Eros Resorts & Hotel Ltd Vs Municipal Corporation of Delhi (Delhi High Court)
Delhi High Court held that imposition of uniform levy of UF-10 and property tax at the rate of 20% on 3-star and above hotels is, therefore, a valid exercise of legislative discretion and withstands scrutiny under Article 14 of the Constitution.
Facts- The instant batch of writ petitions under Article 226 of the Constitution of India, 1950 have been filed challenging the recommendations made by the Municipal Valuation Committee under Section 116 of the Delhi Municipal Corporation Act, 1957, implemented by the Municipal Corporation of Delhi for levying property tax on the petitioner-hotels. The petitioners have sought the quashing of the user multiplier factor of 10 and the imposition of the rate of tax as 20% as against 10% before. The majority of the writ petitions concern hotels of the erstwhile 5-star category. The rating of 5-star has been allegedly reclassified as 4-star w.e.f. 7.02.2022.
Conclusion- Held that the classification of hotels on the basis of star ratings does not suffer from the vice of arbitrariness or discrimination under Article 14 of the Constitution. The star-rating system, being an objective and universally recognised yardstick prescribed by the MoT, is a system of self-classification and furnishes an intelligible differentia distinguishing luxury hotels from ordinary hospitality establishments. The said classification bears a rational nexus with the legislative object of imposing a higher fiscal incidence on establishments catering to affluent clientele and availing premium amenities. Having voluntarily sought and obtained the benefits of star accreditation, the petitioners cannot now assail the consequential fiscal obligations, the doctrine of approbation and reprobation squarely operating against them. The uniform levy of UF-10 and property tax at the rate of 20% on 3-star and above hotels is, therefore, a valid exercise of legislative discretion and withstands scrutiny under Article 14 of the Constitution.
