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TMI Blog2005 (9) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the order dated January 13, 2003, while issuing rule, restricted the scrutiny in these writ petitions only to the validity of the legislative action and relegated the petitioners to pursue their statutory remedies under the Act in respect of the assessment orders. The Petitioners are registered bodies registered under the provisions of the Karnataka Societies Registration Act, 1904. It is the claim of the petitioners that the clubs are meant for private recreation and involving the members in the social activities. It is also averred that the petitioners in the course of such activities do provide facilities like food and drinks, leisure activities such as games, etc., that they have affiliation with similar clubs within and outside the State and the country on reciprocal basis; that the clubs also have provided for accommodation which will be provided on payment to members of clubs who have reciprocal arrangement with the petitioner-clubs and who venture to stay in such accommodation during their visits to the city. It is claimed that such accommodation is not provided to members of the public nor to any person who is a member of the another club which does not have re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cent on the charges collected for luxuries provided in a hotel for residents or others such as health club, beauty parlour, swimming pool, conference hall and the like when such charges are collected separately. 3-C. . . . While the Revenue wants to rope in the petitioner-clubs within the net of tax in terms of section 3 of the Act and that insofar as it related to organisations like the clubs, it had failed earlier in one such effort in view of the decision of this court in the case of Bangalore Golf Club v. Assistant Commissioner of Luxury Taxes [1999] 115 STC 338. The Revenue undaunted by it has renewed its efforts through the supportive law in terms of the provisions of the Act as amended by the Karnataka Act No. 5 of 2000, whereby the liability in respect of the institutions like the petitioners is sought to be made good with retrospective effect, so that the failure on their part in terms of the order of this court in the case of Bangalore Golf Club [1999] 115 STC 338, is got over. Quite naturally, persons like the petitioners again have knocked at the doors of this court by impugning the constitutional validity of the amended provisions in so far as it comprehe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, encroaching upon the judicial powers of the High Court and violative of articles 14, 19, 265, 301 and 304(b) of the Constitution of India. Petitioners though have also sought for such relief having larger repercussion, appear to be content even if this court were to hold and declare that the Explanation appended to the definition clause hotel is to be declared as bad, being ultra vires section 2(4), etc., as prayed in para 14 of the writ petition (W.P. No. 1063 of 2003), which reads as under: This honourable High Court may be pleased to declare and strike down the Explanation which has been appended to section 2(4) of the Karnataka Tax on Luxuries Act, 1979, which was introduced by Karnataka Act No. 5 of 2000 as being ultra vires section 2(4) of the Act. If the amending Act 5 of 2000 as it amends the definition of hotel in section 2(4) is to be declared as unconstitutional, the result will be that exclusive definition will be taken away in which event, as the law as it stood prior to this amendment had come in for interpretation before this court in the case of Bangalore Golf Club [1999] 115 STC 338, and as this court had invalidated the levy under the Act in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the definition clause itself; that what is not actually a hotel in terms of the main definition clause is nevertheless sought to be made a hotel only through the Explanation, which is never the object of having/adding an Explanation; that in the guise of adding the Explanation something new is added; that apart from this incongruity, the Explanation also seeks to bring about a class legislation amounting to invidious discrimination and therefore the Explanation should necessarily be severed even if the main definition clause, in terms of the amending Act 5 of 2000 is one which is sustainable. Yet another contention urged on behalf of the petitioners is that the amendment though effected to the definition clause, yet it is given retrospective effect; that it virtually amounts to levy of tax on the institutions like the petitioners from an earlier date, even when the charging section did not provide for it; that if the charging section is not in any way altered or has been enlarged to rope in the institutions like petitioners within the scope of the charging section, by tinkering with the definition clause, such object cannot be achieved; that the nature of the levy being ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings where such activity was being carried on though was not known as a hotel; that the definition of hotel even earlier could have usually roped in the club if it so fulfilled the requirements, but as in the case of Bangalore Golf Club v. Assistant Commissioner of Luxury Taxes [1999] 115 STC 338, this court had held that the petitioner therein was not carrying on business in the activity of letting out accommodation and therefore was not liable to pay luxury tax, the Legislature wanted to amend the law so as to rope in such activity carried on by clubs also within the net of taxation under the Act; that for such purpose, the definition clause defining hotel was enlarged indicating that the word hotel includes a club also and the Explanation to this definition was added to ensure that in the case of a club, lodging house and holiday resorts, there was no need for further examination of the question as to whether the activity of letting out accommodation is in the course of business or not and when the amendment