EAST INDIA HOTELS LTD. SRINAGAR AND ANR. versus STATE OF JAMMU AND KASHMIR AND ANR.

Citation: [1994] SUPP. 1 S.C.R. 421 · Decided: 12-07-1994 · Supreme Court of India · Bench: KULDIP SINGH, K. RAMASWAMY

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Judgment (excerpt)

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EAST INDIA HOTELS LTD. SRINAGAR AND ANR. ETC. ETC. 
A 
v. 
STATE OF JAMMU AND KASHMIR AND ANR. ETC. ETC. 
JULY 12, 1994 
[KULDIP SINGH AND K. RAMASWAMY, J.I.[ 
Co11stillltion of India-Ent1y 62 list II of Seventh Scliedu/~fanum1 & 
Kashmir Hotel (Amenities and Services) Tariff Taxation Act, 1980-Sections 
2(c), 2(j)3 and 13---Constinttional validity-Levy of tax on amenities and scr-
vicr.s-Wl1ether within legislative competence of State Legislatur~Held, Yes. 
Co11stitution of India-Article 370 (I j-Constitutio11 (Application to 
Jammu & Kashmir) Order 195~Residuary powei-Legislative competence 
of J & K Legislature to enact laws on any subject which come within list II, 
Seventh Schedule. 
Jammu & Kashmir Hotel (Amenities and Services) Tariff Taxation Act, 
1980-Constitutional Validity of 
The constitutional validity of the Jammu & Kashmir Hotel (Amenities 
and Services) Tariff Taxation Act, 1980 had been challenged on the ground 
B 
c 
D 
that the levy of tax was on the gross receipts of the 'hotel keeper' and as such E -
it was a tax on "income" which could only be imposed by the Parliament 
under Entry 82 list I Schedule VII Constitution of India. The question for 
consideration was whether the Jammu & Kashmir State Legislature had the 
legislative competence to enact the Jammu & Kashmir Hotel (Amenities and 
Services) Tariff Taxation Act, 1980. High Court answered the question in the 
F 
affirmative. These appeals had been filed against the judgment of the High 
Court. In the writ petition under Article 32 of the Constitution of India the 
validity of the Act had been challenged on the same grounds. 
Dismi.ssing the appeals/writ petitions, this Court 
HELD: 1.1. For the reasons and the conclu•ions reached by the Con· G 
stitution Bench of this Court in Express Hotels Pvt. Ltd. v. State of Gujarat and 
Anr., (1989] 2 SCR 893, the challenge to the validity of the Jammu and 
Kashmir Hotel (Amenities and Services) Tariff Taxation Act, 1980, on the 
ground of legislative competence has to be rejected. It was held in that case 
that the concept of a tax on 'luxuries' in Entry 62, List II cannot be limited H 
421 
422 
SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R. 
A 
merely to tax things tangible and corporeal in their aspect as 'luxuries'. The 
entry encompasses all the manifestations or emanations, the notion of 
'luxuries' can fairly and reasonably be said to comprehend. The element of 
extravagance or indulgence that differentiates 'luxuries' from 'necessity' can 
not be confined to goods and articles. There can be elements of extravagance 
B 
or indulgence in the quality of services and activities. The question is 
whether the quality or standards of lodging accommodation in hotels can be 
called luxurious by contemporary standards by reason of the higher stand-
ards of charges payable for the accommodation. Legislature has chosen to 
identify the luxury by the statutory standards prescribed by it. According to 
the legislative assumption, price does become evidence of the special quality 
c on the basis of which 'luxuries' could be distinguished and that some special 
quality is attributable to goods and services through the means of the price. 
Quality and price, in the legislative assessment, can be assumed to have a 
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logical inter-relationship. This cannot be held to suffer from the vice of 
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irrationality. [ 426-A, H, 427-A-C) 
D 
Express Hotels Pvt. Ltd. v. State of Gujarat & Anr., (1989) 2 SCR 893, 
relied on. 
1.2. By the Presidential Order, made under Article 370 (1) of the Con-
E stitution of India, called the Constitution (Application to Jammu & Kash-
mir) Order, 1954, the provisions of the Constitution of India were extended 
and made applicable to the State of Jammu & Kashmir with several excep-
!ions and modifications. The words "notwithstanding anything in clauses (2) 
& (3)" occurring in clause (1), and clauses 2, 3 and 4 of Article 246 were 
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omitted. Article 248 and Entry 97 of List I, List II and List III (Concurrent 
List) of the Seventh Schedule were also omitted. Thus the Parliament was 
vested with the power to make laws in respect of Jammu and Kashmir with 
respect to the matters enumerated in Entries 1 to 96 of List I Schedule VII. 
The residuary power was retained by the State of Jammu & Kashmir. It is 
thus obvious that except the legislation relating to Entries 1to96 of List I the 
G legislature of Jammu and Kashmir can legislate on every other matter. The 
Jammn & Kashmir Legi

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