TMI Blog2008 (11) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... various clubs have questioned the applicability of the provisions of the Tamil Nadu Tax on Luxuries Act, 1981 (for short, the Luxuries Act ). The petitioners have challenged the final assessment orders in some writ petitions. In other writ petitions, pre-assessment notices and notices calling upon the petitionerclubs to register themselves under the Luxuries Act were also under challenge. In one writ petition, the order passed by the revisional authority confirming the appellate order upholding the assessment was also under challenge. The short question that arises for consideration is whether section 4 of the Luxuries Act levying tax on the luxuries provided in a hotel in respect of every room under occupation by any person is applicable to the clubs having rooms rented for accommodation for its members is covered 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the levy and collection of a tax on luxuries provided in hotels and lodging houses. Inasmuch as the object in these two Acts cannot be said to be one and the same, it would not be correct to read the definition of the term 'business' as given in the Tamil Nadu General Sales Tax Act, 1959 into the Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Act, 1981. This issue can be examined from another angle as well. The Tamil Nadu General Sales Tax Act was enacted in the year 1959, whereas the Act in question was enacted in the year 1981. If really the Legislature desired the definition as given in Sales Tax Act as amended by the Amendment Act, 1964 to be adopted, that would have been certainly made clear in this present Act by indicating sufficiently, (i.e.,) by introducing an Explanation clause mentioning the same. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks; that is to say, was the club acting as an agent of the members or did the property in food and drinks pass from the club to the members? ... In the circumstances, we think it appropriate that the matter should go back to the Tribunal, who will decide, on facts, as to the exact relationship between the parties in the matter of supply by the club of food and drinks to its members. In other words, the principle of mutuality and agency among other circumstances shall be gone into by the Tribunal before which the said appeal is pending. At this stage, it may be noted that the Department is also relying upon clause (vi) inserted to section 2(n) of the 1959 Act. All these amendments have been brought on the statute book in view of the 46th Amendment of the Constitution. We grant liberty to both sides to add by way of amendment any ground 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. adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs or guests or the members of other clubs are provided the facility for stay and food on reciprocal basis. In common as well as commercial parlance, club providing such activity would not be considered to be a hotel. That stage has not been pointed, where the club ceased to have its own existence as a club and is converted into a hotel. The business which a hotel is required to carry on for lodging accommodation, is with the intention and main object as lodging house or accommodation or building where the lodging accommodation is provided by way of carrying on business. The activity of renting the room or charging for food in a club cannot be considered to be its main activity so as to fall within the charging section. In fact, subsequent to the judgment referred to above, the Karnataka State Legislature has amended the definition to include clubs 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 hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of a lodging house, such an exclusion was deliberately made by the Legislature. It will not be out of place to refer to the definition of residential hotel found in section 2(11) of the Tamil Nadu Catering Establishments Act, 1958. It reads as follows: Residential hotel means any premises in which the business of providing dwelling accommodation and supply of meals to any member of the public or a class of the public is carried on. When the provisions of the Act were sought to be applied to a membership club, (i.e., to the YMIA), a learned single judge of this court after noting the object of the Act for the welfare of the employees made a liberal interpretation. However, the matter was taken to the Division Bench and that view was reversed. The said decision is reported in [1964] 2 LLJ 302 in the case relating to Young Men's Indian Association v. Assistant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved at page 256: '...It must be borne in mind that noscutur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service...' In the present case, the word 'business' though generally of wide import does acquire a more limited meaning when read with the words 'of 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. While the Legislature has got every right to legislate on the subject under entry 62 of List II of the Seventh Schedule and having legislated on the said entry, this court has to decide only the relationship between the charging section and the definition portion. It cannot introduce any artificial meaning to the term hotel as suggested by the counsel for the respondent-State. Though an attempt is made by stating that the matter will have to be decided only after remitting the matter to the appropriate authority, this court is unable to agree with the said submission. The definition of the term hotel as provided under the Act is not susceptible for any different meaning. It is not even suggested by the counsel for the State that the clubs while providing accommodation is doing a business so as to attract the charging section under section 4 of the Luxuries Act. In view of the above, the action instituted by the respondents in attempting to cover the clubs, which are the petitioners before this court, within the purview of the Luxuries Act is without jurisdiction and any action taken pursuant to such coverage will become void ab initio. Hence, all the writ petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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