EXPRESS HOTELS PRIVATE LTD Vs. STATE OF GUJARAT

JUDGEMENT

(1.) Heard the learned advocates. The petitioner is a Company registered under the Companies Act, 1956. It is a `Hotel' within the meaning of the Gujarat Tax on Luxuries [Hotel & Lodging Houses] Act, 1977 {hereinafter referred to as, "the Act of 1977"}. It is not disputed that the petitioner is liable to pay taxes under the Act of 1977. However, in the year 1977, the petitioner challenged the constitutionality of the Act of 1977 before this Court in Special Civil Application No. 405 of 1979. The said petition came to be dismissed on 23rd July, 1980. The judgment and order of this Court came to be confirmed by the Hon'ble Supreme Court in Civil Appeals No. 338 of 1981 and 339 of 1981 by its judgment and order dated 2nd May, 1989. During the pendency of the aforesaid litigation, in view of the interim stay granted by this Court and latter by the Hon'ble Supreme Court, the petitioner did not pay taxes payable under the Act of 1977. Since the dismissal of the appeal on 2nd May, 1989, the petitioner paid the aforesaid taxes during the months of June & July, 1989. During pendency of the said litigation, by Gujarat Ordinance No. 12 of 1988 and latter by Gujarat Act no. 8 of 1989, Section 7-A came to be inserted in the Act of 1977. By said Section 7-A, interest has been made chargeable on the amount of tax not paid within the time and in the manner prescribed in the Act. The said Section 7A & Section 8 of the Act of 1977 read as under:-

(2.) In view of the said section 7A, the District Collector, Vadodara by its order dated 30th December, 1999 directed recovery of a sum of Rs. 1,00,230/= being the amount of interest payable under the said section 7-A and imposed a fine of Rs 21,000/= under Section 7 of the Act of 1977. Feeling aggrieved, the petitioner preferred appeal before the State Government. The said appeal came to be rejected on 5th January, 2001. Feeling aggrieved, the petitioner has preferred the present petition.

(3.) Learned advocate Mr. Patel has submitted that the petitioner had been legitimately prosecuting the litigation with respect to the constitutionality of the Act of 1977. During the pendency of the said litigation, the recovery of the tax from the petitioner was stayed by this Court and latter by the Hon'ble Supreme Court. Soon after dismissal of the appeal by the Hon'ble Supreme Court, the petitioner paid the amount of taxes due. The petitioner, therefore, cannot be charged with interest under Section 7A of the Act of 1977. He has also submitted that the taxes in question were for the years 1981-82 till the year 1988-89. The aforesaid section 7A came to be inserted on 22nd December, 1988 i.e. after the date the aforesaid taxes became due and payable. The said section 7A does not have retrospective application. The petitioner, therefore, cannot be charged interest under the said Section 7A on the taxes that had already became due and payable prior to 22nd December, 1988. In the submission of Mr. Patel, even otherwise, in view of the stay granted by the Courts, as aforesaid, no interest can be charged from the petitioner. At last, he has submitted that even if such interest is chargeable, the same would become due and payable from the date notice is issued by the Collector for this purpose, as envisaged under sub-section (1) of Section 8 of the Act. Such notice was issued in the year 1995. Hence, the petitioner cannot be charged interest for the period prior to the date of issuance of notice and thirty days thereafter. Mr. Patel has also challenged the imposition of fine of Rs. 21,000/= under Section 7 of the Act of 1977. He has submitted that neither of the conditions mentioned in Section 7 of the Act of 1977 did exist. The District Collector, therefore, could not have invoked penal provision under Section 7 of the Act of 1977. Mr. Patel has relied upon the judgment of the Hon'ble Supreme Court in the matter of Commissioner of Income Tax, Bhopal vs. Hindustan Elector Graphites Limited, Indore [(2000) 3 SCC 595]. 593.