Escapade Resorts Pvt. Ltd. Vs Commercial Tax Officer (Wc & Lt) (Kerala High Court)
The writ petition concerns a challenge by a private limited company operating an Ayurvedic treatment centre at the leased Kollengode Palace against an assessment order passed under the Kerala Tax on Luxuries Act, 1976. The authorities treated the establishment as a “hotel” and assessed luxury tax on both room rent and treatment charges for the years 2004-05 to 2007-08. The petitioner argued that the centre functioned exclusively as a full-fledged Ayurvedic hospital, admitting only individuals who agreed to undergo specified therapeutic treatment for a minimum duration of fourteen days. The petitioner clarified that no general accommodation was offered, there was no restaurant or separate food tariff, only dietary food was provided, and no facilities such as swimming pools or shops existed. Despite these submissions, the first respondent completed the assessment by treating the centre as a “hotel,” noting comments in the brochure and guest reviews which suggested the treatments resembled wellness or betterment therapies rather than targeted medical interventions for specific diseases.
The petitioner contended that the assessment was unsustainable because the establishment had already been recognised as a hospital in an earlier Division Bench judgment in OP (Tax) No. 1 of 2015 relating to subsequent assessment years. The petitioner maintained that this classification was decisive. The respondents argued that the earlier judgment applied only to the later years and that the factual circumstances differed. They defended the assessment on the ground that the treatment charges and room rent formed part of a luxury package that varied according to room type, similar to luxury accommodation in hotels. They also stressed guest reviews describing improvements in general well-being, claiming such comments supported their conclusion that the centre did not provide medical treatment in the true sense.
