STATE OF KERALA Vs. HOTEL DIANA

JUDGEMENT

(1.) State is the petitioner in this writ petition, wherein the challenge is to order passed by the Tribunal setting aside the assessment as well as the penalty order issued against the respondent herein.

(2.) The short facts involved in the writ petition would disclose that the respondent herein is conducting a bar attached hotel. In terms with provisions of the Kerala Tax on Luxuries Act, 1976, the respondent is also under obligation to pay luxury tax levied in terms of Section 4 of the Act. The proceedings were taken by the assessing officer alleging escapement of turnover of service tax on the ground that during the period 2004-05 and 2005-06, certain service charges were collected, but tax was not paid. Service charges were collected from customers who were provided the facility to consume liquor in the rooms of the hotel. Accordingly, the assessment orders were passed as Ext.P1. Separate appeals were filed before the Deputy Commissioner who confirmed the demand. On the very same basis, the penalty proceedings were taken against the petitioner under Section 17A of the Act and an order of penalty had been passed imposing on the petitioner to pay double the amount of tax that had been levied. In the appeal filed against the penalty order, the appellate authority reduced the penalty to half of the amount, viz; the tax payable. All the appellate orders were under challenge before the Tribunal and the Tribunal had passed a common order as Ext.P5 setting aside the assessment order as well as penalty order.

(3.) Learned Special Government Pleader appearing on behalf of the petitioner submits that the only ground on which the Tribunal had set aside the assessment order as well as the penalty order is by stating that there is no provision in the Act to demand service charges when the customer is served liquor from a hotel room. The main argument raised by the learned Special Government Pleader is that the very levy of luxury tax clarifies the above point. Section 4 (1) as it then existed reads as under: