EAST INDIA HOTELS Vs. STATE OF J&K

JUDGEMENT

(1.) THESE petitions, by the hoteliers, challenged the levy of sales tax on the provision of amenities and services in a hotel under the Jammu and Kashmir General Sales Tax Act. 1962 (hereinafter called the Act). The Act as originally enacted, was amended by Act No. XXV of 1972. The amending Act became effective from 1 -1 -1973.

(2.) THE material provisions of the Act, as amended, are as follows : By section (f) Contract has been defined inter alia as meaning any agreement for carrying out for cash or deferred payment or other valuable consideration the provision of any amenities or service or labour or supply of taxable goods whether separately or jointly as a part of the same transaction or otherwise, Section 2 (g) defines dealer as meaning any person including a Department of Government who carries on the business of selling goods in the State. Section 2(h) defines goods as meaning all kinds of movable property other than actionable claims, newspapers, stocks, shares or securities and includes the provision of amenities or service in a hotel and all materials, articles and commodities whether or not used in the construction, fitting out, improvement or repair of moveable or immovable property. Section 2 (1) defines sale as meaning any transfer of property in goods, by any person for cash or deferred payment or for other valuable consideration and includes the transfer of property in goods involved in the execution of contract. It does not include the mortgage, hypothecation charge or pledge, Explanation (4) appended to this section says that provision of amenities or service in a hotel shall be deemed to be a transfer of goods for purposes of sale under this Act. Section 2(n) define turnover to mean the aggregate amount for which goods are sold by a dealer whether for cash or deferred payment or other valuable consideration. The explanation appended to this section provides inter alia that subject to such conditions and restrictions as may be prescribed in this behalf, any amount chargeable in a a hotel on account of amenities service or labour if any, shall be deemed to be a part of the turn -over, Section 4 is the charging section providing as under : -

(3.) FOR the petitioners it was contended that section 4 read with section 2 {f),2 (g) 2 (h),2 (1) and 2 (n) of the Act shows that the impugned levy, in pith and substance, is a levy on income of a hotelier which could be imposed only by the Union Parliament acting under Entry 82 in List I of 7th Schedule of the Constitution -tax on income other than agricultural income". It was urged that by defining the provision of amenities as sale of goods it was not permissible to encroach upon Entry 82 and, so considered, the impugned levy fell outside the legislative competence of the State Legislature, On this argument, the question arises : what is the true nature and character of tax on amenities and services in a hotel ? This question fell for consideration by this Court in the case of East India Hotels and others Vs. State of J&K (Writ Petition No 286 of 1980 decided on 7th September, 19S1) That case arose out of a recent enactment called J&K Hotels (Amenities and Services) Taxation Act, I980. The court has held that the tax on amenities and services in a hotel is tax on hospitality and that such tax is imposable by the State Legislature by virtue of the residuary powers of legislation vested in it under the Constitution This principle is equally applicable in the present case and I hold so.