu Value Added Tax Act which is patently
incorrect. That apart, since the additions on merits have been
set aside, there can be no question of levy of penalty. In fine,
the impugned assessments are set aside and the writ petitions
allowed. No costs. Consequently, connected miscellaneous
petitions are closed.
8.This Court on 07.08.2014 had granted an interim
stay upon condition that the balance taxes demanded under
the impugned orders of Rs.17,66,735/- and Rs.14,07,514/-
be paid within three weeks from the date of order. The
petitioner has effected remittances as aforesaid. A copy of
covering letter dated 01.09.2014 with cheque numbers and
acknowledgments is placed on record. Let a request be made
to the Assessing Officer seeking refund which shall be
granted in accordance with law.”
4. Subsequently, another order has been passed for the same
assessee viz., M/s.Adyar Gate Hotel Limited in W.P.No.20871 of
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W.P.Nos.4719 & 4721 of 2022
2014 for subsequent assessment year by order dated 04.03.2021,
where also another learned Judge has passed the following order:
“2. By an order dated 01.11.2019, the demand was set
aside with the following observations:-
“4. The petitioners' case is that the Internet
connection has been provided via telephone that stands
specifically excluded from the ambit of 'luxury', as per the
definition above. I agree. Moreover, Internet facility can
hardly be considered as a luxury and has come to be
regarded as a basic necessity, equatable to telephone facility.
This addition is deleted.
5. The second addition is made in terms of
Section 4-A of the Act. Section 4-A is extracted below:
'4-A. Intimation of revised rate to the Assessing
Authority.-
Where any proprietor intends to revise any rate of
charge for any luxury provided in a hotel, he shall intimate in
writing to the assessing authority seven days prior to the date
of giving effect to such revised rates. The proprietor shall be
liable to pay tax at the revised rate after the expiry of seven
days from the date of receipt of such intimation by the
assessing authority.'
6. In the present case, admittedly the petitioner
has put into operation the revised rates within a period of 7
days and prior to intimation of the revision to the
Department. This is not called into dispute by Mr.Haribabu,
learned Additional Government Pleader appearing for the
respondent. Tax has thus been remitted by the petitioner on
the revised, enhanced rates. Thus, there can be no prejudice
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W.P.Nos.4719 & 4721 of 2022
caused to the Department, since it has, in fact received the
tax on the enhanced rates as per the timelines stipulated in
Section 4-A above though intimation of the revision was
belated. This ground is allowed and the modification deleted.
7.Coming to the aspect of penalty, the
provisions of Section 8(d) of the Luxury Tax Act, if at all,
would be applicable in the present case. However, the
Assessing Authority has levied penalty in terms of the
provisions of the Tamil Nadu Value Added Tax Act which is
patently incorrect. That apart, since the additions on merits
have been set aside, there can be no question of levy of
penalty. In fine, the impugned assessments are set aside and
the writ petitions allowed. No costs. Consequently, connected
miscellaneous petitions are closed.”
3. The learned counsel for the respondent/Commercial
Tax Department submits that this order was passed on
01.11.2019 and has not appealed against. Considering the
same, this Writ Petition stands allowed in terms of the above
order. No costs. Consequently, connected miscellaneous
petition is closed.”
5. Relying upon these decisions, the learned counsel would contend
that, the present order passed by the Revisional Authority confirming the
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order of the Appellate Authority as well as the Assessing Authority
imposing the luxury tax on the services of providing internet facility by
the hotel concerned i.e., the assessee is unjustifiable or unlawful and
therefore, the said orders are liable to be set aside, he contended.
6. Per contra, Mr.V.Prasanth Kiran, learned Government Advocate
appearing for respondents would submit that, though initially there was
no appeal filed against the said orders, subsequently, the Department has
decided to file intra-Court appeal against those orders, therefore, the
decision taken by the Writ Court cannot be construed as a conclusive one.
7. I have considered the said submissions made by the learned
counsel for both sides and have perused the materials placed before this
Court.
8. Even though it is submitted by the learned Government
Advocate for respondents that, they decided to prefer appeal against the
said orders, of course belatedly, that may not preclude this Court from
following the earlier orders based on the same subject or same point,
where, those writ petitions have been allowed in a similar circumstances
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W.P.Nos.4719 & 4721 of 2022
by giving interpretation to the concerned provision of law viz., luxury tax
and therefore, I am inclined to follow the orders referred to above and if
the said principle enunciated in the said orders is applied to the present
facts of the case, this Court has no hesitation to hold that the impugned
orders cannot be sustained.
9. In that view of the matter, this Court is inclined to dispose of
these Writ Petitions with the following orders:
That the impugned orders are quashed and the writ
petitions are allowed.
10. It is brought to the notice of this Court that, during the
pendency of the proceedings upto the Revisional Authority levels due to
the steps taken to recover the money by the Revenue from the petitioner/
assessee, the petitioner/assessee without prejudice his right to contend
that, he is not liable to pay the tax, has already paid the tax due.
11. In view of the above, since the writ petitions have been allowed
and the orders of assessment including the Revisional Authority's order
since has been set aside, the petitioner is entitled to get the refund of the
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W.P.Nos.4719 & 4721 of 2022
amount already paid and therefore, there shall be a direction to the
respondents to refund the said amount within a period of four weeks from
the date of receipt of a copy of this order. However, there shall be no
order as to costs.
03.03.2022
Index : Yes / No
Speaking Order : Yes / No
Sgl
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W.P.Nos.4719 & 4721 of 2022
To
1.Assistant Commissioner (CT)(FAC)
Mylapore Assessment Circle,
46, Greenways Road,
Chennai – 600 028.
2.Appellate Deputy Commissioner (CT)
Chennai (East)
C.T. Building, Annexe
Greams Road, Chennai -600 006.
3.Additional Commissioner
(Revenue Collection and Monitoring)
Office of the Commissioner of Commercial Taxes
Ezhilagam, 4th Floor,
Chepauk, Chennai – 600 005.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4719 & 4721 of 2022
R. SURESH KUMAR, J.
Sgl
W.P.Nos.4719 & 4721 of 2022
03.03.2022
https://www.mhc.tn.gov.in/judis
