Luxury Tax U/S 5A Of Kerala Building Tax Act Is Constitutionally Valid, However, Demand Beyond 3 Years Is Unsustainable: High Court

The Kerala High Court has ruled that luxury tax imposed under Section 5A of the Kerala Building Tax Act is constitutionally valid even after the 101st Amendment to the Constitution (which introduced GST). The court clarified that the demand for luxury tax, however, cannot be made for a period beyond three years, thus providing a limitation. This judgment confirms the state's power to levy luxury tax on buildings, distinguishing it from goods and services covered by GST. While upholding the constitutional validity of the tax, the court also imposed a crucial restriction on the period for which past demands can be raised, offering some relief to taxpayers by preventing indefinite claims.