“BMC’S NEW CAPITAL VALUE SYSTEM FOR PROPERTY TAX HAS SPELLED DOOM FOR THE HOTEL INDUSTRY”- HRAWI

Hotel Industry To Initiate An All Out Protest

Mumbai: Hotel And Restaurant Association of Western India (HRAWI) has today announced that it will start an all out protest against the new capital value system for taxation adopted by Brihanmumbai Municipal Corporation (BMC) with retrospective effect from 2010. This announcement comes in the wake of Public Interest Litigations filed separately by HRAWI, East India Hotels Ltd, Taj Group of Hotels, eminent architect, Shri Jashwant Mehta, and other individuals, associations, hotels and institutions.

Earlier, BMC had replaced property tax computation from rateable value method – based on rent – to capital value system – based on the property’s market price. The new system resulted in property tax of both residential and commercial properties jumping up; creating huge disparity between new properties and old; widening the difference between commercial and residential properties; and, introduction of periodic revision to property tax as against fixed taxes; among other changes.

“To give an example, a hotel like Taj* would have paid Rs. 27.73 lacs as per the old system. However, a new hotel similar to Taj coming up in the same area and in the same location will, as per the new system, be paying Rs. 27.74 crores – a jump of almost ninety times,” says Mr. Jashwant Mehta who has been studying the issue in depth and has a Public Interest Litigation pending in the Bombay High Court in the same matter.

Some of the other fallouts of the new valuations are equally devastating. For one, it would spell the death of service apartments. By clubbing service apartments with 4 star hotels, the former will end up paying 5 to 7 times higher taxes as compared to furnished apartments given on lease in the same location. The difference between the two is only an addition of services such as house-keeping, maintenance, security, and the like. This will be in addition to 15 times higher water charges. A typical one BHK service apartment having carpet area 600 sq.ft., built in 2014 in Juhu area is liable to pay approx. Rs. 3.00 lacs per annum as municipal taxes as against Rs.60,000/- payable as taxes by a furnished lease apartment in the same locality and built in the same year.

Star category hotels, especially those catering to the budget segment are also expected to take a big hit. Against 0.652% property tax paid by unstarred hotels, 1 star to 4 star category hotels will have to pay 1.303% taxes. “If we add the user category factor of 1.00 for unstarred hotels and 1.10 for the star category, the difference in taxes between star hotels and unstarred ones would be 220%. This will make operating as a star hotel, especially in the budget segment, totally unviable. Its consequence on tourism would be disastrous. The quality of services provided could see a big hit and we may see a drop in mid to high yield tourists. The difference between unstarred and star category budget hotels is not in capital value but in quality of service,” says Mr. Kamlesh Barot, immediate past President, HRAWI.

“The new capital value system provides for a shelter only to old properties. So the cap of 300% on existing property taxes as payable on or before April 01, 2010 will not benefit hotels constructed after 2010. They will see a rise in taxes even in slump years. If, God forbid, we are hit by a massive economic downturn, we could, theoretically, be in a situation where the property tax is higher than gross revenues,” adds Mr. Barot.

Another anomaly in the value system based taxation is that new hotels built between 2010 and 2014 will have a liability of Rs. 35.43 crores compared to Rs. 27 crores for a hotel of the same value constructed before 2010. “And, if a similar hotel in the same zone were constructed in 2014, the taxes would be 64% higher due to increase in Ready Reckoner rate between 2010 and 2013. This would mean that the tax provision in this case would be a staggering Rs. 58.15 crores. The anomalies are disturbing and will make it very difficult for new hotels to come up,” says Mr. Jashwant Mehta.

“In 2015, the situation gets worse. The taxes for all properties will be as per capital value as on April 1, 2015 subject to maximum of 40% cap over the taxes as payable on April 01, 2010. New properties will be worse off. For example, if taxes payable by Taj* were Rs.1.13 crores in 2015 a new property similar to Taj built in 2010 will be liable to pay Rs. 49. 60 crores,” reveals Mr. Mehta.

“Under such conditions it would be completely unviable for existing hotels to survive or new hotels to come up. Without its infrastructure, Mumbai is no different from any other B town in India. We have already filed a Public Interest Litigation in the Bombay High Court. In addition, we will embark on an all out protest comprising of advocacy at all levels, representations with concerned authorities and any other measure as may be warranted,” concludes Mr. Gurbaxish Singh Kohli, Vice-President, HRAWI.

