Kerala High Court’s ruling that the tax is unconstitutional comes as a shot in the arm

The Kerala High Court has termed as “unconstitutional” the imposition of service tax on hotels and restaurants by the Centre by amending the Finance Act. The court verdict has come as a shot in the arm for hoteliers in other States, who have been raising a hue and cry over the levy of tax demanding its immediate withdrawal.

Members of the Executive Committee of the South Indian Hotels and Restaurants’ Association (SIHRA), who met for two days in Vijayawada, have decided to take a cue from Kerala and move their respective High Courts on the issue.

Representatives of fives States — Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, and Puducherry — participated in the meeting.

“The Kerala High Court has taken a strong view on the service tax issue, and we want to follow suit with a hope of a favourable response,” K. Pattabhi Ram, president of the Vijayawada Hotel Owners’ Association, told a press conference here on Saturday.

Taking exception to imposition of 14.5 per cent as VAT on hotels doing bigger volume of business, Mr. Pattabhi Ram pointed to the fact that the 1 per cent VAT imposed on cloth merchants was waived following a string of protests by them.

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