Delhi Gymkhana Club Liable To Pay Luxury Tax: Delhi High Court
|The Delhi High Court observed that the Delhi Gymkhana Club is exigible to tax under Delhi Tax on Luxuries Act, 1996 (DTL Act).
In this case, the Commissioner, (Entertainment and Luxury Tax) held the club is liable to pay luxury tax for assessment years 2009-10, 2010-11 and 2011-12. The Court noted that the per the facts of the case, the case falls under the Act of 1996 and not under the new act of 2012.
The Bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed, “In fact, the word “luxury” did not even exist on the statute book prior to its insertion by virtue of the 2012 Amendment Act. In view of the above and bearing in mind the statutory position which prevailed at the time when the assessment orders came to be passed, we find no justification or ground to interfere with the ultimate conclusion arrived at by the first respondent”.
Advocate Ayush A Mehrotra appeared for the Petitioners (Delhi Gymkhana Club) and Additional Standing Counsel Rajeev Aggarwal appeared for the Respondent (Commissioner of Luxury Tax).
The Petitioner was a social club registered as a not-for-profit company under Section 25 of the Companies Act, 1956 (Act). The Petitioner had not obtained registration under the Delhi Tax on Luxuries Act, 1996 (DTL Act), and has not paid any tax thereunder. The Assessing Authority held the Petitioner liable to pay luxury tax, and the First Appellate Authority affirmed this decision. The Petitioner appealed to the Commissioner, who held that the Petitioner was liable to pay luxury tax. Aggrieved, the Petitioner approached the High Court challenging the order.
The High Court noted that the DTL Act initially taxed hotels offering residential accommodation, including the Petitioners club categorized as an "establishment" under Section 2(g). The term "hotelier" was linked to Section 2(g), making the club liable for tax under Section 3.
Furthermore, the Court observed that the 2012 amendment broadened the tax to cover banquet halls, gyms, hotels, and spas.
Additionally, the Bench noted that the term "receipt" is defined as monetary consideration received from any luxury provided in the establishment. To be subject to the tax, the assessee must not only qualify as an establishment but must also derive income or receipts from the provision of a luxury.
The Court added that the Act before its 2012 amendment would be applicable on the facts of the case.
Accordingly, the Court affirmed the order and dismissed the Petition.
Cause Title: Delhi Gymkhana Club v Commissioner (Luxury Tax) (2023:DHC:8223-DB)