LI Network
Published on: November 19, 2023 at 18:12 IST
The Delhi High Court, on Friday, affirmed the imposition of a Rs 2.92 crore luxury tax on the Delhi Gymkhana Club by the city government in 2014. The court dismissed the club’s challenge to the demand raised under the Delhi Tax on Luxuries Act.
In a ruling issued on November 18, 2023, by the bench of Justices Yashwant Varma and Ravinder Dudeja upheld the order, stating, “While we uphold the impugned order and reject the challenge raised, we emphasize that the decision of the Commissioner (Entertainment and Luxury Tax) contested before us should not be considered a precedent for any assessment period post the promulgation of the 2012 Amendment Act.”
The court further stated, “Any assessments made or proceedings pending would need to be evaluated in light of the observations rendered hereinabove.”
Back in July 2014, when the initial plea was filed, the high court directed the club to remit Rs 1.45 crore, half of the total Rs 2.92 crore, for three accounting years – 2009-10, 2010-11, and 2011-12 – as luxury tax to the city government.
The court required the club to make a partial payment of the tax owed to the government as a precondition to hearing its plea, asserting that it cannot be subjected to the tax as it exclusively caters to its members.
Additionally, the court instructed the Delhi government to lift the attachment order against the club and issued notices to the Excise, Entertainment, and Luxury Tax Department.
The Delhi Gymkhana Club, an esteemed institution coveted by the capital’s influential elite, had filed a petition, contending that the order issued on July 1, 2014, demanding payment of Rs 2.92 crore within seven days under the Delhi Tax on Luxuries Act, was “erroneous and was issued without affording it a hearing.”
The petitioner argued that the club operates as a social club based on the principle of “mutuality,” functioning as a mutual benefit association with activities limited to its members.
The club’s legal representative had previously asserted that the government department mischaracterized the club as a hotelier and imposed luxury tax on funds collected from members for accommodation services.
