- (1.) The question for consideration is whether the Jammu and Kashmir State Legislature has the legislative competence to enact the Jammu and Kashmir Hotel (Amenities and Services) Tariff Taxation Act, 1980 (the Act). A Division Bench of the Jammu and Kashmir High Court answered the question in the affirmative. These appeals are against the judgment of the High Court. In the writ petitions under Article 32 of the Constitution of India the validity of the Act has been challenged on the same grounds as was done by the appellants before the High Court.
(2.) The preamble to the Act seeks to provide for the levy of tax on the amenities and services in a hotel in the State. Section 2 is the definition clause and defines, inter alia, the expressions 'amenities and services' and 'hotel' occurring in Clauses C and J respectively which are as follow:- ' 'Amenity and Service' includes lodging, boarding, massaging, bathing, hair dressing, and beauty parlour facilities and providing entertainment and other facilities, whether charged/chargeable jointly of separately; (j) 'Hotel' means any premises or part of premises including a hut, house-boat, tent, guest house, rest house or a club occupied by resident or casual visitors with or without board, service and amenities in consideration of a tariff and includes a restaurant excluding the portion used as a bar for service of supply of liquor as defined in Jammu and Kashmir Excise Act, Svt. 1958, attached or annexed thereto.' Section 3 read with Schedule annexed to the Act are the charging provisions which provide: 'SCHEDULE Rate of Tariff Rate of Tax A. Resident Visitors 1.Up to Rupees 100 a day 5% 2.Rs.101 to Rs.200 a day 8% 3. Rs.201 to RS.300 a day 12% 4. Rs.301 and above a day 15% B. Casual (Non-resident) Visitors Full amount of tariff 8%' Section 13 of the Act which provides for collection of taxes by the assessee is as under:- '13. Collection of tax by the assessee-(1) A registered hotel keeper is authorised to charge the tax due on tariff under the provisions of this Act. (2) Notwithstanding anything contained in sub-section(1)- (a) if any person other than a registered hotel keeper collects any amount by way of tax leviable under this Act, or (b) if any registered hotel keeper collects tax in excess of the amount chargeable under this Act. such person or such registered hotel keeper, as the case may be, shall pay such sum to the Government within the period of thirty days from the expiry of each quarter and the provisions of sub-section (1) of section 12 and the provisions of this Act relating to recovery shall apply to the recovery of such sum.' The remaining Sections of the Act refer to the returns to be filed by every 'hotel keeper' and 'person' liable to pay tax under the Act, the assessment and collection of tax, the imposition of penalty, the payment of tax and penalty, appeals, revisions etc. etc.
(3.) The main contention raised by the appellants before the High Court was that the levy of tax is on the gross receipts of the 'hotel keeper' and as such it is a tax on 'income' which could only be imposed by the Parliament under Entry 82 List I Schedule VII Constitution of India. The High Court referred to Section 13 of the Act which authorised the 'hotel keeper' to charge the tax due from the customers. It further noticed that the taxing event under the Act is not the receipt of gross income by a 'hotel keeper' but is in fact the provision of amenities and services by him to his customers. The gross income of a 'hotel keeper' has been merely used as a measure to quantify the tax payable under the Act. Interpreting the relevant provisions of the Act the High Court found that the tax is leviable irrespective of the consideration whether the 'hotel keeper' earns any income in the sense of the Income Tax Act. All that is necessary is the occupancy of the hotel by the customers and their availing the amenities and services envisaged under the Act. On appreciation of all these factors the High Court came to the conclusion that the levy, being on amenities and services provided by the 'hotel keeper' to his customers it was not a tax on income and as such was within the legislative competence of the State Legislature.;