LUXURY TAX ACT, 1987 - MAHARASHTRA


I. INTRODUCTION:
Luxury Tax is levied under “The Maharashtra Tax on Luxuries and By Way of Cess on Other Facilities, Services, Enjoyments, Utilities, Consumption, etc. Act, 1987” (Luxuries Act, 1987). Though previously it covered more categories of assessees, at present it covers only the hotels as a taxable assessee. The tax is levied on hotels, lodging house, clubs and Inn etc. for providing residential accommodation. Luxury Tax is levied at different rates. The applicable rates with effect from 1-5-2010 are as under:
Charges for luxury provide in a hotel per residential accommodation per day
Rate of Tax
Upto `.750/-
Nil
Exceeding `750/- upto `1200/-
4%
Exceeding `1200/-
10%

* Where the charges are levied otherwise than on daily basis then charges shall be computed proportionately for a day per residential accommodation, based on total charges and total period.

  • Tax under this Act shall not be levied on the turnover of receipts for supply of food and drinks, on which hotelier has to pay sales tax under MVAT Act, 2002.
  • Tax collected separately by the hotelier under this Act shall not be considered to be part of the turnover of receipts by the hotelier.
  • A hotelier having even one room with charges more than ` 750/- per day per accommodation would be liable to pay tax and hence liable for registration u/s.8 of the Act. The hoteliers shall apply for registration within 30 days from the date on which he is first liable to pay tax.
  • Rule 3: Maintenance of Accounts. Every person shall maintain:


  1. Information of residential accommodation and tariff thereof in Form 1.
  2. Daily accounts of occupation of residential accommodation in the hotel and collection of tax thereof in Form 2 and
  3. Monthly abstract of collection and remittance of tax in Form 3. The register in Forms 1, 2 and 3 shall be certified by an officer duly authorized by the Commissioner.


  • The Commissioner of Luxury Tax, vide Circular No. 4/1988 dated 24-2-1988, had clarified that hotelier may maintain one register only (instead of three separate registers).
    At the time of Registration, the register/s shall be signed and sealed by registering authorities. Thereafter new register shall be signed and sealed by assessing authorities.
  • The Act has been amended w.e.f.1-5-1992. By the said amendment, Luxury Tax @ 12% will be levied on the food and drinks etc. supplied in a club. But the Act also provides that where ‘Sales Tax’ under BST/MVAT Act is levied on any such supply, then Luxury Tax will not be levied in respect of the same supply.
  • Exemptions from Luxury Tax: Various Notifications are issued u/s. 22 for granting exemptions to certain specified persons or class of persons from Luxury tax in hotels. For details please refer the Notifications issued u/s. 22(1). The last such Notification is LTA-2008/CR-55/Taxation-2 dated 2910.2009.
  • Vide Notification No. LTA-1090/CR-47/Taxation-2 dated 18th November, 2008, the Government of Maharashtra has exempted the Luxury Tax in excess of 6% on the luxuries provided in hotels during the period 1st May, 2004 to 30th April, 2005. The exemption is subject to certain restrictions and conditions provided in the Notification.
II. TAX ON TOBACCONIST AND TEXTILES TRADER:
State Government levied Luxury Tax on these categories of dealers also. However, in the case of Godfrey Philips India Ltd. V/s. State of U.P. and others 139 STC 537(SC) dated 20-1-2005, the Supreme Court struck down the levy of Luxury Tax on supply of tobacco. It held that Luxury Tax can apply where there is providing of service by way of luxury and not on supply of any goods. To give effect to the judgment of Supreme Court, the Maharashtra Government, by an Ordinance No. VI of 2006 dated 20th June, 2006, deleted the levy of tax on tobacconists and textile traders. The Act now remains applicable to hoteliers only. However, with effect from 1-4-2007, State Government amended the VAT schedule and levied sales tax on tobacco @ 12.5% (enhanced to 20% from 1.7.2009) by removing this item from entry 45 of Schedule A.
III. RETURNS:
(Form No. 8)
Category of dealer
Periodicity
Time limit
  1. Annual Tax liability less than `. 5000/- in previous year
Yearly By end of the month immediately succeeding the end of year.
  1. Annual Tax liability exceeding `5000/- but less than `. 20000/- in the

previous year
Quarterly except for the months January and February. By end of the month immediately succeeding the quarter. For the months January and February, dealer should file monthly returns for the said months on or before the last day of the respective immediately succeeding month.
  1. Annual Tax liability exceeding `20000/- in previous year
Monthly By end of immediately succeeding month.
  1. Annual Tax liability exceeds `5000/-, in current year
1st April to end of quarter in which it so exceeds By end of month immediately succeeding the quarter and thereafter-quarterly returns.
  1. Annual Tax liability exceeds `20000/- in current year
Quarterly return till it exceeds `. 20000/- thereafter-monthly returns. Due date as per (iii) above.
IV. APPEAL:
First appeal under the Luxuries Act lies to Assistant Commissioner/Deputy Commissioner as the case may be. Second Appeal lies only to Commissioner of Luxury Tax and not to Tribunal. The appeal should be filed within 60 days of communication of order. Rule 47 of the Luxuries Rules prescribes court fee stamps for filing appeal. For first appeal against Sales Tax Officer’s Order, court fee stamp is ` 5. Against the Assistant Commissioner’s order Court fees stamp is `10 and for second Appeal before CST the court fees stamp is 5% of the amount in dispute, subject to minimum ` 50 and maximum ` 500.