ORDER
This petition has been moved by M/s Taj Mahal Hotel (The Indian Hotels Company Ltd.) No. 1, Man Singh Road, New Delhi under Section 33(1) and 33(2) of the Delhi Tax on Luxuries Act, 1996. The petition has been carefully examined and various points raised therein are listed and determined as follows:
1. TELEPHONE CHARGES & LAUNDRY CHARGES SEPARATELY BILLED:-
Point: Point of determination is whether telephone calls and laundry for which the hotel charges separately attracts the Luxury Tax.
Determ: The Delhi Tax on Luxuries Act, 1996 envisages levy of Luxury Tax on luxury provided in a hotel where rent per room per day is Rs. 500/- or more. The term 'hotel' has been defined in Section 2(g) of the Act as 'hotel includes a residential accommodation, a lodging house, an inn, a club, a resort, a farm house, a public house or a building or part of a building, where a residential accommodation is provided by way of business.'
The term 'business' has been defined in Section 2(b) of the Act to include the activity of providing residential accommodation and any other service in connection with, or incidental or ancillary to, such activity of providing residential accommodation, by a hotel for monetary consideration'.
From bare reading of the definition of the term 'business', it is clear that all services which are in any way connected with the activity of providing residential accommodation even if they are incidental or ancillary to such activity are liable to be taxed provided they are given by a hotelier for monetary consideration. Thus, all services even if they are separately charged for, if they are incidental or ancillary to any service used by a resident in a room of a hotel, luxury tax is leviable. thereforee, laundry service, valet service as well as telephone calls of telephones emanating from the room will be taxed for luxury tax in the room provided, if, in the first instance the room rent per day is Rs. 500/- onwards. Related to this are other services which are exclusively for residents but may not be necessarily used in the room, such services are also liable to be taxed because they are incidental or ancillary to provide residential accommodation otherwise if would not have been provided exclusively for the use of residents.
2. GROUP RATE:-
Point: Group rate is offered to a group of people in different categories and they are offered a lower tariff than is paid by a casual customer.
Determ: Determination of this point has to be done as per the provisions of Section 3(4) read with 3(2). Concessions to guests other than employee is inadmissible. If the group stays in a hotel for more than one day then the charges will levied as visualized in Section 3(2), i.e. in a situation like this the charges for determining the tax liability shall be computed proportionately for a day and per room basis for the total period of occupancy for which the charges have been made.
Similarly, if a group is entertained with a complimentary room, the room will be charged on its notified rate for Luxury Tax.
3. ROOM RENTAL FOR PURPOSE OTHER THAN RESIDENCE
Point: Certain rooms are given for the commercial purposes where the customers are either maintaining their offices or organizing sales from those rooms and such rooms are exclusively used for the commercial purposes and not for residential purposes.
Determ: Section 2(g) and 2(b) define the parameters governing the issue raised by this point of the petition. It is clear that the terms 'hotel' and 'business' cover only 'the activity of providing residential accommodation and any other service in connection with, or incidental or ancillary to, such activity of providing residential accommodation, by a hotelier for monetary consideration'. It is evident that where the room has been let out for any activity other than residential usage, Luxury Tax will not be chargeable. However, if the activity combines with residential usage also the tax would be leviable. To clarify, in a situation where the hotel room is used as office-cum-residence, Luxury Tax shall be chargeable.
4. EXEMPTION TO THE DIPLOMATIC CORPS AND ORGANISATIONS AFFILIATED TO THE UNITED NATIONS AND AGENCIES THEREOF:-
Point: The point on which determination is sought is self-explanatory.
Determ: To determine this point Section 3(4) is to be read with Section 22(1). It is clear from these two sections that only 'specified class of luxuries', 'class of hotels' and 'employees' can be given concession or exemption and no other class of people of clients or customers is admissible from this consideration.
Sd-
(S.N. SAHAI)
COMMISSIONER
(LUXURY TAX)'
18. It is not in dispute that the Excise Commissioner is the Commissioner of Luxury Tax. As against the said order, appeals were filed and by an order dated 2nd November 1998, the said appeals were dismissed.
19. Thereafter, these writ petitions have been filed questioning the said orders.
20. The learned counsel appearing on behalf of the petitioners would urge that having regard to the interpretations clause vis-a-vis the charging provision, as tax is levied on a luxury of the hotel, no tax would be payable where the services are separately charged for. It was urged that tariff of group booking being also a tariff, the concerned respondents erred in holding that luxury tax shall be payable on the tariffs fixed by the hotels even in relation to the group bookings. It was further submitted that having regard to the provisions contained in Diplomatic Relations (Vietnam Convention) Act, 1972, no luxury tax is recoverable from the Diplomatic and Embassies.
