The Hindu Business Line : HC sets aside ST assessment on VGP Golden Beach

The Madras High Court has ruled that State Tourism Department had authority and power vested under the TN General Sales Tax Act to grant Star status to a hotel. Hence, when a hotel had not applied with any status for grant of star category, the sales tax assessment orders of October 14 and 15, 2003, issued to it by the State authority were "wholly unwarranted and were liable to be set aside," the Court said.

Mr Justice K. Chandru, who heard writ petitions from VGP Golden Beach Resorts Ltd, Injambakkam, Chennai, challenging the orders, said that the grant of star status depended upon certificate issued by Tourism Department, and when the document showed that petitioner had not applied with any status, it was strange for authorities to direct the hotel that they (petitioner) should pull down the structure so as to be exempted from star category, which act was not warranted by power vested under Sales Tax Act.

The petitioner, who was running a star hotel at Injambakkam, was initially assessed to sales tax on the basis that theirs was a star hotel. Subsequently, the petitioner discontinued to have star status for hotel, and produced a letter dated February 5, 2004 issued by Tourism Department stating that petitioner had not applied for classification of their resort, and therefore, they had not been issued any star classification since April 1, 1989. The tax authority, according to the petitioner, had not acted upon the letter from the Tourism Department.

The petitioner filed two writ petitions challenging assessment orders and later filed appeals for rectification of error found in the orders. The Assistant Appellate Commissioner (CT), Kancheepuram dismissed their appeals. Thereafter the cases were taken up to the Sales Tax Appellate Tribunal, which also dismissed the appeals.

The Judge held that respondents were bound by certificate issued by Tourism Department regarding status of hotel run by petitioner, and the impugned orders forming finding of the appellate authority was wholly unwarranted and liable to be set aside. The Judge set aside the impugned orders and allowed the writ petitions.

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