- (1.) In these Civil Appeals and Writ Petitions the constitutional validity of legislations of different States viz., State of Gujarat, State of Tamil Nadu. State of Karnataka and State of West Bengal, imposing a tax on "Luxuries" under Entry 62 of List II of Schedule VII to the Constitution of India is challenged. Civil Appeal Nos. 338 and 339 of 1981. Writ Petition Nos. 7990, 9119, 8338, 8339 of 1981 relate to the challenge to the legislation by the State of Gujarat viz. the Gujarat Tax on Luxuries (Hotels & Lodging Houses) Act, 1977. Writ Petition No. 162 of 1982 pertains to the corresponding legislation of the State of Tamil Nadu viz. Tamil Nadu Tax on Luxuries in Hotels & Lodging Houses Act, 1981. Writ Petitions Nos. 1271 and 1272 of 1982 pertain to the challenge to corresponding Karnataka Legislation viz. The Karnataka Tax on Luxuries (Hotels and Lodging Houses) Act, 1979. W. P. No. 5321 of 1985 pertains to the challenge to West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act, 1972. All these Taxing-statutes except for certain aspects individual to them, are analogous and the scheme of the legislation is substantially similar. The variations are in the differences in the oriteria of classification of the hotels to which the Act is applied and the rates of taxes. The grounds of challenge are substantially the same. An examination of the contention urged in support of the challenge to one statute would cover the cases of the other statutes as well.
(2.) We might take up for consideration, the provisions of the Gujarat Act which may be considered as representative of the legislations on the topic. The constitutional validity of the Gujarat Act had been assailed before the High Court of Gujarat, which by its judgment dated 23-7-1980 upheld its constitutional validity. The judgment of the High Court is under appeal in C. A. Nos. 338 and 339 of 1981.
(3.) The statement of objects and reasons in the Gujarat Legislative Bill states : "With a view to augmenting the financial resources of the State it is proposed to levy a tax on luxury provided in hotels and lodging houses at the rate of certain percentages of lodging charges recovered by the proprietors of such hotels and lodging houses from persons lodging therein. Every accommodation provided in a hotel or lodging house the charges for which are not less than rupees thirty-five per day per person is, for the purposes of the tax, to be treated as a luxury. This bill seeks to achieve that object." Section 2 is the interpretation clause and defines, inter alia the expressions "charges for lodging" "hotel", "luxury provided in hotel" "proprietor" occurring in clauses (a), (d), (e) and (g) respectively. The definitions are as follows : "(a) "charges for lodging" include charges for air conditioning, telephone, television, radio, music and extra beds and the like but do not include any charges for food, drink or other amenities. (d) "hotel" means a building or part of a building where lodging accommodation, with or without board is, by way of business provided for a monetary consideration, and includes a lodging houses. (e) "luxury provided in a hotel" means accommodation for lodging provided in a hotel, the rate of charges for which (including charges for air conditioning, telephone. (a) Where the charges for lodging are thirty five rupees but not more than fifty rupees per day per person. (b) Where the charges for lodging are more than fifty rupees but not more than one hundred rupees per day per person. (c) Where the charges for lodging are more than one hundred rupees per day per person. Provided that where charges for lodging are levied otherwise than on daily basis or person, then, for the purpose of determining the tax liability of any person under this section, the charges shall be computed as for a day and per person, based on the period of lodging for which charges are payable and the number of persons actually lodging or permitted to lodge according to the rule of customs of the hotel. Provided further that where any charges for lodging are paid by any person other than a citizen of India in any foreign exchange, then such person or where such charges are paid by any person or class of persons as the State Government may, by order, direct such as foreigners staying as guests in India of any Government or of any Corporation or Company owned or controlled by Government, or such other person as in the opinion of the State Government it is expedient in the public interest to exempt, then such person or persons shall be exempt from the payment of the tax. (2) Where luxury is provided in a hotel to representatives or employees of any company and charges for such luxury are to be borne by the company, there shall be levied and collected the tax from such company. Explanation : In this sub-section "Company" means any body Corporate and television, radio, music, or extra beds and the like but excluding charges for food, drink and other amenities is not less than thirty five rupees per person per day." Section 3 is the charging section which provides : "3. (1) Subject to the provisions of this Act, with effect on and from the date on which this Act comes into force, there shall be levied and collected from every person a tax (to be known as "luxury tax") in respect of any luxury provided to him in a hotel at the following rates, namely : 10 per cent such charges Rs. 5/- plus 20 per cent of such charges in excess of Rs. 50/- per person per day. Rs. 15/- plus 30 per cent of such charges in excess of Rs. 100/- per person per day; includes a firm or other association of persons. (3) The tax payable under this section shall be collected by the proprietor and be paid into a Government treasury within the time and in the manner provided in the Act. (4) In computing the amount of tax payable under this section, the amount shall, if it is not a multiple of five paise, be increased to the higher multiple of five paise." Section 4 provides for the mode of collecting of tax. It provides : "4. (1) Where the rate of charges for luxury provided in a hotel is inclusive of the charges for food or drink or other amenities, if any, being amenities referred to in clause (e) of Sec. 2, then the Collector may, from time to time, after giving the proprietor an opportunity of being heard, fix separate rates of charges for such luxury and for food or drink or other amenities, if any, being amenities referred to in clause (e) of Sec. 2 for the purpose of calculating the tax under this Act. (2) Where, in addition to the charges for luxury provided in a hotel, service charges are levied and appropriated to the proprietor and not paid to the staff, then, such charges shall be deemed to be part of the charges for luxury provided in the hotel. (3) Where luxury provided in a hotel to any person (not being an employee of the hotel) is not charged at all, or is charged at a concessional rate, then also there shall be levied and collected the tax on such luxury, as full charges for such luxury were paid to the proprietor of the hotel. (4) Where luxury provided in a hotel for a specified number of persons in shared by more than the number specified, then, in addition to the tax paid for luxury provided to the specified number of persons, there shall be levied and collected separately, the tax in respect of the charge made for the extra persons accommodated. (5) Where any proprietor fails or neglects to collect the tax payable under this Act, the tax shall be paid by the proprietor as if the tax was recovered by the proprietor from the person to whom the luxury was provided and who was accordingly liable to pay the same." Sections 5, 6, 7, 8, 9 and 10, respectively refer to the returns to be filed by every proprietor liable to pay tax under the Act; the assessment and collection of tax; the imposition of penalty; the payment of tax and penalty; appeals and revision. Section 13 and 14 speak of offences and offences by companies. Section 15 pertains to the compounding of offences. Section 17 confers power of inspection of accounts and documents and of search and seizure. Section 21 confers the power to make Rules.;