LAXMI SADAN Vs. STATE OF HARYANA

JUDGEMENT

(1.) Challenge in this petition is to the levy of tax on open space termed as "banquet halls" providing only accommodation or space for marriages/receptions in terms of Section 2(c) in the manner stated under Section 2(k) of the Haryana Tax on Luxuries Act, 2007 (in short, "the Act") as these are not covered under the head 'Luxury' vide entry No.62 of List II of Schedule VII of the Constitution of India. Prayer has also been made for setting aside Explanation to Section 2(k) of the Act which prescribes inclusion of charges for amenities, even if arranged by persons other than the proprietor of the banquet hall. The petitioner has also assailed levy and collection of tax on charges for banquet hall under Section 9 read with Section 11 of the Act to be bad being based on assumption and presumptions.

(2.) A few facts relevant for the decision of the controversy involved as narrated in the petition may be noticed. The petitioner is engaged in letting out open space for marriage functions. The activity being carried out by the petitioner has been brought under the head "luxury" and subject to tax under the Act inspite of the fact that it does not provide luxury in terms of sections 2(j) and 2(k) of the Act. In terms of Section 2(k) of the Act, the cost of amenities/services provided by the persons other than the petitioner are to be added for the purpose of computing the luxury tax notwithstanding that these are provided by persons other than the proprietor of the banquet hall. The levy and collection of tax is governed by Section 9 of the Act. The petitioner is required to register itself under the Act by virtue of Section 11 of the Act. The petitioner is further required to deposit security on the basis of anticipated tax payment under Section 11(4) of the Act. Under Section 12 of the Act, every proprietor shall declare the normal rate for luxury provided by him in such manner and within such period as may be prescribed. According to the petitioner, the services provided by the proprietors do not fall under the definition of "luxury". The premises of the petitioner are no doubt banquet hall in terms of the definition under Section 2(c) of the Act still the same does not provide luxury in terms of Section 2(j) of the Act. The activity of the petitioner does not come under the purview of the Act and the service of letting out the space in any manner does not constitute 'luxury' under the Act. As long as the petitioner is letting out its space for marriages without providing any facility like air conditioning, air cooling, chairs, tables, utensils etc. for a consideration below Rs. 20,000/- per function, its subject activity cannot be termed as luxury. As far as provision for amenities is concerned, it is the option of the organizer to arrange of its own. The charges for amenities are bound to vary from function to function depending upon the type of arrangement and cannot be defined on uniform basis. According to the petitioner, in the present times, arranging marriage functions in a banquet hall is no more a luxury. Providing facility of performing a marriage in a marriage hall is a necessity. The services rendered by the petitioner are subject to service tax limited to the value of consideration received. One such Assessment was made for the year 2012- 13 putting the liability as Rs. 4,17,96,000/- vide order dated 27.11.2014, Annexure P.2. The petitioner had to approach the appellate authority under Section 31 of the Act. Vide order dated 16.7.2015, the said order was set aside and the case was remanded back to the assessing authority for framing de novo assessment in accordance with law after providing opportunity of hearing to the petitioner. Hence the instant writ petition with the prayer as mentioned above.

(3.) The primary grievance of the petitioner that arises for consideration in this petition is whether the computation of taxable limit of Rs. 20,000/- for levy of luxury tax for "luxury provided in banquet hall" as depicted in Explanation to Section 2(k) of the Act is unconstitutional or not. In other words, whether the services provided by the petitioner in the shape of open space termed as "banquet halls" for marriages/receptions fall under the definition of 'luxury' so as to be liable to levy of tax in terms of Sections 2(j) and 2(k) of the Act.