# Taj View Hotel, Agra & another v. State of U.P. and others

- **Citation:** (2008) 2 ILRA 398
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2008-02-06
- **Case number:** Civil Misc. Writ Petition No. 369 of 2002
- **Bench:** Sushil Harkauli, Sudhir Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/taj-view-hotel-agra-another-v-state-of-u-p-and-others-41202
- **Pages:** 4

## Headnote

U.P. Taxation & Land Revenue Act, 1975Section 3(e), 5 (2)-Luxury Tax-liability of
Hotel to pay interest on Luxury Taxstarts after expiry of five days in each
falling months.

Held: Para 9

In the circumstances, we are of the
opinion that Section 5 (2) read with Rule
3 lay down that the liability to pay
interest would start running from the
end of five days after the end of the
month to which the tax relates, that is
the month in which the luxury was
availed by the customer in the hotel and
consequent liability to pay the luxury tax
arose.
The
respondent
no.
3
will,
2 All] Taj View Hotel, Agra and another V. State of U.P. and others
399
accordingly, determine and charge the
interest from the petitioners.
Case law discussed:
(1958) Vol. IX STC 267, AIR 1961 SC 1534

## Text

398 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
to have the complaint or the charge-sheet
quashed is an exception rather than a rule
and the case for quashing at the initial
stage must have to be treated as rarest of
rare so as not to scuttle the prosecution. In
the event, however, the court on perusal
of the complaint comes to a conclusion
that the allegations levelled in the
complaint or charge-sheet on the face of it
does not constitute or disclose any offence
as alleged, there ought not to be any
hesitation to rise up to the expectation of
the people and deal with the situation as is
required under the law."

11. In the case in hand as already
stated above no offence under Section 277
of the Act was made out against the
applicants No. 3 and 4 as the return in
question was verified by the applicant
No.2. In the complaint the only allegation
against applicants No.3 and 4 was that
they were partners of the firm-applicant
no. 1. Having regard to the facts stated the
Magistrate committed gross error in
issuing process against the applicants No.
3 and 4 for the offence under Section 277
of the Act. On the face of the material
brought on record process could have
been issued only against applicants No.1
and 2 for the offence under Section 277 of
the Act. The allegations made in the
Complaint do not constitute an offence
against the applicants No.3 and 4, no
useful purpose would be served by
allowing the criminal prosecution to
continue against them. The inherent
power under Section 482 Cr.P.C. can be
exercised for quashing the prosecution to
prevent the abuse of the process of any
Court or otherwise to secure the ends of
justice.

12. Having regard to the facts and
circumstances discussed above, partly
allowing the application under Section
482
Cr.P.C.
the
prosecution
and
proceedings
of
abovementioned
complaint case against the applicants
No.3 and 4 being abuse of process of the
Court are quashed. The proceedings of
complaint case shall go on against the
applicants No. 1 and 2. Application
Allowed Partly.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.02.2008

BEFORE
THE HON'BLE SUSHIL HARKAULI, J.
THE HON'BLE SUDHIR AGARWAL, J.

Civil Misc. Writ Petition No. 369 of 2002

Taj View Hotel, Agra & another ..Petitioner
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioners:
Sri Mool Behari Saxena

Counsel for the Respondents:
S.C.

U.P. Taxation & Land Revenue Act, 1975Section 3(e), 5 (2)-Luxury Tax-liability of
Hotel to pay interest on Luxury Taxstarts after expiry of five days in each
falling months.

Held: Para 9

In the circumstances, we are of the
opinion that Section 5 (2) read with Rule
3 lay down that the liability to pay
interest would start running from the
end of five days after the end of the
month to which the tax relates, that is
the month in which the luxury was
availed by the customer in the hotel and
consequent liability to pay the luxury tax
arose.
The
respondent
no.
3
will,
2 All] Taj View Hotel, Agra and another V. State of U.P. and others
399
accordingly, determine and charge the
interest from the petitioners.
Case law discussed:
(1958) Vol. IX STC 267, AIR 1961 SC 1534

(Delivered by Hon'ble Sushil Harkauli J.)

