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TMI Blog2008 (11) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by the Luxuries Act. In all these cases, the clubs have disclosed their bye-laws/articles of association, wherein it is stated that they are rendering service to their members by collecting subscriptions, contributions and fees, which is being utilised for rendering services and amenities exclusively for and on behalf of the members without any profit margin. In essence, whether the "doctrine of mutuality" will apply to these cases is the question. In order to appreciate the demand of levy of luxury tax made by the respondents, it is necessary to refer to the following definitions found under the Luxuries Act: "Section 2(f) defines 'hotel' which is as follows: 'hotel' means a building or part of a building where residential accommodation with or without board is by way of business provided for a monetary consideration and includes a lodging house. Section 2(fff) defines 'luxury' which is as follows: 'luxury' means luxury provided in hotel or any tobacco product supplied by a tobacconist or the scheduled commodity which is for enjoyment over and above the necessities of life. Section 2(g) defines 'luxury provided in a hotel', whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But that has not been done. For the above reasons we are of the view that the definition of the term 'business' as given in the Tamil Nadu General Sales Tax Act, 1959 cannot be applied." But another Division Bench of this court, in the context of the membership clubs availing the doctrine of mutuality and seeking exclusion from the sales tax in the matter of supply of food and drinks to their members, considered the issue in Cosmopolitan Club v. Tamil Nadu Taxation Special Tribunal reported in [2002] 127 STC 475 (Mad). This court, after taking note of the definition provided under clause (29A)(f) of article 366 of the Constitution of India read with section 2(n)(vi) of the Tamil Nadu General Sales Tax Act, 1959, held that the said provision does not make a distinction between incorporated bodies and the unincorporated bodies. It was also held that the judgment in Young Men's Indian Association case reported in [1970] 26 STC 241 (SC) making a distinction does not help any more. In paragraphs 20 and 21, it is held as follows: (at page 484 of 127 STC) "20. The question considered in the Young Men's Indian Association case [1970] 26 STC 241 (SC), was, as already stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to them in law in the pending appeal before the Tribunal. All contentions that are available to both the sides are expressly kept open and they may raise the same before the Tribunal. The Tribunal shall decide the said appeal without reference to the impugned judgment of the High Court which is under appeal." (emphasis Here italicised. added) In the present context, it is unnecessary to go into the question whether the members' clubs are eligible to pay sales tax on the food and drinks supplied by them in the light of the constitutional backing and the subsequent amendment made to the Tamil Nadu General Sales Tax Act. The court is only concerned with the issue relating to liability to pay luxury tax on the lodging accommodation provided by the clubs on hire charges. Mr. Ramani, learned counsel for the petitioners drew the attention of this court to the judgment of the Karnataka High Court reported in [1999] 115 STC 338 in the case relating to Bangalore Golf Club v. Assistant Commissioner of Luxury Taxes. In that decision, the Karnataka High Court was concerned with the similar provisions found in Karnataka Tax on Luxuries Act. The Karnataka High Court, after referring to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s specifically under the Act. Therefore, in the present case, in the absence of any wider definition, by reading into the term "hotel ", lodging accommodation provided by the clubs will cause violence to the said definition. Mr. Haja Naziruddin, learned Special Government Pleader, placed reliance upon the definition of the term "hotel" found in section 2(f). According to him, the said section has the following ingredients: (a) a building or part of a building; (b) where residential accommodation with or without board is provided; (c) provision of accommodation is by way of business; (d) for a monetary consideration; and (e) includes a lodging house. (emphasis Here italicised. added) The learned Special Government Pleader, after referring to the definition, stated that the ingredients found in sub-clauses (a), (b) and (d) of section 2(f) stand satisfied. He stated that even if the definition (a) to (d) should have the ingredients of sub-section 2(f)(c), and the activity by way of a business was not found in a club but the definition in section 2(f)(e), which includes a lodging house, will certainly cover all the clubs where residential accommodation is provided. The learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Inspector of Labour, Madras. The following passages found in page Nos. 304 and 305 may be usefully extracted below: "Jagadisan, J., however held that as the Act was a piece of welfare legislation of promoting the interests of labour, to prevent exploitation by employers, a wider meaning should be given to the word 'business'. The learned judge referred, in this connection, to several decisions which lay down the principle that the words in a statute should be interpreted to accord with the intention of the Legislature. There can be little doubt in regard to the correctness of this proposition. But at the same time, it must be recognised that the definition given in a statute provides the key to its meaning. A statute has, therefore, to be understood in the light of the definition contained in it. Generally, the scope and extent of operation of a statute has to be determined according to the language used therein. That language again has to be understood normally in the light of the definition contained in the Act. There have been instances where an apparently wide meaning imported by the definition has been controlled by the operative words of the statute. But, where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the supply of refreshments...to the public...'. Having regard to the fact that 'residential hotel' and 'restaurant' have been defined in the Act, and are intended to interpret the words 'catering establishments' implying as they do a business with a profit motive, we must conclude that the object of the Legislature was to use the word 'business' in its commonly accepted sense, namely, that form of systematic activity prompted by a profit motive. To give a different interpretation would bring within the meaning of the Act, annachatrams, private guest houses, etc. It would hardly have been the intention of the Legislature that these institutions should be comprehended by the Act." The ruling in Sri Palani Dhandayuthabani Devasthanam's case [2001] 124 STC 553 (Mad) had become final and the present attempt is to review the decision of the Division Bench. The question raised is not whether by letting out the rooms for hire for their members' use on consideration, the doctrine of mutuality is applicable or not. On the contrary, when luxury tax is liable to be imposed under section 4 only on "hotels", which term has got a specific definition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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