Charges received by the taxpayer for services at the Ayurveda Centre, Beauty Parlor, and Convention Centre within the hotel attract luxury tax

Last updated: 03 July 2024

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The Kerala High Court has ruled that hotels are liable for luxury tax on services provided by third parties within their premises, such as at an Ayurveda Centre or Beauty Parlour. The court determined that even if the hotel shares revenue with these third parties, it is considered rent for the space provided, and the services are not directly rendered by the hotel itself. Additionally, luxury tax on Convention Centre charges was only applicable after an amendment in July 2006.

Court :
Kerala High Court

Brief :
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, a third party was providing services to the customers in the premises of the Taxpayer.

Citation :
O.P (Tax) No. 24 and 28 of 2016 dated June 04, 2024

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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