1. The question for consideration in
this case is as to whether the interest
payable because of late deposit of 'luxury
tax'
payable
by
Hotels
under
the
provisions of Uttar Pradesh Taxation and
Land Revenue Act 1975 (U.P. Act No.8
of 1975) would start running:

(a) from the date on which the said
tax is actually collected by the petitioner
from the customer, as contended by the
petitioners.

or

(b) from the date on which the
liability of the customer for payment
arose i.e. the billing dates or the date on
which the hotel room was occupied by the
customer,
as
contended
by
the
respondents.

2. The petitioners contend that the
liability to pay interest would begin from
the date on which the tax is actually
realized by the hotel from the customer.
In support, reliance has been placed on
the use of the words "realized from" in the
definition given in Section 3 (f) of the
Act, which is reproduced below:

"3 ............
(f) "rent" means the aggregate of all
charges, by whatever name called,
realized from the occupier of a room
in a hotel, and includes lodging,
boarding or service charges or any
sum charged by the proprietor on
account of tips payable to servants of
the hotel or any of them ".

3. Reliance has also been placed on
Rules 3 & 4 of the rules framed under the
Act, known as U.P. Luxuries (in Hotel)
Tax Rules 1975. For ready reference, the
said rules are reproduced below:

"3. Period within which and the
manner in which the tax be paid: Section
5(1)- The amount of Tax payable by a
proprietor under sub-section (1) of
Section 5 of the Act shall be paid into a
Government Treasury or the State Bank of
India by a challan in LT Form 1 within
five days after the end of the month to
which the tax collected by the proprietor
relates. "

"4. Returns: Section 5(1) - (1) Every
proprietor liable to pay tax under the Act
shall submit a return in L.T. Form II, L.T.
Form III and L.T. Form IV, maintained by
him under Rule 16, within seven days
after the end of the month to which the
returns relate.
(2) Every proprietor signing the
return
shall
subscribe
on
solemn
affirmation that the facts mentioned in
that return are true to the best of his
information and belief
(3) The Collector may verify the
return
from
the
bound
registers
maintained under Rule 16."

4. Having examined the provisions of
the entire Act, we are of the opinion that
both (i) the liability to pay interest, as
well as (ii) the date from which the
interest will begin to run are clearly
defined by Section 5 (2) read with Rule 3.

For ready reference Section 5 in its
entirety is reproduced below:
400 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
"5. Manner of payment: (1) The tax
shall be collected along with rent by the
proprietor of the hotel from the persons
liable to pay it and shall be paid by the
proprietor to the State Government in
such manner as may be prescribed.
(2) If any proprietor fails to pay the
tax within the prescribed period he shall
be liable to pay simple interest at the rate
of eighteen per cent per annum on the
amount remaining unpaid, and such
interest shall be added to the amount of
Tax and deemed for the purposes to be
part of the tax:
Provided that where as a result of an
order passed on appeal the amount of
tax is varied the interest shall be
recalculated."

It is clear from Section 5 (2) quoted
above, that:

(1) the liability to pay interest arises
if the proprietor (of hotel) fails to pay tax
within the prescribed period;
(2) Interest is payable on the amount
remaining un-paid.

5. Thus, because (a) that there would
be no liability to pay interest if the tax is
paid within the prescribed period; and (b)
the interest is payable only on the amount
remaining unpaid at the end of the
prescribed period; therefore the liability
of paying interest would start at the end of
the prescribed period and would be
confined to the tax remaining unpaid at
the end of that period.

6. The "prescribed period" referred
under Section 5 (2) has been given in
Rule 3 (quoted above). Because there has
been some debate about the correct
interpretation of Rule 3, therefore, the
said Rule is again reproduced below with
the relevant words being given in bold
letters so as to make the meaning clear.

