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TMI Blog2011 (1) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... uxuries provided in a club. In fact, as the law stood then, the word "club" was included in the definition of the word "hotel". It was inserted by Act No. 5 of 2000 giving retrospective operation. However, the Legislature, by way of an amendment to the Act, inserted section 3D by way of substitution by Act No. 3 of 2004 and it was declared that it shall be deemed to have been substituted with effect from April 1, 2003. In other words, retrospective effect was not given by the Legislature expressly restricting its operation only from April 1, 2003. The constitutional validity of the said provision was challenged by the respondents herein by filing writ petitions before this court. The learned single judge who heard the matter, upheld the constitutional validity of the said provision. However, he interpreted the said section and held that, the section does not stipulate any levy on the mere existence of a facility. It is the user of the facility by a member which is the taxing event. The measure of levy is not on the total membership of the club, but is only at the rate per member. Consequently, he quashed all the proposition notices issued to the said clubs, with liberty to the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration in this appeal is, "Whether the liability to pay luxury tax under section 3D arises the moment the club provides luxury to its members and they are required to pay fee or when the members actually use luxury and pay fee?" In this regard, it is necessary to look into section 3D, which reads as under: "3D. Levy and collection of tax on luxury provided in a club.-(1) There shall be levied and collected a tax on luxuries provided in a club to the members who are required to pay any amount as fee, deposit, donation or any other such charges by whatever name called, at the rate as specified in column (3) of the table below: S. No. Location of club Rate of tax (1) (2) (3) 1 Corporation area Six hundred rupees per member per annum 2 Other areas Three hundred rupees per member per annum Provided that no tax shall be payable in respect of a member who has attained sixty five years of age and who is not a corporate member subject to such conditions as may be prescribed. Provided further that no tax shall be payable in respect of a member of a youth club registered or recognised as such by the Department of Youth Services. (2) The tax levied under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax shall be paid by every proprietor within such period and in such manner as may be prescribed. Explanation II is added to clarify the payment of the luxury taxes by the clubs in respect of corporate membership or similar membership. Though the corporate member is treated as one, if more than one person uses luxuries, then, the tax shall be levied and collected in respect of such number of persons who utilise luxuries of the club in pursuance of such corporate membership. This is the plain meaning one can makes out from the language used in the aforesaid provision. It is settled law that, in interpreting these statutory provisions, the intention of the Legislature is primarily to be ascertained from the language used, which means that attention should be paid to what has been said as also what has not been said. The words of a statute are understood in their natural, ordinary or popular sense. The phrases and sentences are construed according to their grammatical meaning, unless that leads to some absurdity or unless there is something in the context in the object of the statute to suggest the contrary. The rule of construction is to read the statute literally, i.e., by giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... els and Restaurants) Tax Act, 1972 where the said section 4 reads as under: "4. Liability for luxury tax.-There shall be charged, levied and paid to the State Government a luxury tax by the proprietor of every hotel and restaurant in which there is provision for luxury and such tax shall be calculated- (a) In the case of a restaurant at the rate of an annual sum of rupees three hundred for every ten square meters or part thereof in respect of so much of the floor area of the restaurant which is provided with luxury, and (b) In the case of a hotel at such rate not exceeding fifteen per centum on the daily charges of a room provided with luxury as may be notified by the State Government in the Official Gazette." The question posed for consideration was whether the impost on the mere possibility of enjoyment of a luxury can be taxed or not. In answering the said question, the apex court held as under (page 170 of 74 STC): ". . . The concept of 'luxuries' in the legislative entry takes within it everything that can fairly and reasonably be said to be comprehended in it. The actual measure of the levy is a matter of legislative policy and convenience. So long as the legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the Constitution Bench, the State has power to levy tax on luxuries even if there is no actual utilisation or the actual consumption of the said luxury provided. When once, the nexus between taxing power of the State and the tax is established, all other matters are matters of fiscal policy and it is not amenable to the judicial review by the courts. A perusal of the judgment in Godfrey Phillips [2005] 139 STC 537 (SC) makes it very clear, they did not go into the question whether the consumption or utilization of the luxury is a condition precedent for levying tax on luxury. The said judgment went into the question of constitutional validity of the power of the Legislature to impose luxury tax only. In the instant case, the constitutional validity of those provisions has been upheld and thus it has reached finality. We are called upon to interpret only the said provision imposing the luxury tax. The law laid down in the Express Hotels Private Ltd. [1989] 74 STC 157 (SC); AIR 1989 SC 1949, squarely applies to the facts of this case. The levy of tax on luxury for merely providing the same is valid and legal and does not suffer from any legal infirmity as pointed out by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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