The Kerala High Court has held that Keraleeyam Ayurvedic Resort primarily a resort, ayurvedic treatment incidental and is liable to pay tax.
The bench of Justice A.K.Jayasankaran Nambiar and Justice Easwaran S. has observed that while imparting Ayurvedic treatment to the inpatient, though a special diet is given in accordance with the treatment and the medicine given, the fact that an extra person is accommodated in the resort is charged with a rate and the fact that the breakfast, lunch, and dinner have been provided, shows that the appellant is not running an ayurvedic treatment centre but a resort where the incidental facility of ayurvedic treatment is being given to the occupants.
The appellant/petitioner claims that they are running an Ayurvedic hospital, a part of S.D. Pharmacy Private Limited and also a manufacturer of Ayurvedic medicines. The assessments were made prior to the amendment brought to the Luxury Tax Act through the Kerala Finance Act, 2008, incorporating “hospital” within the ambit of Luxury Tax Act. The definition of “hospital” after the amendment includes a nursing home, therapy centre, rejuvenation or recuperation centre, nature care or cure centre, Ayurvedic cure or care centre and other treatment. However, for levy of Luxury Tax prior to the amendment, it must be shown that the appellant was running a hotel in terms of Section 2(e) of the Luxury Tax Act.
The assessing authority found that the nature of the activity of the appellant is to provide accommodation to the tourists and also providing Ayurvedic treatment to sick and non- sick persons, and their main income is derived from providing accommodation to the tourists. Therefore, the assessing authority was of the opinion that the wellness treatment provided by the appellant, along with accommodation, is liable to be taxed. The appellant was thus assessed by an order dated 30.9.2009 for the tax.
Immediately after the order of assessment, the appellant was also visited with an order of penalty. Aggrieved by the order of assessment and penalty, the appellant preferred statutory appeals before the Deputy Commissioner (Appeals) and the same was dismissed. As against the said order, the appellant filed statutory appeals before the appellate tribunal. The appellate tribunal, by order dated 16.8.2010, dismissed the appeals and modified the demand of penalty to the extent of tax payable.
Aggrieved by the order of the tribunal confirming the order of assessment and penalty, the appellant approached the writ court by preferring the writ petitions.
The Single Judge who considered the writ petition found that inasmuch as the appellant has not chosen to produce any books of accounts before the authority to show that the income derived from the renting act of accommodation was incidental to the main activity of providing treatment to the patients, refused to interfere in the order of assessment. However, considering the peculiar facts, it reduced the penalty to 50% of the tax payable.
The petitioner, being aggrieved by the judgment, preferred the intra-court appeals.
The court while dismissing the appeal held that the main activities of the appellant are not running the hospital but providing a resort and other facilities and the Ayurvedic treatment is only incidental to that of the facilities.
Case Details
Case Title: Keraleeyam Ayurvedic Resort Versus The Commercial Tax Officer (Luxury Tax)
Case No.: WA NO. 709 OF 2018
Date: 11/03/2025
Counsel For Petitioner: Anil D. Nair
Counsel For Respondent: V.K. Shamsudheen
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