ORAL :
1. In this petition under Article 226 of the Constitution the petitioner has challenged the assessment order under Expenditure Tax Act, 1987 in respect of the payments made by him to the Hotel Corporation of India Ltd. -respondent No.3 herein under the licence agreement dated 6th March, 1987. Under the said licence agreement the petitioner was conducting the business of beauty parlour and barber saloon in an area admeasuring 740.35 sq. ft. approximately on the ground floor of the said Hotel near Mumbai Air Port. The petitioner had to pay to the respondent a sum of Rs.13,400/- per calender month as and by way of licence fee and further a sum of Rs.8,884/- as and by way of service charges for air conditioning and maintenance of the public area in front of the shop aggregating to Rs.22,284/- per month and also monthly compensation of Rs.1500/- as rent for imported/indigenous beauty parlour/barber saloon equipment, fixtures and fittings in the shop on quarterly basis. The petitioner was also required to pay separately electricity and telephone rental charges to the respondent.
2. The provisions of Section 5 of the Act as applicable at the relevant time read as under:
5.Meaning of chargeable expenditure-For the purposes of this Act, chargebale expenditure means any expenditure incurred in, or payments made to, a, hotel to which this Act applies, in connection with the provisions of,
(a) any accommodation, residential or otherwise; or
(b) food or drink by the hotel, whether at the hotel or outside, or by any other person at the hotel; or
(c) any accommodation in such hotel on hire or lease; or
(d) any other service at the hotel, either by the hotel or by any other person, by way of beauty parlour, health club, swimming pool or other similar services. (emphasis supplied).
3. The dispute as raised by the petitioner in this petition is that payments for the licence fee made by the petitioner to the hotel for the premises in question could not be subjected to levy of tax under the Act. It is contended that words "any accommodation, residential or otherwise" or the words "any accommodation in such hotel on hire or lease" would not cover the case of accommodation taken on licence basis . The petitioner further contends that the word "hire" would have reference to only movable property and would not include any immovable property taken on licence basis. It is contended that there is well known distinction between "Lease" and "Licence". Hence, for the accommodation taken by the petitioner on licence basis, no expenditure tax was payable on the licence fee paid by the petitioner to respondent No.3.
The learned counsel for the petitioner fairly invited our attention to a decision of the Delhi High Court in the case of R.L.Jain and others v. Union of India and others reported in 1989 Tax Law Reports 1063 which is against the petitioner covered by the above decision.
4. Having heard the learned counsel for the parties, we find substance in the submissions made on behalf of the respondent that the payment made by the petitioner in respect of the premises taken on licence basis fall within the provisions of Section 5 (a) and (c) of the Act. In fact, clause (a) and clause (c) overlap and therefore, licence fee in respect of the shop in question would fall under sub clause (a) as well as sub clause (c) of the Act.
5.The expression "any accommodation in such hotel on hire " in Section 5(c) of the said Act would include amounts payable under a license/leave and license agreement. This is clear from the use of the term "hire" in respect of "accommodation". Section 5(c) for the present purpose may be paraphrased thus :-
"5. Meaning of chargeable expenditure. - For the purposes of this Act, chargeable expenditure means any payments made to, a hotel to which this Act applies, in connection with the provision of , -
(a)
(b)
(c) any accommodation in such hotel on hire or lease :
or "
6.Faced with this, Mr.Sanklecha submitted that the term "hire" pertains only to payments made for the use or occupation of movable properties such as of tents.
7.The submission is not well founded. The term "hire" is not inconsistent with payment due in respect of the use or occupation of immovable property. It is used in connection with payment made for the use of immovable property in dictionaries, judgments and legislation.
8.1. The Oxford English Dictionary (Being A Corrected Re- Issue With An Introduction, Supplement, And Bibliography Of A New English Dictionary On Historical Principles Founded Mainly On The Materials Collected By The Philological Society) Volume V at page 299 column 3 contains references in texts to hiring a villa and to the hiring of a vineyard.
8.2 The Random House Webster's Unabridged Dictionary indicates that the term "hire" is synonymous with the words employ and lease and includes the payment for the temporary use inter-alia of halls, dwelling, room and also to rental paid for a business building.