"3. Period within which and the
manner in which the tax be paid: Section
5(1)-The amount of Tax payable by a
proprietor under sub-section (1) of
Section 5 of the Act shall be paid into a
Government Treasury or the State Bank of
India by a challan in L.T Form 1 within
five days after the end of the month to
which the tax collected by the proprietor
relates."

7. Thus, it is clear that the tax
collected by the proprietor has to be
deposited within five days after the end of
the month of which the tax "relates".
Obviously, the tax "relates" to the month
in which the luxury of the hotel was
availed by the customer whereby liability
of luxury tax arose. The tax cannot 'relate'
to the month in which it was actually
collected for the simple reason that such
interpretation would mean that if for some
reason
the
amount
remains
unpaid/uncollected the prescribed time for
deposit of tax by the hotel would never
end. The liability to pay tax has been
imposed upon the hotelier with liberty to
pass on the burden to the customer and is
therefore irrespective of whether he
actually collects the same from the
customer. Passing on the tax burden to the
customer is a matter exclusively between
the hotelier and the customer, and does
not concern the State. It has been held by
two Constitution Benches of the Supreme
Court of India in the case of The Tata
Iron & Steel Co. Ltd. Vs. The State of
Bihar (1958) Vol. IX STC 267 (at page
284) and M/s J.K. Jute Mills Co. Ltd. Vs.
State of Uttar Pradesh AIR 1961 SC
1534 (para 13) that the fact that dealer has
been permitted to pass on the liability, of
2 All] New Sun Education Society and another V. State of U.P. and others
401
the trade tax imposed upon the dealer, to
the customer does not mean that if the
dealer does not collect the tax or fails to
pass on that liability, the dealer can be
absolved from paying the tax which is
primarily imposed upon the dealer.

8. In the light of the above
reasoning, the words "realized from" in
Section 3 (f) must be interpreted to mean
"realizable" from the customer or billed to
the
customer.
The
column
in
the
prescribed Form L.T. III for mentioning
the amount of luxury tax collected from
each of the occupants is only for
verification by the department and in our
opinion it would not lead to the inference
that there would be no liability to pay the
tax on the part of the hotelier if he fails to
realize the tax from the customer. Nonrealisation from the customer would
obviously be due to the fault of the
hotelier in granting credit to undeserving
persons. In such a case the hotelier cannot
be absolved of the liability to pay tax.

9. In the circumstances, we are of
the opinion that Section 5 (2) read with
Rule 3 lay down that the liability to pay
interest would start running from the end
of five days after the end of the month to
which the tax relates, that is the month in
which the luxury was availed by the
customer in the hotel and consequent
liability to pay the luxury tax arose. The
respondent no. 3 will, accordingly,
determine and charge the interest from the
petitioners.

10. The writ petitions is disposed of
with the aforesaid directions.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.02.2008

BEFORE
THE HON'BLE DR. B.S. CHAUHAN, J.
THE HON'BLE BHARATI SAPRU, J.

Civil Misc. Writ Petition (P.I.L.) No. 9059
of 2008

New Sun Education Society and another

 ...Petitioners
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioners:
Sri Arvind Srivastava
Sri Ravindra Srivastava

Counsel for the Respondents:
Sri Pushpendra Singh
S.C.

Constitution of India, Art. 226-Public
Interest Litigation- Society-challenging
advertisement-seeking reservation quota
for
physically
handicapped
personneither public injury-or omission of state
or public authority-or fundamental right
or statutory right those poor down
trodden, ignorant, illiterates affected-No
contribution to wards the cause of
handicapped persons either part or in
present disclosed-held-petitioner not a
bonafide
litigant-petitioner
dismissed
with cost of Rs.50,000/-

Held: Para 29, 35 & 36

Thus, in view of the above, the ratio of
all these judgements is that there must
be a public injury and public wrong
caused by wrongful or ultra vires acts or
omission of the state or a public
authority. It is for the enforcement of
basic human rights of weaker sections of
the
community
who
are
poor,
downtrodden, ignorant, illiterates and
whose fundamental rights and statutory
rights have been violated. In fact, it is