LexEXPRESS HOTELS PRIVATE LIMITED versus STATE OF GUJARAT & ANR.
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• EXPRESS HOTELS PRIVATE LIMITED v. STATE OF GUJARAT & ANR. MAY 2, 1989 [R.S. PATHAK, CJ, SABYASACHI MUKHARJI, S. NATARAJAN, M.N. VENKATACHALIAH AND S. RANGANATHAN, JJ.) Gujarat Tax on Luxuries (Hotels & Lodging Houses) Act, 1977/ Tamil Nadu Tax on Luxuries in Hotels & Lodging Hn11ses Acr. /C/81/ J:arnataka Tax on Luxuries (Hotels & Lodging Houses) Act, 1979/ West Bengal Entertainments and Luxuries (Hotels & Restaurants) Tax Act, 1972: Tax on luxury provided in hotels, lodging houses and restaurants-State Legislations-Competency of-Tax on means of providing luxury-Permissibility of. Constitution of India, 1950: Articles 246, 301 and Schedule V ll. List II Entry 62: Tax on luxuries enjoyed in hotels, lodging houses and restaurants-Validity of-Whether impedes freedom of trade. Statutory Interpretation: Legislative entry-To be construed widely and liberally to include ancillary and subsidiary matters. Words and Phrases: 'Luxury'-Meaning and scope of. Clause (a) of s. 2 of the Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act, 1977, defines "charges for lodging" .to include charges for airconditioning, telephone, television, radio, music and extra beds, and the like. The Explanation appended thereto makes the decision of the State Government on any dispute in that behalf final. Clause (e) defines 'luxury provided in a hotel' to mean accommodation the charges for which, including charges for airconditioning etc. but excluding charges for food and other amenities, .is not less than thirty five rupees per person per day. Section 3 prescribes the rates of tax at certain percentage of the lodging charges per person per day recovered by proprietors of hotels and lodging houses from persons lodging therein. Sub-section (3) of s. 4 provides that 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 concessional rate, then also there shall be levied and collected the tax on such luxury, as if full charges for such luxury were paid to the proprietor of the hotel. 893 A B c D E F G H 894 SUPREME COURT REPORTS [1989] 2 S.C.R. A It was contended for the appellants that Entry 62 of List JI of ~ Schedule VII to the Constitution providing for taxes on luxuries con- templates and takes within its sweep a tax on.goods and articles in their aspect and character as 'luxuries', which does not include services and activities, the levy on the services for lodging provided at the hotels was, B therefore, ultra vires the State power under the said entry; that the real criterion distinguishing luxury being a special attribute or quality of the commodity llr the services, as the case may be, and not the quantitative difference in the price, the impost has no relation to the concept oi. luxuries in the legislative entry; that the scheme of the Act in so far as it makes no distinction between the components of the services, which include both necessities and comforts, as distinguishable from luxuries, C the levy on such composite subject matter was bad; that the expression D "and the like" in the definition of "charges for lodging" ins. 2(a) was vague and irrational and read with the explanation thereto, which renders the decision of the State Government on what constitutes "lodging charges" final, was an unreasonable restriction, violative of Article 19(l)(g), that s. 4(3), which provides that the luxury provided free or at concessional rates be taxed as if the full charges were deemed 'f,' to have been received was unreasonable and offends Article 19(I)(g), and that the luxury tax imposed on the charges for lodging has the direct and immediate effect of restricting the freedom under Article 30 I of the Constitution as it directly impedes the right of intercourse • E throughout the territories of India. Similar contentions were raised in the writ petitions'challenging the analogous provisions of the Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Act, 1981 and the Karnataka Tax on Luxuries (Hotels and Lodging Houses) Act, 1979. F In the writ petition challenging s. 4 of the West Bengal Entertain- ~ ments and Luxuries (Hotels and Restaurants) Tax Act, 1972 which fixes .. the liability to pay tax on the proprietor of the hotel and restaurant on the basis of the floor area as well, it was contended that the means of providing luxury by itself does not provide the nexus between the taxi
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