Gujarat High Court
Cama Hotels Ltd & vs State Of Gujarat & 2 on 13 August, 2014
Bench: M.R. Shah, K.J.Thaker
C/SCA/4837/1991 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 4837 of 1991
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH sd/
and
HONOURABLE MR.JUSTICE K.J.THAKER sd/
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1. Whether Reporters of Local Papers may be NO
allowed to see the judgment ?
2. To be referred to the Reporter or not ? NO
3. Whether their Lordships wish to see the fair copy NO
of the judgment ?
4. Whether this case involves a substantial question NO
of law as to the interpretation of the constitution
of India, 1950 or any order made thereunder ?
5. Whether it is to be circulated to the civil judge ? NO
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CAMA HOTELS LTD & 1....Petitioners
Versus
STATE OF GUJARAT & 2....Respondents
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Appearance :
MR ZUBIN F BHARDA, ADVOCATE for the Petitioners.
MR JAIMIN GANDHI, AGP for the Respondents.
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE K.J.THAKER
Date : 13/08/2014
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE M.R. SHAH) 1.0. By way of the present petition, the petitioner has prayed for an appropriate writ, direction and order to quash and set aside the impugned notices at Annexures D, E, I and J and similar other notices issued by respondents no. 2 and 3, issue to recover amount Page 1 of 5 C/SCA/4837/1991 JUDGMENT of interest i.e. 2,29,303/ on the amount luxury tax i.e. Rs. 42,01,597.50 for the period between 1981 to 1986, at the rate of 2% under Section 7(a) of the Gujarat Taxes on Luxuries ( Hotel & Lodging Houses) Act, 1977 (hereinafter referred to as the "Act, 1977") w.e.f. 2.5.1989 till June/ July 1989.
2.0. Heard Shri Zubin Bharda, learned advocate for the petitioners and Shri Gandhi, learned Assistant Government Pleader appearing on behalf of the respondent State. It is required to be noted that the petitioners challenged the levy of luxury tax under the Act, 1977 before the Hon'ble Supreme Court by way of Civil Miscellaneous Petition No.21381 of 1981. By interim order dated 15.10.1981, the Hon'ble Supreme Court stayed the demand of the luxury tax under the aforesaid Act on condition that the petitioners give security in respect of the tax dues to the satisfaction of the Collector. It appears that petitioners time and again furnished the bank guarantee with respect to luxury tax due and payable quarterly from time to time and furnish the bank guarantee of total amounting to Rs.42,01,597.50 towards the luxury tax liability for the period October 1981 to March 1986. It appears that thereafter instead of furnishing the bank guarantee, the petitioners continued to pay luxury tax due and payable under the Act on and from April 1986. It appears that thereafter the Hon'ble Supreme Court dismissed the aforesaid writ petition and upheld the constitutional validity of the Act and levy of luxury tax by judgment and order dated 2.5.1989. That thereafter, the petitioner paid the aforesaid amount of Rs. 42,01,597.50 in five installments commencing from 27.06.1989 to 19.07.1989 and therefore, clear the entire issue of Page 2 of 5 C/SCA/4837/1991 JUDGMENT luxury tax of Rs.42,01,597.50 by 27.06.1989. That thereafter, respective bankers returned the bank guarantee to the petitioners as such the aforesaid amount of luxury tax was paid by the petitioner. That thereafter, the petitioners have been served with the impugned notices calling upon the petitioners to pay interest under Section 7(A) of the Act, 1977 w.e.f. 2.5.1989 to 26.7.1989 i.e. Rs.2,29,303/. That thereafter, the petitioners approached the concerned authority making representation against the aforesaid demand of interest, however still the demand has been continued. Hence, petitioners have preferred present Special Civil Application challenging the impugned notices / demand of interest under Section 7(A) of the Act, 1977.
3.0. Number of submissions have been made by Shri Bharda, learned advocate for the petitioners against the demand of interest under Section 7(A) of the Act, 1977 w.e.f. 2.5.1989 to 27.6.1989 inclusive of applicability of provision of Section 7(A) of the Act, 1977, which had come into effect w.e.f. 1.1.1989. He has also further submitted that as such there was no fault on the part of the petitioners in not making the payment of luxury tax of Rs.42,01,597.50 due and payable from October 1981 to March 1986, after Hon'ble Supreme Court dismissed the petition. It is submitted that as such all efforts were made by the petitioners to see that amount of luxury tax of Rs. 42,01,597.50 is paid to the Collector by encashing bank guarantee. It is submitted that however as some time was likely to be taken in encashing bank guarantee and making payment to the State Government, immediately petitioners paid the amount of Rs. 42,01,597.50 by Page 3 of 5 C/SCA/4837/1991 JUDGMENT different cheques issued between 27.06.1989 to 19.07.1989. However, Shri Bharda, learned advocate for the petitioners has stated at the bar that to put an end to the very old litigation pending since 1989, the petitioners are ready and willing to pay reasonable amount towards interest which may not be less than Rs. 1,25,000/, which shall be paid by the petitioners within a period of four weeks from today.
4.0. Shri Gandhi, learned AGP has stated at the bar that he is not in a position to give any consent if the request of the petitioners to reduce interest liability to Rs. 1,25,000/ is accepted. However, it is required to that he is also not in a position to point out any steps taken by the Collector to encash the bank guarantee immediately on dismissal of the petition by the Hon'ble Supreme Court.
5.0. Having heard the learned advocates for the respective parties and in the peculiar facts and circumstances of the case and dispute is only with respect to interest on the amount of Rs. 42,01,597.50 w.e.f 2.5.1989 to 19.7.1989 imposed under Section 7(A) of the Act, 1977 and it can be said that both the parties can be said to be responsible for delay in recovering the amount from encashing bank guarantee furnished by the petitioners, we are of the opinion that if the petitioner is saddled with the liability to pay lump sum interest at Rs.1,25,000/ to be deposited by the petitioners within the period of four weeks from today, it will meet the end of justice and may put an end to the entire litigation which is pending since long, more particularly, pending since 1989.
Page 4 of 5C/SCA/4837/1991 JUDGMENT 6.0. In view of the above and for the reasons stated above, petition succeeds in part and it is ordered that if the petitioners makes payment of Rs.1,25,000/ towards interest liability as demanded with the department within the period of four weeks from today, there shall not be any further liability of the interest demanded under the impugned notices. It goes without saying and even as agreed by Shri Bharda, learned advocate for the petitioner if aforesaid amount of Rs. 1,25,000/ is not paid / deposited by the petitioners with the department within the aforesaid period, liability of the petitioners in the impugned notices stand and amount may be recovered from the petitioners by following due procedure of law. Rule is made absolute to the aforesaid extent.
sd/ (M. R. SHAH, J.) sd/ (K. J. THAKER, J.) Kaushik Page 5 of 5