Tax Demand of Rs.2.9 Crore on Gymkhana Club sustained

The Delhi High Court upheld the government’s imposition of a Rs 2.9 crore luxury tax on Delhi Gymkhana Club in 2014.

It denied the club’s request to challenge the claim made under the Delhi Tax on Luxuries Act.

The High Court, however, stated that the ruling will not be considered a precedent for any assessment period following the passage of the 2012 amending Act.

“Any assessments made or proceedings pending would have to be considered bearing in mind the observations rendered hereinabove,” said a bench of judges led by Yashwant Varma and Ravinder Dudeja.

When the petition was filed in July 2014, the high court ordered the club to pay Rs. 1.45 crore as luxury tax to the city government for three accounting years – 2009-10, 2010-11, and 2011-12.

The court had ordered the club to pay a portion of the tax owed to the government as a condition of hearing its claim that it could not be assessed because the club exclusively serves members.

It also requested that the Delhi government lift the attachment order against the club and served notices on the Excise, Entertainment, and Luxury Tax Department.

The club’s membership is highly sought after among Delhi’s influential elite.

The high court issued its decision in response to a petition filed by Delhi Gymkhana Club, which claimed that the order issued on July 1, 2014, ordering it to pay Rs 2.92 crore in tax within seven days under the Delhi Tax on Luxuries Act was “wrong and was done without hearing it.”

The petitioner claims it is a social club governed by the “mutuality” principle, a mutual benefit association, and its different activities are limited to its members.

The club’s attorney had previously contended that the government department saw the club as a hotelier and wanted the luxury tax on the revenue collected from its members for providing accommodation to them.