IMPORTANT POINT
The court affirmed that luxury tax applies to medical bed charges in hospitals, while penalties for non-declaration were set aside due to the petitioner's bona fide belief of non-liability.

JUDGMENT :

Harisankar V. Menon, J.

These two writ petitions are filed by the petitioner–a private limited company–mainly engaged in providing health care services, specialised in maternity related care/ treatment.

2. The petitioner is holding registration under the provisions of the Kerala Tax on Luxuries Act, 1976 (hereinafter referred to as ‘the Act’). The petitioner has a total of twenty two rooms of which four are Suite Rooms and the balance eighteen are Deluxe Rooms. The petitioner points out that, it is also providing some “sophisticated medical beds” imported from abroad having multiple functions for providing optimum nursing care for expecting mothers. Petitioner points out that the afore medical facility is provided to the patients/expecting mothers who require special medical care, collecting a separate amount towards the use of the said bed. The petitioner points out that as regards the room rent collected, it is admittedly satisfying luxury tax under the statute. However, as regards the charges for the facility of “medical bed”, as above, the petitioner had not declared the said receipts under the statute and was also not paying tax thereunder, taking the stand that the receipts for the use of the medical bed as above, are outside the purview of imposition of luxury tax under the Act.

3. It is seen that the Commercial Taxes Department has initiated proceedings under Section 17A of the Act for the years 2012-13, 2013-14 and 2014-15, culminating in the issue of Exts.P5 to P7 orders, passed by the 1st respondent in W.P.(C) No.36848 of 2017. By the afore orders; penalty of Rs.9,38,532/- for 2012-13, Rs.11,52,690/- for 2013-14 and Rs.6,60,430/- for 2014-15, being double the tax as regards the facility of medical bed provided as above, is imposed. Though separate appeals were filed, those appeals stood rejected by Ext.P8 order dated 29.03.2017. The findings in the said appellate order at Ext.P8 is the subject matter of challenge in W.P.(C) No.36848 of 2017.

4. On the basis of the imposition of penalty as above, and the appellate order confirming such penalty, the 2nd respondent in W.P.(C) No.28762 of 2017 has issued Exts.P8 to P10 orders of assessments for 2012-13 to 2014-15, demanding tax payable as against the facility for medical beds provided as above. It is also noticed that by the afore assessment orders, an equal amount of the alleged suppression detected by the Intelligence Officer in the orders of penalty, have been added towards probable omissions and suppressions so as to arrive at the total rent collection for the purpose of levy of tax. The said orders at Exts.P8 to P10 are the subject matter of challenge in W.P.(C) No.28762 of 2017.

5. I have heard Sri. Jose Jacob, learned counsel for the petitioner and Sri. Sayed M. Thangal, the learned Government Pleader for the respondents in these writ petitions.

6. Sri. Jose Jacob, the learned counsel for the petitioner, contends that :

(i) The petitioner is not liable to tax as regards the amounts realized for the use of “medical beds” as above.

(ii) He would submit with reference to Ext.P1 in W.P.(C) No.28762 of 2017 and Ext.P19 document and Ext.P20 catalog in W.P.(C)No.36848 of 2017 that the medical beds as above were an essential part of the professional services provided in the hospital and hence not liable to taxation under the statute.

(iii) With reference to the various provisions of the statute, he would elaborate that the receipts as against the medical beds provided by the petitioner were outside the purview of taxation, and hence, the demand that is sought to be enforced is without any basis.

(iv) Without prejudice, he contends that the department was not justified in imposing penalty and also making arbitrary estimation of the turnover as against the petitioner.

7. Per contra, Sri. Sayed M. Thangal, the learned Government Pleader contends that :

(i) The nature of use as highlighted in the writ petition proves that the sophisticated medical bed is nothing but a luxury.

(