* The example of Taj is given for illustration purpose only

About Hotel & Restaurant Association Western India (HRAWI)

The Hotel and Restaurant Association (Western India) is a 64 years old Association of Hotels and Restaurants in Western India. Its members include Hotels up to 5-Star Deluxe categories like The Taj, Trident, Hyatt, J.W. Marriott and The Leela who are some of the prominent members of our Association. With around 1300 members across Western India, HRAWI covers Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Goa and the Union Territories of Daman, Diu &Silvassa is considered to be the voice of the Hotel Industry. The association is part of the national body of Federation of the Hotels & Restaurants Associations of India (FHRAI), located in New Delhi, which was originally founded in Mumbai in 1950 by the late Mr. J.R.D. Tata.

NATIONAL LIVER FOUNDATION ANNOUNCES “GET TESTED” AS WORLD HEPATITIS DAY ’14 THEME

Breakthrough In Treatment Ushers Hope For Patients

Mumbai: With the estimated carrier pool for Hepatitis B and C pegged at 50 million in India and the illness emerging as one of the top health concerns of the nation, the National Liver Foundation has decided to observe the World Hepatitis Day 2014 with the theme, “Get Tested”.

"Despite the magnitude of the illness, Viral Hepatitis has very low awareness in India. There is lack of awareness of the threat as well as of the treatment options. Those who don’t have the disease are not aware of the risk factors and those who are infected are not aware that they can be treated successfully. With one of the largest carrier pools in the world, hepatitis prevention and early identification are the priorities in this country. Bearing this in mind, our campaign for the Hepatitis Day this year is “Get Tested”," says Dr. Shah, Founder Trustee of the National Liver Foundation and Head of the Dept of Hepatology at Global Hospitals, Mumbai.

Viral hepatitis is a liver disease caused by a virus. There are five different hepatitis viruses, hepatitis A, B, C, D and E. Hepatitis B, C and D viruses can also cause long-term infection, called chronic hepatitis, which can lead to life-threatening complications such as cirrhosis (liver scarring), liver failure, and liver cancer. Viral hepatitis kills 1.5 million people every year. Together hepatitis B and C represent one of the major threats to global health and India in particular. Contracted through blood-to-blood contact, Hepatitis B and C are both ‘silent’ viruses, and because many people feel no symptoms, a person could be infected for years without knowing it.

“In some cases, a diagnosis is made too late and the only option is a liver transplant. Any person who falls within the risk category should get tested as soon as possible and, if diagnosed, consider precautions and treatment options,” adds Dr. Shah.

While instances of Hepatitis across the world have been seeing a rise, World Hepatitis Day 2014 also has something to cheer about, thanks to emergence of breakthrough treatment options.  The earlier treatment method using interferon (upto 1 year long injections and fraught with serious side effects) is giving way to new oral drugs.  These drugs could become available in India very soon once procedural formalities are cleared. In the west, these drugs are available already and have proven highly effective. The drug companies have already committed to providing the drugs in India at affordable cost. 

Hepatitis B and C viruses are largely transmitted through blood transfusions, medical or dental interventions without adequate sterilization of equipment, mother to infant during childbirth, sharing equipment for injecting drugs, sharing razors, toothbrushes or other household articles, tattooing and body piercing if done using unsterilised equipment.

“By adopting basic hygiene measures and precautions, hepatitis transmission can be prevented. The National Liver Foundation has been working in Mumbai and is now extending its reach to other cities and towns. With its huge population and high density, India is sitting on the brink of an explosion. Under the circumstances, ‘Get Tested’ would not merely be a campaign tag, but a potential life saver,” concludes Dr. Shah.

About National Liver Foundation:The NLF was set up in 1999 as a registered non-profit organization with the aim of helping patients with liver diseases, increase awareness about liver disease amongst the public, patients and medical fraternity and promote concept of organ donation and cadaveric liver transplant. The foundation has reputed philanthropists and eminent doctors committed to the cause of liver disease.

World Hepatitis Day on 28^th July -  For a Hepatitis Free India

INDIAN COMPANY APPLIES FOR PATENT ON NEW TEA BREWING TECHNOLOGY; TO LAUNCH THE WORLD’S FIRST FRESH TEA BREWING MACHINE

Mumbai: Signaling, perhaps, the first ever touch of technology to the age old art of tea brewing, beverages major, D’lecta Café has announced the unveiling of the world’s first ever tea brewing machine. The company has already filed the technology for patent and plans to make it available in the domestic market in the forthcoming week followed by a worldwide launch.