21. The learned counsel would contend that the provisions of the said Act being absolutely clear and unambiguous, the impugned orders must be held to be illegal and without jurisdiction. In any event, if there is a doubt or dispute, in relation thereto, the same should be construed in favor of the assessed and against the Revenue.
22. Ms. Geeta Luthra, learned counsel for the respondent on the other hand, would submit that similar legislation, enacted by the other States had been declared intra virus in Express Hotels Pvt. Ltd. v. State of Gujarat and Anr., : [1989]178ITR151(SC) . The learned counsel would contend that the impugned orders have been passed by the statutory authorities upon proper application of their mind and as such, this court should not interfere therewith. The learned counsel would further contend that the principles of 'ejusdem generis' should be applied in interpreting the words 'food, drinks and other services' and in support of the said contention, reliance has been placed on Royal Talkies, Hyderabad and Ors. v. Employees State Insurance Corporation, : (1978)IILLJ390SC .
23. The question raised in these petitions are required to be considered in the afore-mentioned backdrop.
Regarding Contention 1
24. A bundle of services are rendered by a hotelier which would include (i) providing for residential accommodation and services incidental or attending thereto; (ii) providing for food and beverages; and (iii) other services.
25. At the outset, we may observe that the apex court in The State of Punjab v. Associated Hotels of India Ltd., : [1972]2SCR937 had taken into consideration different types of services rendered by a hotelier.
26. In the said decision, the apex court, inter alia, observed that by reason of rendition of certain types of services, neither any independent transaction comes into being nor thereby element of sale and purchase may come into operation. Services rendered by a hotelier can be charged either on a consolidated rate or for each service separate rates can be provided for. A guest in a hotel undisputedly is entitled to avail all the services rendered therein. Services so rendered be subject matter of a collective rate or separate rates. Similarly, services can be collectively availed or separately availed.
27. Sub-section (1) of Section 3 of the said Act, in no unmistakable terms, states that the tax shall be levied on the turnover of receipts of a hotelier.
28. The expression 'turnover of receipts' as defined in Section 2(r) is aggregate of the amounts of valuable consideration received or receivable by a hotelier or by his agent in respect of the luxuries provided in a hotel. For the purpose of this case, thereforee, we have to fall back upon the interpretation of the expression 'luxury' as contained in Section 2(i) of this Act. The said definition is in two parts. In terms of the first part, the same would mean accommodation and other services provided in a hotel, the rate of charges of which is Rs. 500/- per room per day or more. For the purpose of coverage of the rate of charges, the same includes the charges for air-conditioning, telephone, radio, music, extra beds and the like. The words 'and the like' must be read keeping in view the words preceding thereto. They fall in one category and thus, should be read ejusdem generis.
29. The other part is the exclusionary clause, which takes within its umbrage supply of food, drinks or other services, which are separately charged for.
30. The questions which principally arise are: (i) whether by reason of this exclusionary clause, irrespective of the fact that telephone and other charges are separately charged for, they would come within the purview of the first part of the said definition; and (ii) whether having regard to the provisions contained in Section 3(5) of the Act, exception thereto would be made only to foods, drinks or other similar services which are separately charged for. In other words, whether the other services, which are separately charged for, must fall in the category of supply of food and drinks.
31. Before adverting to the questions afore-mentioned, we may observe that the orders impugned in the writ petitions passed by the concerned respondents on the ground that the charging section is referable to 'business' as contained in Section 2(b) of the Act, cannot be sustained. Section 3(1) to the turnover of receipts, which in turn refers to luxuries provided in a hotel. The word 'business' has been referred to only in certain provisions, like Sections 4(2), 5, 6 and 8. By reason of the afore-mentioned interpretation clause defining business, merely the tax net has been widened, which has nothing to do with the taxing or charging provision.
32. Thus, in a hotel, providing for luxury in terms of the afore-mentioned provisions, the facilities, amenities or services in the shape of air-conditioning, telephone, radio, music etc. could be included, where for, there amy be one tariff but in the event, separate charges for the afore-mentioned facilities, apart from the room tariff, are levied, then all such charges for the said facilities would have to be taken into consideration for the purpose of computing the tariff of the room and only in the event sum total thereforee exceeds Rs. 500/- or more, the hotel would be covered under the said Act. Exclusion clauses, as is well-known, should be given wide meaning. Sub-section (5) of Section 3 provides for an exception but the said exception has also a limited role to play inasmuch as because of the provisions of the Delhi Sales Tax Act, all foods or drinks are not liable to payment of sales tax. Thus, in terms of Sub-section (5) of Section 3, only those items of foods and drinks which come within the purview of the Delhi Sales Tax Act, would be excluded from computation of the tax.
