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Luxury Tax Act 
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THE ANDHRA PRADESH TAX ON LUXURIES ACT, 1987 HISTORICAL BACK GROUND
The Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses Act, 1987 (Act No.24 of 1987) was enacted mainly to mobilise additional resources to the State. In the Statement of Objects and Reasons, it has been stated as under:
 
STATEMENT OF OBJECTS AND REASONS
"With a view to mobilise additional resources and to compensate the loss of revenue due to exemption from payment of sales tax by hotels up to a total turnover of Rs.2 lakhs in a year and also to levy tax on the richer income group of the society, the Government have decided to levy and collect a tax at a rate of 10% on the charges in respect of any luxury provided in a hotel to every person when the rate of charge per person per day is Rs.60/- or more. This Bill seeks to give effect to the above decision."

Subsequently, by Act No.28 of 1996, the levy was extended we.f.1.8.1996 even to corporate hospitals. Section 3 which is the charging section has been substituted.

By the same Act the levy was extended to tobacco products specified in the Schedule. Cigarettes and chewing tobacco products were included in the said Schedule.

By Ord. No.2 of 1997 the rate of tax on chewing tobacco products was increased from 10% to 50%. The reasons for the steep increase as set out in the L.A.Bill No.6 of 1997 are as under:
 
STATEMENT OF OBJECTS AND REASONS
The Supreme Court of India in Abdul Kadar Vs. State of Kerala (AIR 1976 SC 182) has held that tobacco products have been found to have deleterious effect upon health and a tax on tobacco has been recognised as a tax in the nature of a Luxury tax. Accordingly, luxury tax is being levied at the rate of 1 0 passe in the rupee on chewing tobacco preparations, commonly known as Khara, Masala, Kimam, dokta, zarda, sukha and surthi..The aforesaid chewing preparations are considered to be injurious to health and therefore Government have decided to curb their sales and consumption in the State. Therefore, Government have decided to impose a heavy dosage of tax at the rate of 50 paise in every rupee at the first point of supply in the State.
1. Short title, extent and Commencement
2. Definitions-Andhra Pradesh Tax On Luxuries Act
3. Levy and Collection Of Tax
3A. Tax on Tobacconist
4. Appointment Of Officers
4A. Registration
5. Mode Of Collection Of Tax
6. Returns
7. Assessment And Collection Of Tax
7A. Provisional Assessment
8. Assessment of escaped or under Assessed Tax
9. Imposition of penalty in certain cases
10. Payment of Tax, penalty under the Act in installments
10A. Power to assess, re-assess, collect and enforce payment of cess
10B. Power of Deputy Commissioner
11. Appeal
12. Revision
12A. Appeal and Revision 
13. Court fee on appeal and application for revision
14. Refund of Tax
15. Offences
16. Offences by companies
17. Compounding of Offences
18. Power to enforce attendance etc
19. Maintenance of true and correct accounts and records by proprietor
20. Power to order production of Accounts and power of entry, inspection
20A. Possession,submission of certain records by owner
20B. Inspection of goods in transit 
21. Certain provisions of Limitation Act to apply to appeal and revision application 
22. Bar of jurisdiction of Courts 
23. Protection of acts done in good faith 
24. Powers to delegate
25. Power to transfer proceedings
26. Power to make rules 
27. Power to remove difficulties 
28. Power to alter the rates of tax 
29. Power of State Government to notify exemptions and reduction of tax or interest 
30. Power to amend schedule 
 
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