PANDYAN HOTELS LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee is a hotelier. As the charges levied for the rooms in the hotel exceed the amount prescribed under the Tamil Nadu Tax on Luxuries Act, 1981 (hereinafter referred to as the Act) and the assessee is a person who provides luxury in a hotel as defined under Section 2 G of the Act, the assessee is required, under the provisions of the Act, to pay tax to the Government at the rates prescribed in the Act on the value of the luxury provided in the room.

(2.) The assessee is required by Section 6 of the Act to file a monthly return in the prescribed form. It is assessed to tax under Section 7 at the end of the year. Along with the monthly returns, the hotelier is required to pay the tax having regard to the period for which the rooms had been occupied by its customers. Failure to file returns or failure to pay the amounts results in the imposition of penalties.

(3.) Under the scheme of the Act, a person, who occupies a room in a hotel wherein any luxury is provided, is not made liable for tax. The occupant of the room is not required to pay directly to the Government any amount by way of luxury tax nor can any assessment be made on that occupant for payment of tax. The only person who is required to make the payment is the hotelier. The hotelier, however, under the provisions of the Act, is empowered to collect the amount of tax from the occupant of the room. However, it is not obligatory on the hotelier to charge the tax separately in the hotel bill. It is permissible to collect a lumpsum from the occupant for the rental of the room which can include the element of luxury tax.