Unlike most tea vending machines available in the market today which dispense a cup of pre-mix tea made from powdered milk that are high in sugar content, this machine will begin brewing only when one wishes to have a cup of freshly brewed tea. Adding milk and/or sugar is as per preference, and have been provisioned separately on extended trays attached to the machine. In fact, powdered milk has been substituted by creamers made of evaporated milk derived from pure cow milk and are aseptically packed for convenience. The new product will dispense a cup of freshly brewed connoisseur tea within thirty seconds, and can dispense up to 400 cups a day.

“Unlike coffee making, which has been seeing automation and technological advancements on an ongoing basis, tea brewing has largely remained a manual process. This is because tea brewing is a delicate process. But with the introduction of D’lecta Tea Vending Machine, connoisseurs will be able to enjoy their tea of choice without going through the labourous process of manual brewing,” says Mr Deepak Jain, Founder & Managing Director, Dlecta Foods Pvt Ltd.

This automatic fresh-tea vending machine is a first of its kind that will brew tea at the press of a button. It’s capable of dispensing a choice of beverages including the classic Assam tea, masala tea and green tea besides also offering black coffee, premixed coffee and café mocha. The machine has been designed, developed and patented by Dlecta Foods which has recently forayed into the consumer markets with its dairy based products after successfully operating in the B2B segment for over 12 years.

The machine has been ergonomically designed for elegance and space efficiency with arrangements to neatly accommodate consumables like paper cups, tea bags, coffee sachets, sugar and stirrers. The machine itself is easy to clean from the exteriors and comes with special hygiene features. The machine prompts for self-rinse if a selected option has been dormant for over 15 minutes and will all rinse for end of the day. All wet contact parts are made of stainless steel for longer life and easy cleaning.

“The machine is aimed at catering to the needs of the urban Indian offices and workspaces. The machine fulfils the typical needs of tea and coffee consumers by factoring in health, taste and convenience. The machine also proves to be economical by delivering an 80ml hot cup of freshly brewed tea for just Rs.3/- and is offered with a nominal AMC by the company at the time of purchase,” concludes Mr. Devendra Garg, Executive Director, Dlecta Foods Pvt Ltd.

About Dlecta Foods Private Limited:

Dlecta Foods Private Limited, formerly known as Devashree Foods Pvt Ltd, commenced operations in 2001 primarily as a marketing company. As the sole marketer and distributor of Dynamix Cow Ghee, D’lecta not only established the Dynamix brand, but also went on to create a market for Cow Ghee in India. Till its introduction, the consumer ghee market was dominated by buffalo ghee.Since then Dlecta has introduced a slew of products and services that include food ingredients with special focus on dairy, bakery, confectionary and nutrition. It comprehensively covers the needs of any HORECA, offering from a range of top quality value products for the industry and a small range of consumer products including cheese, ghee, UHT milk, dairy creamers and even vending solutions.

UNION BUDGET 2014 - 15

Few Positives, But Overall Fails To Match Up To Expectations Of Hospitality Sector

Mumbai: After raising hopes and conveying optimism in the run up to the Union Budget, the Budget itself has been lackluster from the hospitality point of view and has failed to match up to expectations.

“We had expected that this budget would concentrate on some critical areas like lowering the minimum project cost mandated for inclusion of hotels in the Reserve Bank of India’s Infrastructure Lending List, restoration of the Depreciation amount on hotel building, exemption from deducting tax at source at the rate of 10 per cent on commissions paid to travel agents, exemption from Service Tax and de-liking of taxes with star category of hotels. There was so much the Government could have done, and did not. We are disappointed,” says Mr. Kamlesh Barot, immediate past-President, HRAWI.

The HRAWI felt that while tourism was provided some support, hospitality as a sector was completely ignored. “While we appreciate the government’s commitment to boost tourism, we are at loss to understand why the Finance Minister (FM) has not addressed any of the concerns of the hospitality industry. The FM has set aside Rs. 500 crores for developing 5 tourist circuits in the country but without adequate hotels, the tourists arriving at these destinations will experience a deficiency in quality of services,” adds Mr. Barot.

The association has however expressed that not all the announcements were negative. The industry did also get a few positives to take home. “The budget has allocated generous funds for development of tourist circuits; air, road and rail infrastructure; archeological preservations and defense museums. As had been indicated in the pre-election manifesto for the development of tourism circuits, the budget announced setting aside Rs.500 Crores and has dedicated separate funds for improving facilities at pilgrim destinations, for augmenting national heritage sites and also for the development of archeological sites across India. These will benefit the hospitality sector in the long run,” says Mr. D.S. Advani, President, HRAWI.

