CAMA HOTELS LTD Vs. STATE OF GUJARAT

JUDGEMENT

(1.) BY way of the present petition, the petitioner has prayed for an appropriate writ, direction and order to quash and set aside the impugned notices at Annexures D, E, I and J and similar other notices issued by respondents no. 2 and 3, issue to recover amount of interest i.e. 2,29,303/ on the amount luxury tax i.e. Rs. 42,01,597.50 for the period between 1981 to 1986, at the rate of

(2.) % under Section 7(a) of the Gujarat Taxes on Luxuries ( Hotel & Lodging Houses) Act, 1977 (hereinafter referred to as the "Act, 1977") w.e.f. 2.5.1989 till June/ July 1989. 2. Heard Shri Zubin Bharda, learned advocate for the petitioners and Shri Gandhi, learned Assistant Government Pleader appearing on behalf of the respondent State. It is required to be noted that the petitioners challenged the levy of luxury tax under the Act, 1977 before the Hon'ble Supreme Court by way of Civil Miscellaneous Petition No.21381 of 1981. By interim order dated 15.11981, the Hon'ble Supreme Court stayed the demand of the luxury tax under the aforesaid Act on condition that the petitioners give security in respect of the tax dues to the satisfaction of the Collector. It appears that petitioners time and again furnished the bank guarantee with respect to luxury tax due and payable quarterly from time to time and furnish the bank guarantee of total amounting to Rs.42,01,597.50 towards the luxury tax liability for the period October 1981 to March 1986. It appears that thereafter instead of furnishing the bank guarantee, the petitioners continued to pay luxury tax due and payable under the Act on and from April 1986. It appears that thereafter the Hon'ble Supreme Court dismissed the aforesaid writ petition and upheld the constitutional validity of the Act and levy of luxury tax by judgment and order dated 2.5.1989. That thereafter, the petitioner paid the aforesaid amount of Rs. 42,01,597.50 in five installments commencing from 27.06.1989 to 19.07.1989 and therefore, clear the entire issue of luxury tax of Rs.42,01,597.50 by 27.06.1989. That thereafter, respective bankers returned the bank guarantee to the petitioners as such the aforesaid amount of luxury tax was paid by the petitioner. That thereafter, the petitioners have been served with the impugned notices calling upon the petitioners to pay interest under Section 7(A) of the Act, 1977 w.e.f. 2.5.1989 to 26.7.1989 i.e. Rs.2,29,303/. That thereafter, the petitioners approached the concerned authority making representation against the aforesaid demand of interest, however still the demand has been continued. Hence, petitioners have preferred present Special Civil Application challenging the impugned notices / demand of interest under Section 7(A) of the Act, 1977.

(3.) SHRI Gandhi, learned AGP has stated at the bar that he is not in a position to give any consent if the request of the petitioners to reduce interest liability to Rs. 1,25,000/ is accepted. However, it is required to that he is also not in a position to point out any steps taken by the Collector to encash the bank guarantee immediately on dismissal of the petition by the Hon'ble Supreme Court.