Kerala High Court: Charges for Ayurveda Centre, Beauty Parlor, and Convention Centre Services in Hotels Attract Luxury Tax

Kerala High Court: Charges for Ayurveda Centre, Beauty Parlor, and Convention Centre Services in Hotels Attract Luxury Tax

Introduction

The Hon’ble Kerala High Court, Ernakulam, in the case of State of Kerala v. M/s M. Far Hotels Ltd. [O.P (Tax) No. 24 and 28 of 2016, dated June 04, 2024], held that charges received by the taxpayer for services at the Ayurveda Centre, Beauty Parlor, and Convention Centre within the hotel attract luxury tax under the Kerala Tax on Luxuries Act, 1976 (“the KLT Act”) because the services were not being rendered directly by the taxpayer but by a third party providing services to customers on the taxpayer’s premises.

Facts of the Case

A Common Order dated August 4, 2015 (“the Impugned Order”), was passed by the Kerala Value Added Tax Appellate Tribunal (“KVATAT”) concerning the Assessment Year 2003-04. It also disposed of four appeals preferred by the Revenue relating to Assessment Years 2004-05, 2005-06, 2006-07, and 2007-08, all decided against the State of Kerala (“the Petitioner”).

Aggrieved by these circumstances, the Petitioner filed the present writ petition on the applicability of luxury tax on services provided to customers at the hotel premises by a third party.

Issue

Whether charges received by the taxpayer for services at the Ayurveda Centre, Beauty Parlor, and Convention Centre within the hotel attract luxury tax under the Kerala Tax on Luxuries Act.

Held

The Hon’ble Kerala High Court, Ernakulam, in O.P (Tax) No. 24 and 28 of 2016 held as follows:

The writ petition was disposed of accordingly.

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