The FM also has proposed an international convention centre on PPP mode in Goa, announced E-Visa scheme to be introduced in a phased manner at 9 airports and also set aside 150 crores on women’s safety in cities.

“From the viewpoint of improving and encouraging Foreign Tourist Arrival (FTA) in the country, the FM has made tangible provisions. Introducing Electronic Visa Scheme will definitely reduce the hassles a tourist faces on a visit here and will prove to be a boon in the long term. Besides, gradually expanding this to Visa-on-arrival will be icing on the cake. Women’s safety another sensitive tourist issue that has been addressed. Most importantly, the FM has identified Goa as an international venue considering the vast untapped potential of the state and would mean good occupancy for hotels there,” says Mr. Gurbaxish Singh Kohli, Vice-President, HRAWI.

“The Union Budget includes some innovative measures to facilitate long term financing for infrastructure. The Government has also indicated that Public Private Partnerships will be the preferred mode of undertaking most projects relating to urban renewal, physical and economic infrastructure. Some of these measures should augur well for the industry as a whole,” says Mr. Pradeep Shetty Hon Secretary - Hotel and Restaurant Association Western India.

“Although, the Union Budget has clearly paved way for the development and progress of tourism in India, the hospitality sector that functions as its backbone has been completely neglected. From the several funds and incentives allocated to various projects declared by the government for the growth of tourism, not a single sop was given for betterment of the hospitality sector. But the sector is still hopeful that the government will understand the potential of the industry and provide some support in the coming future,” concludes Mr. Kamlesh Barot, immediate past-President, HRAWI.

HOSPITALITY SECTOR OPTIMISTIC AHEAD OF UNION BUDGET

Mumbai: The Hotel and Restaurant Association of Western India (HRAWI) has announced that it expects the new Finance Minister to present a friendly budget. The sector that has been at the receiving end of rising taxes and other burdens for over a decade now is hopeful that at least some of the recently introduced burdens will be eased out this year.

In the run up to the budget, the association has identified four key parameters that will play a crucial role in the resurrection of the sector. To reduce the burden and help boost commerce, HRAWI has suggested the following:

Infrastructure: Lowering the minimum project cost mandated for inclusion of hotels in the Reserve Bank of India’s Infrastructure Lending List from Rs.200 crores to Rs.20 crores for hotels that have 20 or more guest rooms.

Depreciation: Depreciation on hotel building under Section 32. Hotels were eligible for a depreciation allowance of 20 per cent on their ‘Plant’ (Building) till March 31, 2002. Thereafter, it was scaled down to 10 per cent vide Notification No. 291/2002, dated September 27, 2002. HRAWI requests for restoring the 20 per cent depreciation allowance.

TDS: Under Section 194H, hotels are required to deduct tax at source at the rate of 10 per cent on commissions paid to travel agents. In actual practice, the payments received from travel agents by hotels are net of commission. Subsequently, hotels have to deposit the applicable tax on their own account and later on make efforts to recover the same from the travel agents. Commissions on hotel bookings should be exempt from TDS.

De-linking of Taxes: Every budget either introduces or reduces or increases some tax and links it with the star category of the hotel. HRAWI would like to urge this Government to not link any taxes (past, present and future) to star category.

The hotel industry is presently plagued by several bureaucratic obstacles and the growth trajectory of the overall sector including tourism, is stagnating. The industry has been battling to keep up with the harsh financial burdens brought about by both the central and state governments that include Service Tax – charged by the Central Government, Luxury Tax – charged by the State, Value Added Tax (VAT) – on Food and Beverage, Excise Duty – on Beverages and Octroi Duty - on items imported into the State, among others.

The hospitality industry has high expectations from the new government based on the pre-election manifesto that promised tourism and hospitality to be one of the pivots for economic growth. Tourism plays a key role in socio-economic progress through creation of jobs, enterprise, infrastructure development, and foreign exchange earnings. The new government has acknowledged this and only the outcome of the budget will determine if the tourism and hospitality industry will receive its due.

About Hotel & Restaurant Association Western India (HRAWI)

The Hotel and Restaurant Association (Western India) is a 64 years old Association of Hotels and Restaurants in Western India. Its members include Hotels up to 5-Star Deluxe categories like The Taj, Trident, Hyatt, J.W. Marriott and The Leela who are some of the prominent members of our Association. With around 1300 members across Western India, HRAWI covers Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Goa and the Union Territories of Daman, Diu & Silvassa is considered to be the voice of the Hotel Industry. The association is part of the national body of Federation of the Hotels & Restaurants Associations of India (FHRAI), located in New Delhi, which was originally founded in Mumbai in 1950 by the late Mr. J.R.D. Tata.

