Tamil Nadu

Clubs challenge luxury tax

CHENNAI: The Madras High Court on Tuesday allowed petitions by various clubs challenging the applicability of the provisions of the Tamil Nadu Tax on Luxuries Act to them.

In his order, Justice K.Chandru said the action by authorities in attempting to cover clubs, the petitioners before the court, within the purview of the Luxuries Act was without jurisdiction. Any action taken pursuant to such coverage would become void ab initio.

While in some writ petitions, the petitioners challenged the final assessment orders, in others, pre-assessment notices and notices calling upon the petitioner clubs to register themselves under the Luxuries Act were also questioned. In one petition, the order by the revisional authority confirming the appellate order upholding the assessment was also challenged.

The question before the court was whether Section 4 of the Act, levying tax on luxuries provided in a hotel in respect of every room under occupation by any person, was applicable to clubs having rooms rented for accommodation for its members.

Mr. Justice Chandru said the definition of “hotel” as provided under the Act was not susceptible to any different meaning. It was not even suggested by the State’s counsel that clubs, while providing accommodation, was doing business so as to attract the charging section under the Luxuries Act. Allowing the writ petitions, he said if any tax was collected by any coercive process or compulsion, it should be returned to the petitioners within 8 weeks.

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