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2011 Supreme(Mad) 34
High Court of Judicature at Madras
R. SUDHAKAR
Golden Sun Hotel and Beach Resorts, represented by its Director
Versus
The Special Commissioner and Commissioner of Prohibition and Excise & Another
Writ Petition No.1744 of 2008 & M.P.Nos.1 & 2 of 2008
Decided on : 04-01-2011
For the Petitioner:AR. L. Sundaresan, Senior Counsel for Mrs. AL. Ganthimathi, Advocate.
For the Respondents:L.S.M. Hasan Fizal, Government Advocate.
The non-renewal of a hotel's classification does not absolve the petitioner from paying the privilege amount applicable to the category for which they are seeking renewal.
Headnote:
FL.3 Licence - Hotel Classification - - The court discussed the classification of the petitioner's hotel and beach resorts, the renewal of the FL.3 licence, and the demand for differential privilege fee. The court highlighted the legal provisions related to hotel classification and the authority's power to grant FL.3 licence based on the category of the hotel or resorts. The court emphasized that the non-renewal of the three-star category by the petitioner did not absolve them from paying the privilege amount applicable to the category for which they were seeking renewal.
Fact of the Case:
The petitioner, a hotel and beach resorts, sought to quash the demand for differential privilege fee for the FL.3 licence. The petitioner's hotel was initially classified as a three-star category, which expired, and the petitioner sought renewal under the non-star category.
Finding of the Court:
The court found that the demand for the differential privilege fee had no basis as the classification of the petitioner's hotel as a three-star category had not been renewed, and the show cause notice proceedings had not been finalized in accordance with the law.
Issues: The issues revolved around the renewal of the FL.3 licence, the demand for differential privilege fee, and the classification of the petitioner's hotel under the non-star category.
Ratio Decidendi: The court held that the non-renewal of the three-star category by the petitioner did not absolve them from paying the privilege amount applicable to the category for which they were seeking renewal. The demand for the differential privilege fee was set aside due to the absence of a legal basis.
Final Decision: The Writ Petition was allowed, and the impugned demand seeking the differential amount for the periods 2001-2002 to 2007-2008 in a sum of Rs.7,00,000/- was set aside. Connected miscellaneous petitions were closed, and no costs were imposed.
1. Writ Petition is filed praying to issue a Writ of Certiorari, calling for the records relating to the letter dated 7.9.2007 in Letter No.P&E 2(4)/5950/2007 and letter dated 17.12.2007 in Lr.Rc.No.P&E 2(4) 5950/2007 of the first respondent and quash the same.
2. Petitioner is a hotel and beach resorts at Mamallapuram. On inception, the petitioner hotel and beach resorts was classified and awarded three star category for a period of three years with effect from 12.12.1997. According to the petitioner, the said three star classification expired on 12.12.2000 (i.e.) after three years and thereafter, it becomes a non-star category hotel and resorts as it was not renewed. When the petitioner hotel and beach resorts was under the three star category, FL.3 Licence was granted on payment of privilege fee of Rs.2,00,000/- per annum as applicable. There is no dispute that the petitioner has paid the privilege fee of Rs.2,00,000/- per annum for the three year period as above.
3. Beginning from 2001-2002 since the three star category was not renewed and was removed from the list of three star category by the Department of Tourism Development, petitioner sought for renewal of the FL3 licence under non-star category and paid the privilege fee of Rs.1,00,000/- per annum as is applicable to the said category. The first respondent appears to have renewed it for three years with effect from 2001-2002 onwards on payment of Rs.1,00,000/- per annum. Thereafter, based on audit objection, a show cause notice was issued on 26.10.2005 calling upon the petitioner as to why the FL.3 licence issued to the petitioner should not be cancelled on account of short collection of privilege fee applicable to three star category hotel and beach resorts. To this, petitioner submitted a reply on 5.11.2005 stating that the three star hotel category expired on 12.12.2000 and in support of the same, the letter of the India Tourism-Chennai, Government of India, Southern Regional Office, Chennai-2 was submitted. Thereafter, according to the petitioner, no action was taken by the authority. The first respondent, thereafter, by the impugned proceedings dated 7.9.2007, demanded differential privilege fee of Rs.1,00,000/- (Rupees one lakh only) over and above the sum of Rs.1,00,000/- p.a. already paid for the years 2001-2002 to 2007-2008. In all a sum of Rs.7,00,000/- was claimed as arrears. The first respondent reiterated the differential amount of Rs.7,00,000/- by letter dated 17.12.2007. Both the letters are challenged in the present writ petition.
4. Mr.AR.L.Sundaresan, learned senior counsel for the petitioner contended as follows:- (i) The authority has granted the FL.3 licence from 2001-to 2002 onwards on payment of Rs.1,00,000/- per annum as privilege fee accepting the non-star category. The show cause notice issued has not been finalised and there is no quantification of demand. Therefore, the present demand claiming shortfall has no basis and is arbitrary. (ii) The Government of India, Tourism Development has already stated that they have not renewed the three star category from the year 2001-2002 onwards. Therefore, the question of claiming privilege fee at the rate of Rs.2,00,000/- per annum applicable to three star category does not arise. (iii) In any event, the payment now demanded under the impugned proceedings has no basis and is without reason, besides being arbitrary.
5. A counter-affidavit has been filed. The stand of the respondent has been reiterated in para 6 of the counter-affidavit which reads as follows:-
"6. I submit that the petitioner is holder of FL.3 licence bearing No.5/91-92 have applied for the renewal of FL.3 licence for the year 2007-2008. Further I submit that on perusal of the records, it reveals that the Writ Petitioner's hotel was awarded 3 stars gradation for three years with effect from 12.12.1997. Subsequently, the petitioner/ licensee did not renew the above said classification in order to avoid payment of privilege f