LANDMARK HC STAY ORDER AGAINST COPYRIGHT ADMINISTRATOR

FIFA World Cup Broadcast, Other Cable Feed& Playing Of Recorded Music in Hotels & Restaurants Need No Additional Licenses

June, Mumbai: The Hotel and Restaurant Association of Western India (HRAWI) has welcomed the judgment of The Hon’ble Bombay High Court on Thursday restraining Novex Communication from obtaining license or payment of license fee in respect of any copyrighted works or broadcast reproduction rights. Café Leopold and Hotel Unicontinental had filed a suit in the Bombay High Court after receiving notices by Novex.

“We are pleased with the verdict.  This is a landmark order by the Hon’ble Bombay High Court with great ramifications. It is a victory not only for the hoteliers but also the large number of hotel guests and diners who visit restaurants for entertainment,” said Mr. D.S.Advani, President, HRAWI.

Earlier, Novex Communications Pvt Ltd had sent notices to hotels that Novex had been authorized to administer and grantPublic Performance Rights for various audio, musical compositions and sound recordings from the libraries of (1) M/s. Yash Raj Films Private Limited, (2) M/s. Shemaroo Entertainment Private Limited, (3) M/s. UTV Software Communications Limited and (4) M/s. Big Net Communications Private Limited, and that commercial establishments will have to pay them a license fee to play or telecast of such material.

“Contesting the notification, Café Leopold and Hotel Unicontinental had approached the High Court, which granting an ad-interim Injunction/Stay Order against Novex Communications, restrained it from making any demands for obtaining license or payment of license fee. The order also restrained collection of license fee on the broadcast reproduction rights of Multi Screen Media Pvt. Ltd./ MSM Discovery Pvt. Ltd which includes the channel SONY SIX on which the FIFA World Cup matches are being telecast,” said Mr. Pradeep Shetty, Chairman Legal Sub-Committee HRAWI.

Re-emphasizing the fact that Novex communication itself was undertaking illegal act he added, “the Association has always been of the view that Novex Communication has no authority to make any of the above demands, and the same are unlawful. The order of the Hon’ble Bombay High Court has vindicated the stand of the Association that Novex has been illegally carrying on the business of a copyright society without obtaining any registration under the Copyright Act, 1957, and has been making wrongful demands on hotels and restaurants across the country.”

“In so far as playing recorded music in the establishment is concerned, we have advised all our members to obtain appropriate licenses from the registered copyright society or the Copyright owner directly, as the case may be,” says Mr. Gurbaxish Singh Kohli, Vice-President, HRAWI.

“As fordisplaying cable feeds at the establishment is concerned, our members have paid necessary fees to the Local Cable Operator/ DTH operator. They are part of the amenities or facilities being offered to the guests. Novex’s demand for additional license fees over and above the fees being paid to the cable operators is unjustified and illegal,” he added.

The exceptions to the rules of broadcasting at any commercial establishment are that, these establishment if are selling tickets or charging entry fee to display the cable feed such as the FIFA World Cup matches or if they are recording the cable feed and are playing the same at a later date, then they may be required to pay separate fees for the same.

“People go to restaurants or hotels to relax and generally have a good time and pay for services that we render. Watching a match, in the course of their stay or while enjoying their meals should not be something that should be commercially exploited. The order from the HC comes as a great relief to the entire hotel industry. For now, we are requesting all our members from refraining to pay any monies to Novex and have requested those who may have already paid any to inform us about the same for us to take further action,” concluded Mr. Kamlesh Barot, immediate past-President, HRAWI.

About Hotel & Restaurant Association Western India (HRAWI)

The Hotel and Restaurant Association (Western India) is a 64 years old Association of Hotels and Restaurants in Western India. Its members include Hotels up to 5-Star Deluxe categories like The Taj, Trident, Hyatt, J.W. Marriott and The Leela who are some of the prominent members of our Association. With around 1300 members across Western India, HRAWI covers Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Goa and the Union Territories of Daman, Diu &Silvassa is considered to be the voice of the Hotel Industry. The association is part of the national body of Federation of the Hotels & Restaurants Associations of India (FHRAI), located in New Delhi, which was originally founded in Mumbai in 1950 by the late Mr. J.R.D. Tata.