IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM TUESDAY, THE 14TH DAY OF AUGUST 2012/23RD SRAVANA 1934 OP(C).No. 1928 of 2012 (O) -------------------------- PETITIONER(S): ------------- STATE OF KERALA REPRESENTED BY DEPUTY COMMISSIONER (LAW) COMMERCIAL TAXES, ERNAKULAM. BY ADV.DR.SEBASTIAN CHEMPAPPILLY, GOVERNMENT PLEADER RESPONDENT(S): -------------- M/S.KAIRALI AYURVEDIC HEALTH RESORTS PVT. LTD KODUMBU, PALAKKAD, PIN:678 001, REPRESENTED BY ITS MANAGER (OPERATIONS) BY SHRI.T.M.SREEDHARAN (SR.) THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 14-08-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP(C) NO.1928/2012 APPENDIX PETITIONER'S EXHIBITS P1 : COPY OF ASSESSMENT ORDER DATED 03/06/2009. P2 : COPY OF APPELLATE ORDER DATED 04/11/2010. P3 : COPY OF COMMON APPELLATE ORDER IN TA NOS.9 TO 18 OF 2011 DATED 29/02/2012. P4 : COPY OF JUDGMENT DATED 21/05/2012 IN WP(C) NO.14730/2008. //TRUE COPY// PA TO JUDGE. jg C.N.RAMACHANDRAN NAIR, & C.K.ABDUL REHIM, JJ. .................................................................... O.P.(C) No.1928 of 2012 .................................................................... Dated this the 14th day of August, 2012. JUDGMENT
Ramachandran Nair, J.
Writ Petition is filed by the State challenging orders of the Tribunal cancelling luxury tax assessments for the rent collected for air conditioned cottages in Ayurveda Resort run by the respondent that was confirmed in first appeal. While the case of the respondent is that they are running Ayurvedic Hospital, the case of the State is that the respondent is running an Ayurvedic Resort which is essentially a tourism industry, though ayurvedic treatment, mainly massage is provided to staying tourists.
2. After hearing Government Pleader for the petitioner and Senior counsel Sri.T.M.Sreedharan appearing for respondent and on going through the Tribunal's order, what we notice is that the Tribunal has decided the case following an interim order passed by this court in a pending W.P.(C). Interim order is not final judgment and it is not a precedent to be followed by the Tribunal. Further, Tribunal's order in O.P.(C) 1928/2012 2 appeal happens to be final and still the Tribunal has not cared to find out as to what would happen if the High Court dismisses the W.P.(C) recalling interim orders relied on by the Tribunal. We, therefore, do not find any justification for the Tribunal to rest their decision on an interim order of this court treating it as a precedent in the matter.
3. The Tribunal does not appear to be aware of health tourism which attracts lot of foreign and Indian tourists to hotels and Ayurvedic Resorts in Kerala, where one of the services rendered is body massage done by experts using ayurvedic herbs and oils. In fact, invariably every star hotel in Kerala has got a massage centre providing service of Ayurveda Doctors and assistant for massage and allied health care services. So much so, what is required to be considered is whether the industry is a tourism Hotel where ayurvedic treatment is also provided to guests. In fact, the Tribunal failed to understand that massage which is the main ayurvedic treatment provided in tourist-resorts need not be for any specific disease but is for general improvement of health and for rejuvenation. The Government Pleader has referred to and what we have found is that the department has collected entire material about the respondent-Resort which are published in their website wherein it is O.P.(C) 1928/2012 3 projected as an Ayurvedic Resort and not as a Hospital. Further, it is seen from records that guests residing in respondent-Resort are taken to nearby tourist spots namely, the famous Nelliampathy Hills and the Malampuzha Dam. One crucial test the Tribunal should have applied is whether the charges collected is essentially for treatment or whether it is only one of the services availed by the guests staying in the Resort. Further, if it is a Hospital, massage and other treatment would be provided to out patients also. In fact, the department has collected entire data from the accounts which according to the Government Pleader shows that the real charges collected for treatment for disease is insignificant when compared to the massive amount collected towards rent in the 30 A/c cottages and also for food and other services provided in the hotel.
4. It may be noticed that "hotel" under Section 2(e) has a wide definition and under the Explanation even guest rooms attached to companies are covered by the definition of "hotel". Further, the orientation in the definition clause is that when rooms are let out as a business, it attracts luxury tax as hotel. The Tribunal has not even looked at the scope of the wide meaning given to "hotel" in the Act. O.P.(C) 1928/2012 4 However, we find force in the contention of Senior counsel appearing for the respondent that A/C cottages or luxury rooms provided in the hospital does not go against it's identity as a hospital, if it is engaged in treatment only. The question, however, to be considered is whether the establishment of respondent was essentially a hospital or it was essentially a tourist resort where extensive facilities for ayurvedic treatment and massage are also provided. We do not find anything in the Tribunal's order that they have considered the facts to identify the nature of operations in the respondent-resort. In fact, what the Tribunal should have done was to identify the nature of services with reference to the charges collected from the accounts made available by the department and based on this, the identity and activity of the resort should have been found out. It is thereafter the Tribunal should consider application of statutory provisions, particularly definitions and charging sections of the Luxury Tax Act. Since the Tribunal has not considered these, we allow the O.P.(C) by setting aside the orders of the Tribunal and by restoring the appeal to the file of the Tribunal for considering on merit after hearing the parties and after going through the records as to whether respondent can be assessed as a hotel or as a O.P.(C) 1928/2012 5 hospital where rent collection is only incidental and medical treatment is the main activity. If the respondent-Resort is found to answer the description of "hotel", no matter ayurveda resorts are only subsequently specifically brought through an amendment, the same should not stand in the way of the Tribunal sustaining the assessment as a "hotel". On the other hand if it is found to be essentially a true hospital prior to the amendment, naturally levy will be only after amendment made in 2008. The Tribunal is directed to dispose of the appeal afresh within a period of two months from date of receipt of copy of this judgment.
C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms