Luxury Tax on Hospital rooms charging more than Rs 1000 per day: Kerala HC Decision

The impugned amendments to the Act define luxury provided in a hospital under Section 2(fb) as “accommodation for residence for use of amenities and services provided in a hospital, the rate of charges of which, excluding charges of food, medicine and professional services, is one thousand rupees per day or more''

The appeal had contended that Rs 1,000 is very meagre and would not qualify as a luxury given the nature of work at hospitals and thus this decision should be struck down. However, the court dismissing the appeal pointed out that it cannot interfere with the limit set by the legislature which is based on the relevant social and economic parameters of the people of the state.

Explaining the concept of luxury the court was found stating

"The term luxury has been defined to exclude all the essential components of healing and care given by the hospital and includes only that which is not essential to such therapeutic care or healing. The legislature obviously thought that such accommodation and amenities beyond the pecuniary limit of Rupees one thousand can be classified as luxury and it is not something that the courts can interfere with merely because the perception which it holds, even it does, that such pecuniary limits are too low in order to classify as a luxury. We have to be aware of the fact that the legislature legislates for all the people of the State. It is intended to cater to all the classes in the socio-economic and cultural categories of people and it should be presumed that such legislation has been made taking into account all the relevant criterion including the economic one so as to cater not to a particular class but the entire citizenry. Legislation stems from the experience of the evils and should not, therefore, be impeded by the particular beliefs or opinion that certain classes of people would hold. The wisdom of legislature has to be respected as being for the good of the citizenry at large and not to the sentiments of a few."

With the said judgement, in the state of Kerala, in respect of a hospital, for charges of accommodation for residence for use of amenities and services, tax will be levied at the rate of ten percent per room where the gross charges, excluding charges of food, medicine and professional services, is one thousand rupees per day or more as mandated by the legislature.

You can read the full judgement below