33. So far as the exclusion clause is concerned, the same not only brings within its fold supply of food and drinks, but other services also which are separately charged for. The word 'or' between the words food, drinks or other services must be held to be disjunctive in nature.
34. Had the same not been the intention of the legislature, they could have omitted the said exclusionary clause altogether inasmuch as such exclusionary clause had been provided under Sub-section (5) of Section 3 of the Act. There may be hotels where even food, drinks and other services are not separately charged for although the tariff would be more than Rs. 500/-. In case of that nature, for the purpose of coverage, the food, drinks or other services which are separately charged for, would not be taken into account.
35. The expression 'other services', on our opinion will have to be given its full effect.
36. We cannot also ignore the fat that the expression 'other services' would mean that a provision thereforee has to be made. A provision for telephone may be made in a room which may be utilized for intercom purposes but outside calls may be separately charged for. Thus, although a telephone may be installed in a room and the intercom facilities provided there under may be included in the room tariff, if the outside calls made through the telephone are separately charged for, in our opinion, the same would not come within the purview of the definition of luxury.
37. A taxing statute, as is well known, in the event, of having two possible meanings, will have to be construed in favor of the assessed and against the Revenue. We must usefully refer to the following passage from Crawford's Statutory Construction - Interpretation of Laws.
270. Miscellaneous Statutes -- Taxation, Bonds, Licenses, Elections, etc. -- In accord with the rule applicable to statutes generally, which we have hitherto discussed, statutes regulating the assessment of taxes must be given a mandatory construction, if there purpose is to protect the taxpayer. On the other hand, if the statute is simply intended to establish a uniform system of procedure and to promote dispatch, and if non-compliance does not injure the taxpayer, the statute is to be construed as directory.'
38. A fiscal statutory provision, as is well known, in case of ambiguity, must be construed in favor of the assessed.
39. In Polyester and Co. Ltd. etc. v. Addl. Commissioner of Sales Tax, New Delhi, : [1978]3SCR98 it was held:
8. It may be pointed out in the first place that the Legislature could have easily used some such words as 'inside the Union Territory of Delhi' to qualify the word 'resale' if its intention was to confine resale within the territory of Delhi, but it omitted to do what was obvious and used the word 'resale' without any limitation or qualification, knowing full well that unless restriction were imposed as to suit, 'resale' would mean resale anywhere and not merely inside the territory of Delhi. The Legislature was enacting a piece of legislation intended to levy tax on dealers who are laymen and we have no doubt that if the legislative intent was that 'resale' should be within the territory of Delhi and not outside, the Legislature would have said so in plain unambiguous language which no layman could possibly misunderstand. It is well-settled rule of interpretation that where there are two expressions which might have been used to convey a certain expression, but one of those expression will convey that intention more clearly than the other, it is proper to conclude that, if the legislature used that one of the two expressions which would convey the intention less clearly, it does not intend to convey that intention at all. We may repeat what Pollack G.S. said in Attorney General v. Sillim (1864) 2 HC 431, that 'if this had been the object of our legislature, it might have been accomplished by the simplest possible piece of legislation; it might have been expressed in language so clear that no human being could entertain a doubt about it'. We think that in a taxing statute like the present which is intended to tax the dealings of ordinary traders, if the intention of the legislature were that in order to quality a sale of goods for deduction 'resale' of it must necessarily be inside Delhi, the legislature would have expressed itself clearly and not left its intention to be gathered by doubtful implication from other provisions of the Act. The absence of specific words limiting 'resale' inside the territory of Delhi is not without significance and it cannot be made good by process of judicial construction, for to do would be to attribute to the legislature an intention which it has chosen not to express and to usurp the legislative function.'
40. In Federation of AP Chambers of Commerce & Industry v. State of AP & Ors., : (2001)165CTR(SC)672 , it was held in para 7 as under:
'7. It is trite law that a taxing statute has to be strictly construed and nothing can be read into it. In the classic passage from Cape Brandy Syndicate (1921) 1 KB 64 which was noticed in the judgment under appeal, it was said:
'In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can look fairly at the language used.' This view has been reiterated by this Court time and again. Thus, in State of Bombay v. Automobile and Agricultural Industries Corporation, this Court said: 'But the courts in interpreting a taxing statute will not be justified in adding words thereto so as to make out some presumed object of the legislature... If the legislature has failed to clarify its meaning by the use of appropriate language, the benefit thereof must go to the taxpayer. It is settled law that in case of doubt, that interpretation of a taxing statute which is beneficial to the taxpayer must be adopted.'
41. Reference in this connection may be made to Commissioner of Income-tax, Central Calcutta v. National Taj Traders, : [1980]121ITR535(SC) and TBWA Anthem Private Ltd. v. Madhukar Kamnath and Anr., 2001 6 AD 457.
