- Karnataka HC upholds uniform property tax for five-star hotels.
- Court rules five-star hotels are a distinct class.
- Gokula Grand Hotel owner challenged its tax classification.
The ruling came on an appeal filed by MR Kodandaram, owner of Gokula Grand Hotel & Spa, a five-star property near BEL Circle in Bengaluru, according to The Economic Times. The order was passed on July 1 by a division bench of Justice DK Singh and Justice TM Nadaf.
Kodandaram had challenged the levy of a uniform property tax across five-star hotels, arguing that even within the five-star category, taxes should vary based on location. The original writ petition was filed in 2015. A single-judge bench dismissed it in March before the case was heard by the division bench.
"Five-star hotels constitute a distinct and uniform class and, therefore, imposing a uniform tax irrespective of location does not violate any provision of the Karnataka Municipal Corporations Act, 1976, or the BBMP Property Tax Rules, 2009," the bench observed.
BBMP, standing for Bruhat Bengaluru Mahanagara Palike, was the civic body that governed Bengaluru before it was reorganized under the GBA.
The court held that the tax classification meets the equality test under Article 14 of the Constitution because all five-star hotels are treated as a separate category and taxed uniformly. On the question of penalty, the court gave the petitioner limited relief. It gave the petitioner three weeks from July 1 to file a representation with the commissioner and said the penalty cannot be recovered until the commissioner issues a decision.
The ruling comes alongside a separate development involving Chalet Hotels Ltd., which informed stock exchanges that it will pay around $0.93 million in disputed property tax. The payment follows the Karnataka High Court’s dismissal of its petition challenging the property tax revision for Bengaluru Marriott Hotel Whitefield.
Separately, Brigade Hotel Ventures Ltd. announced a $106 million investment plan in Karnataka to expand and upgrade its hospitality assets
