By C. B. Thakar Advocate, G. G. Goyal, Janak Vaghani, Chartered Accountants
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Sales Tax – Rate of Tax – Based on Star Hotels – Given By Tourism Department – Government of India – Special Rate Applies From Date of Approval of Star Granted – And not From 1st Day of Financial Year – Section-5B and Entry 46 of Schedule I of The Kerala General Sales Tax Act, 1963.
Facts:
The respondent is a resort hotel having three star approvals by Tourism Department of Government India with effect from 11-09-2002. Accordingly, the respondent paid license fee for the period up to 11/09/2002 and from 11-09-2002 paid tax on sale of Cooked Food @ special rate of 8% applicable to star hotels under Entry 46 of Schedule I of The Act.
However, the assessing officer having treated classification of three star hotels from 1st day of April 2002, applied special rate of tax of 8% from that date. The Tribunal allowed the claim of the respondent. The Department filed revision petition before the Kerala High Court against the said judgment of Tribunal.
Held:
Liability for tax on sale of cooked food which is generally served in hotel is fixed under the Statue with reference to the classification of hotels. In fact, only bar attached and star hotels are specifically covered by Entry 46 of Schedule I, attracting special rate of tax of 8 %. Other hotels are covered by section 5B, which provides for collection of license fees. The Tourism Department of Government of India is the agency constituted to declare star status of a hotel. Therefore for the purpose of Entry 46, star hotels mean only those hotels so classified by tourism department of Government of India. Therefore, the respondent is liable to pay tax at special rate of 8 % from 11-09-2002 onwards, when the approval of star was given by the tourism department and for earlier period the respondent is liable to pay license fees u/s. 5B of The Act. Accordingly, the High Court dismissed the revision petition filed by the State and approved the order of Tribunal.
