Even as the Chandigarh Municipal Corporation has now begun to charge luxury tax from customers for using community centres after receiving repeated notices from UT excise and taxation department, it continues to drag its feet over the payment of outstanding luxury tax pending since the past three years.
The Municipal Corporation arrears on luxury tax on the use of community centres now touches nearly Rs 10 lakh. According to official records, the first notice on outstanding taxes was issued by the UT excise & taxation department on March 2, 2012 followed by another on May 1, 2012.
After issuing a third notice on October 14 last year, the civic body was served a final notice on January 8, 2014, with a warning of initiating action against it if dues were not cleared.
From February the MC began charging 4 per cent luxury tax on use of the 37 community centres in the city. Of the 37 centres, four are air- conditioned (AC) and cost Rs 11,636 per day each, while the rate for the remaining is Rs 5,818 a day.
MC IN A TIZZY
In what is being seen as a strange move, the Municipal Corporation has decided to recover luxury tax from those who had used its community centres in the past. Joint commissioner municipal corporation Rajiv Gupta said that they will first recover the said amount from the customer and only then will pay to the excise department.
He stated past users would receive letters asking them to pay the tax retrospectively. “We will move the court if the customers refuse to pay,” he added.
Mocking the move, Ajay Jagga, a tax expert, maintained the MC cannot recover taxes that were not mentioned in the contract at the time of leasing a community centre, adding it will have to pay taxes due to the excise department whether or not it manages to recover luxury tax charged for the centres retrospectively.
Meanwhile, UT assistant excise & taxation commissioner RC Bhalla, when contacted, said the civic body must clear its tax arrears, adding the department is not interested in how the funds are raised.
In a notice dated August 4, 2011, the Chandigarh administration notified the Punjab Tax on Luxuries Act, 2009, according to which the proprietor of a hotel or banquet hall has to pay 4% luxury tax.