CAMA HOTELS LIMITED Vs. STATE OF GUJARAT

JUDGEMENT

(1.) Litigation may or not be a luxury for some. This litigation is in any case about luxuries. The constitutional validity of a tax on luxuries provided in a hotel such as air-conditioning television channel music personal telephone etc. is challenged by hotel owners who have to collect the tax from their customers availing of such luxuries.

(2.) A Public Limited Company engaged in the business of running Hotels at Ahmedabad Cama Hotels Ltd. petitioner in Special Civil Application No. 1263/78 and three Private Limited Companies engaged in the same business at Baroda have instituted four allied petitions under Article 226 of the Constitution of India in order to challenge the constitutional validity of the Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act 1977 mainly on 4he ground that the State Legislature has no legal competence to enact the legislation in question under Entry 62 of List II of Schedule VII to the Constitution of India and on some other grounds.

(3.) The State Legislature (as declared in the preamble) has enacted the aforesaid Act in order to provide for the levy and collection of a tax on luxuries provided in hotels and lodging houses. It has come into force with effect from August 10 1977 The expression luxury provided in a hotel has been defined to mean accommodation for lodging provided in a hotel the rate of charges for which (including charges for airconditioning telephone television radio music or extra beds and the like but excluding charges for food drink and other amenities) is not less than thirty five rupees per person per day. The charging section imposing the levy provides that a tax known as luxury tax shall be levied and collected from every person in respect of any luxury provided to him in a hotel at different rates. The Act also provides that the tax payable under the relevant provisions shall be collected in the prescribed manner by the proprietor of the hotel providing such luxuries and shall be paid into a Government Treasury within the prescribed time. As per the statements annexed by the respective petitioners to their petitions the impact of the tax is as under: _________________________________________________________________________________ Name of the hotel Approximate monthly Collection during the last 3 Months_________________________________________________________________________________ Cama Hotels Limited (Petitioner in Spl. Civil Application No. 1236/78) Rs. 22 998 Hotel Utsav (Pvt) Ltd. Baroda. (Petitioner in Spl. Civil Application No. 403/79). Rs. 4 56 Hotels Express Pvt. Ltd. Baroda. (Petitioner in Spl. Civil Application No. 405/79) Rs. 12 670 _______________________________________________________________________________ _______________________________________________________________________________ 4 As disclosed by the respective petitioners the charges for lodging including air-conditioning telephone etc. which prevail in the hotels are as under:- _________________________________________________________________________________ Name of the hotel Charges for Luxuries provided a single room _______________________________________________________________________________ Cama Hotels Ltd. Centrally air (Petitioner in Conditioned Spl. C. A. No. 1263/78 ) Rs. 90/ Telephones channel music 24 hours hot & cold water Hotel Utsav (Pvt) Ltd. Centrally airBaroda. Rs. 78/ conditioned _______________________________________________________________________________ _______________________________________________________________________________ telephone in each room channel music hot and cold water for 24 hours. Hingorani Hotels (Pvt.) Ltd. Baroda. Rs. 90/ Telephone centrally air-conditioned channel music hot and cold water for 24 hours. Hotel Express (Pvt.) Ltd. Baroda. Centrally airRs. 90/ conditioned telephone in each room channel music attached bath hot and cold water for 24 hours. _________________________________________________________________________________