9.The Supreme Court in Dr.H.S. Rikhy & Others v. The New Delhi Municipal Committee, (1962) 3 SCR 604, has used the term "hire" to include payment for the use of immovable property. The Supreme Court held at page 611 as under :-
With reference to the terms of the section, just quoted, it has been contended that the provisions of the Transfer of Property Act regulating the grounds of eviction, or even the provisions of the Municipal Act, particularly Section 47, have no legal effect insofar as they are inconsistent with the provisions of the Act. In this connection, it is asserted that the formalities required by Section 47 of the Municipal Act, in order to invest binding force to the transfer of property or the contract made by the Committee, are inconsistent with the provisions of the Act, namely, the definitions of "landlord", "tenant" and "premises". With reference to Section 47 of the Municipal Act, it is further contended that the section does not confer capacity to contract or to transfer property but only prescribes the mode for entering into a contract or for making a transfer of property by the Committee, and that, therefore, Section 47 cannot have the effect of rendering null and void what was done by the Committee, namely, advertising the premises for being allotted to the highest bidders on terms and conditions as contained in the kabuliyat given by the tenants. In this connection reliance was placed upon Crook v. Corporation of Seaford (1871) LR.6 Ch.551 and Deo v. Taniere (1848( 116 E.R. 11. 44.. It has also been urged that the "letting" contemplated by the Act does not necessarily connote a transfer of property, but simply permitting the tenant to occupy the premises for a sum of money. In other words, even a licensee, as distinguished from a lessee, would come within the purview of the Act. In this connection reference was made to the Shorter Oxford Dictionary, which contains the following words, inter alia, under the word "let":
"to grant the temporary possession and use of in consideration of rent or hire".
If this contention is correct, then there cannot be the least doubt that a licensee would also come within the ambit of the Act. But we are not prepared to hold that the Act, by its terms, intended to be so comprehensive as to include within its sweep not only tenants properly so called, but also licensees. It is true that the dictionary meaning applies the term "letting" to inducting a tenant and delivering possession to him as such, of the premises for a consideration which can be characterised as "rent", or a licensee who has been permitted to occupy the premises for a consideration which may be called "hire". If the argument is correct, then a person hiring a room in a hotel as a licensee would also come within the purview of the Act. But the Act, in terms, has excluded a room in a hotel or a lodging house from the definition of "premises". (emphasis supplied)
Thus the Supreme Court has expressly used the term "hire" in respect of consideration payable by a licensee who has been permitted to occupy premises. The case involved immovable property/premises and not movable premises such as a tent.
10.The term "hire" has also been used in Legislations. For instance in exercise of powers under Section 74 of the Haryana Housing Board Act, 1971 (which was extended to the Union Territory, Chandigarh) the Administrator of the Union Territory of Chandigarh framed the Chandigarh Housing Board (Allotment, Management and Sale of Tenements) Regulations, 1979. Regulations 2(3), (10), (19) and (21) read as under :-
"2(3). "Allottee" means a person to whom a property has been allotted by way of sale or hire purchase or lease or in such manner as prescribed by the Board.
2(10) "Consideration" in relation to a dwelling unit/flat or other built up property or any other property shall include the price fixed by the Board for allotment of such property by way of sale, hire purchase or lease or in any other manner premium, hire purchase, lease money and ground rent ;
2(19) "Hirer" means a person who has signed the Hire Purchase Tenancy Agreement ;
2(21) "Hire-Purchase Tenancy Agreement" means an agreement between the Board and the hirer in the form prescribed in these regulations for disposal of property under the hirer in the Hire-purchase System."
11.Even assuming that the term hire is generally used in respect of the movable properties, considering the context in which the term "hire" is used in Section 5, we are of the opinion that the term is of a wider amplitude and includes the "hire" paid in respect of immovable properties. This is also clear from the use of the term "hire" in respect of
"accommodation" without limiting the ambit of the term "accommodation" to movable accommodation as suggested by Mr.Sanklecha.
12.The Act therefore applies to this case in view of Section 5(1)(c).
13 Even assuming that the words hire or lease do not include premises taken on licence basis as contended by Mr. Sanklecha, the case would still fall under clause (a) of Section 5 of the Act. Sub clause (a) specifically provides that it applies to any payment made to a hotel in connection with the provisions of any accommodation residential or otherwise. Therefore, accommodation taken on licence basis would fall under Section 5(a) of the Act.
14 For the reasons aforesaid, we find no substance in the petition. Hence, the petition is dismissed.