42. Had the intention of the legislature been otherwise, it could have used the word 'like' as was done in the first portion after the words 'food or drinks' but it did not do so. If the argument of the learned counsel for the Respondent is to be accepted, the word 'like' is to be read in place of 'other services which is separately charged for', the same would amount to re-writing the statute, which is beyond the domain of this court. We, thereforee, hold that any services which are separately charged, could not be taxable under the said Act.
Regarding Contention 2
43. The second question which comes up for consideration is as to whether any special tariff for group booking will be treated to be a separate tariff. Tariff is defined in Section 2(q) to mean 'the charges levied or livable by a hotelier for a room provided in a hotel'. Thus, a group booking which is made for a minimum of five rooms by way of a business policy, in our opinion, would not come within the purview of tariff, as provided for under Section 10.
44. The petitioners admitted give concession for group booking. Where such group bookings are made, a lower tariff is offered. There is, thus, no separate tariff for group booking.
45. We may notice that the word 'Concessional rate' has been defined in Section 2(e) which takes which is sweep a rate lower than the normal rate fixed for such luxury by the hotelier or lower than that fixed by any Government, authority, or under law for the time being in force. Thus, even if a separate tariff for group bookings has been notified, the same would still come within the purview of taxing net having regard to the definition of 'Concessional rate' and 'tariff' is defined in Section 2(e) and 2(r) of the said Act respectively.
Regarding Contention 3.
46. The Parliament enacted the Diplomatic Relations (Vienna Convention) Act, 1972. Article 34 of the Schedule appended to the said Act provides that a Diplomatic Agents shall be exempt from all dues, personal or real, national, regional or municipal, except indirect taxes of a kind which are normally incorporated in the particulars of goods or services.
Luxury tax is an indirect tax. Section 2 of the said act is as follows:
Sec 2. Application of Vienna Convention on Diplomatic Relations.-
(1) Notwithstanding anything to the contrary contained in any other law, the provisions set out in the Schedule to this Act of the Vienna Convention on Diplomatic Relations, adopted by the United Nations Conference on Diplomatic Intercourse and Immunities on the 14th day of April 1961, shall have the force of law in India.
(2) The Central Government may, from time to time, by notification in the Official Gazette, amend the Schedule in conformity with any amendments duly made and adopted, of the provisions of the said Convention set out therein.'
47. Even from the representations from the Embassy of the Federal Republic of Germany dated 21st April 1998 and February of the United States of America, as contained in their letter dated 22nd April 1998, it is evident that no final decisions has bene taken in the matter. Admittedly, no notification has been issued and thus, in terms of Article 34 of the Schedule appended to the said Act, the Diplomatic agents are not exempt from payment of tax.
48. The only question which remains for consideration is as to whether the petitioners are entitled to refund of the amount or not.
49. From order sheet dated 22nd December 1999, it appears to have been observed that the amounts by way of luxury tax had been recovered subject to an undertaking given by the respective hotel to its customers that 'in the event of dispute relating to the liability of the hotel to pay the said amounts being decided in favor of the hotel, the amounts will be refunded to the customers'. However, on the basis of the afore-mentioned undertaking, the petitioners were directed to deposit the tax with the respondents.
50. Having regard to the doctrine of unjust enrichment, we are of the opinion that the court may not direct refund of the tax which had been passed on to the customers. Taxes have been passed on to the consumers. Nothing has been placed before us to show that any such undertaking has been given, and in any event, this court had not been apprised of the nature thereof. Had the writ petition been allowed in relation to the Diplomatic Agents and Embassies, the matter might have been different.
51. Furthermore, the impugned order was passed as far back as 27th March 1998 and as such even it may not be practicable for the petitioners to calculate and refund the requisite amount of taxes to their thousands of customers.
52. It is true that a tax is payable in terms of Article 265 of the Constitution of India but in a case of this nature, the court can refuse to pass any order directing refund of the amount. In Mafatlal Industries Ltd. v. Union of India, : 1997(89)ELT247(SC) , it has been held that although the writ jurisdiction of High Courts under Article 226 is unaffected by Section 11B or Section 27 of the Central Excise and Sale Act, the writ court is required to have due regard to the provisions of Central Excise and Customs Act and to refuse grant of relief where burden of duty has been passed on to third party. It was further held that favorable order shall not result in automatic refund and it is for the claimant to prove that burden of duty had not passed on to third party.
53. The said decision has been followed in Collector of Central Excise, Kanpur v. Krishna Carbon Paper, 1999 (111) ELT 322 .
54. We thereforee, are not in a position to direct that a part of the taxes received from the petitioners be refunded to them.
55. These writ petitions are disposed of accordingly. However, in the facts and circumstances of the case, there shall be no order as to cost.