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The Hotel-Receipts Tax Act, 1980

The Hotel-Receipts Tax Act, 1980 was enacted on 9 December 1980 by Parliament in 35th Year of Republic of India which extends to whole of India.  This was aimed at special taxes on gross receipts of hotels.

Definitions like Assesse, Assessment, Assessment Year, Board, Chargeable Receipts, Hotel, Hotel-Receipts Tax, Income-Tax Act, Prescribed, Room Charges, are all explained under the Act. Application of the Act to all hotels who charge Rupees 75 or more per day per individual.  For food, drink, accommodation and other services a composite charges are payable or Income tax officer can determine room charges on a reasonable basis as he deems necessary.

Director of Inspection, Income Tax Commissioner, Assistant Commissioner of income tax officer and inspector ofincome tax will all have powers to perform their duties under this Act as they do under Income Tax Act. Officers employed in this Act should follow orders, instructions and directions of Board but no order can be made to a particular assessment or to interfere with Commissioner’s duty. Income tax officer should follow the orders of Commissioner.

On every hotel commencing on or after 1 April 1981, a tax shall be charged on previous year’s receipts at 15% rate but if the tax is received in foreign exchange the tax will be reduced to 5% on the charges received in foreign exchange. Foreign Exchange Regulation Act 1973 is considered while understanding meaning of Foreign Exchange and Indian Currency. If any person running business of hotel serves food and drink to any other person, then Income tax officer is of the opinion that such arrangements are made to avoid the liability under the Act and tax can be charged on such food and drink.

Scope of chargeable receipts include not only the total amount that has accrued in business of hotel but also sales tax, entertainment tax and luxury tax but if such charges are included in previous year receipts then in subsequent year receipts will not have the said charges.

Computation of chargeable receipts, return of chargeable receipts, Assessment, Self-Assessment, Best Judgement Assessment, reopening of assessment by an assessee, receipts escaping assessment, advance payment of hotel receipt taxes are all discussed under this chapter. Penalty for failure to furnish returns is fixed to 2% of the assessed tax for every month and not exceeding 50% of the assessed tax. Inspecting Assistant Commissioner has to assist Income-tax Officer while imposing any penalty. Commissioner after imposing penalty on an assessee shall forward a copy of such order to the Income Tax Officer. Penalty for false estimate and failure to pay in advance is also explained under Section 16 of the Act.  Assessee is given an opportunity of being heard before ordering or imposing any fine on such assessee.

Any person denying his liability to be assessed or penalty imposed by Income Tax Officer under this Act can appeal to the Commissioner and such appeal shall be verified and if Commissioner deems fit can pass such orders under the Act.  Procedure that is followed in this Act is as per the Income Tax Act with relation to hearing and determination of the appeal. An appeal to an Appellate Tribunal against the order of Commissioner shall also be allowed by the Act. It should be filed within 60 days of the order communicated to the assessee by the Commissioner and the Appellate Tribunal can admit it in the prescribed form and by paying a fee of Rupees 200.00.Rectification of mistakes from the record can be done by Income Tax Officer, Commissioner, or Appellate Tribunal or by application of an assessee and such amendment should be passed in writing by concerned authority.

Hotel receipts payable by assessee for an assessment year shall be deductible from profits of the hotel assessable for that assessment year. Revision of order can be done by Commissioner but it cannot be done after the expiry of 2 years from date of such order.

Commissioner can on his own motion or application by assessee revise and make enquiry and pass order but it should not be prejudicial to assessee.  But he cannot do so for orders made more than 1 year previously. After the expiry of period,Commissioner can accept the application if he is satisfied that assessee was prevented by sufficient cause for making application. Every application shall be accompanied with rupees 25.00 fee.

Any statement or return made under the provisions of Income Tax Act can be obtained for the purpose of this Act. If anyone wilfully evades tax, fails to furnish returns of chargeable receipts, fails to produce accounts and documents, gives false statements in verification, abetment of false returns then that assessee/person is punishable under the Act and penalty is also levied.

Notwithstanding anything contained in CRPC 1973 some offences are non-cognizable under this Act. Except at the instance of the Commissioner no person is liable under IPC for any matters connected to this Act. Board under control of Central Government by gazetted notification can make rules to carry out the purpose of this Act.

Central Government has the power to exempt any hotels or class of hotels from levying of hotel-receipt tax it can be done after Gazette notification in the public interest. Central Government may order to remove difficulties in provisions that are arising in giving effect to the provisions of the said Act, but it cannot do so after the expiry of 2 years period from commencement date.

by  Sushma Javare