is for such express purpose and it has actually achieved the purpose, the Legislature being competent to bring about such amendment, there is no occasion to declare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment to the definition clause hotel adding the Explanation is illustrative of the attempt and answer to the problem faced for collecting luxury tax from organisations like clubs in the light of the decision of this court in the case of Bangalore Golf Club v. Assistant Commissioner of Luxury Taxes [1999] 115 STC 338; that the amendment was a legislative measure to get over the stumbling block the Revenue faced, in subjecting to tax the organisations like the petitioners; that the explanatory note and as contained in the Budget speech of the Finance Minister while introducing the Bill which has brought about amendment which reads as under: The honourable High Court of Karnataka has held that luxury tax cannot be levied on accommodation provided by a club as the charges collected is not in the course of business. Therefore it is proposed to amend the definition of 'hotel' to include club with retrospective effect. Clearly spelt out the purpose and object of effecting such amendment; that this change in law is within the competence of the Legislature and therefore there is no occasion to invalidate any of the provisions of the amended Act including the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutional or not even the Explanation as added by the amended Act 5 of 2000 to this definition clause of section 2(4) Hotel; that the argument of discrimination does not carry conviction and has to be rejected. Mr. Narayana, learned counsel appearing for some of the petitioners, has also made submissions in the light of submissions made by Sri Prasad that if the main provision of definition of the term hotel as occurring in sub-section (4) of section 2 is to be properly understood, the Explanation is to be so understood as to be in consonance with the main provision, in which event, it should be held that in the case of clubs also the activity of letting out accommodation will not attract levy of luxury tax unless such activity is by way of business and not otherwise. In the case of S. Sundaram Pillai v. V.R. Pattabiraman AIR 1985 SC 582, the Supreme Court had an occasion to examine the scope and meaning of Explanation in statutory provision and has by looking into the earlier judicial pronouncements, held that the Explanation is only for clarifying or amplifying what is contained in the main provision which by itself was not clear and not for the purpose of either brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise. This can only mean one of two things. One is the activity of letting out accommodation in a club, lodging house or a holiday resort is invariably by way of a business, in which event the adding of the Explanation does not make much difference. If not by way of business, if even otherwise the Legislature wants to levy tax on clubs, lodging houses and holiday resorts, irrespective of the activity being by way of business or not, for which the Legislature is definitely entitled to do and if it does so, while no exception can be taken to such a move, the question as it arises here is due to the inelegant manner in which the Legislature has gone about in achieving this object. It is undoubtedly true that the Explanation could have as well been a part of the main definition clause itself. Even the statement of objections and submission of learned Government Pleader is to the effect that the amendment was brought about with the definite object of roping in within the net of luxury tax, institutions like the petitioner-clubs irrespective of the activity being by way of business or otherwise. If a plain meaning to the words is given, the Explanation added to the definition has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give 'force and life' to the intention of Legislature. A Judge should ask himself the question how, if the makers of the Act and themselves come across this ruck in the texture of it, they would have straightened it out? He must then do so as they would have done. A Judge must not alter the material of which the Act is woven, but he can and should iron out the creases. This view has been quoted with approval by the Supreme Court in the case of N.K. Jain v. C.K. Shah reported in AIR 1991 SC 1289. When Lord Wrenbury said in Rex v. Kensington Income-tax Commissioner 6 TC 613, no reliance can be placed upon an assumption of accuracy in the use of language in these Acts , Lord Wrenbury was not speaking in any different language. The Supreme Court also had an occasion to examine the scope of understanding and interpreting a definition c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I think it does not in the present case for the reason that, in the first instance, the legislative measure is well within the competence of the State Legislature; that it does not seek to create any artificial levy, but the levy is real and attempt is only in describing as to what all institutions and organisations according to the Legislature should be understood as a hotel for the purpose of the Act which is also well within the domain of the Legislature. Even the change, if at all can be said to be a change brought about by the amending Act by adding the Explanation, cannot be said to be one bringing about a discriminatory act, inasmuch as, the clubs are treated as a class. The classification is a reasonable classification as clubs definitely can be grouped together as a class of institutions distinct from others left out of the group and of course levy of luxury tax on clubs definitely has nexus to the object of the main Act of levying tax on luxury provided in a hotel, club being defined as a hotel under the Act. Though Sri Prasad, learned counsel for the petitioner, has placed reliance on the decision of this court in the case of Shamanur Kallappa and Sons v. Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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