Bangalore Club K M Cariappa Road vs The Asst Commissioner Of Commercial ... on 1 December, 2008

[Cites 4, Cited by 1]

Karnataka High Court

Bangalore Club K M Cariappa Road vs The Asst Commissioner Of Commercial ... on 1 December, 2008

Equivalent citations: AIR 2010 (NOC) 222 (KAR.), 2009 (6) AIR KAR R 364

Bench: L.Narayana Swamy

In W.A.No.3§gy§g-;__._ ..  '


xx» x '-

'K
K

'-.2" " 
'%"""'*'§I>,>:-<,>.»,~».~"*='«"-"'3'§?(A

 

1»: THE HIGH comer OF KARNATAKA 

Dated: Istday of Decembcx**2i§{?8:  u  

Pxesignt       
HOEWBLE Mr.JUSTICE:'V.G=£)PALA' GOWE.}A. '~._ "V.

HONBLE M;..JUSTI€§il"NARASEANASWJEXMY A ';;2ae5 {T-Rcs) w.A .Hb1§_.--_1$843 fa; 3s44;1_;goo5 BANGALORE <:ts;v,U.._B"«.% "

K,M.CA'RIAPPP; Ream) BANGALO{RE,560._0'25' _ NOW REPR:.._BYI'I'S_ EEPGTY SECRETARY ' . « S.\ffj--1$¥i{£tTESH "

" 'AMAFJACEER Argcoums ArA1d:V . . . APPELLANT PRASAD as VASAN ASSOCIATES) 'r.1~«I_E ASS'? COMMISSEONER 01? COMMERCEAL TAXES _ H2-4'I'H CIRCLE "BANGALORE THE STATE OF KARNATAKA REPR:BY ITS SECRETARY FINANCE DEPARTMENT VIDHANA SOUDHA BANGALURE FEESPONDENTS (BY SR} H.M,MANJUNA'I'H~GA FOR R1 89 2) \w/ In W.A.No.3843/05:

Between:

M] 5. BANGALORE GOLF CLUB REPR: BY ITS I-iON.SECREAF<'Y RVISWANATH No.2 SANKEY ROAD HIGH GROUNDS BANGALORE 560 001 .. :(A1Prj'§LL2ii'FT (BY SR} R.V.PRASAD asVASANV"As'Socm*E.s;..V And: % ' _ % 1 THE ASST COMMISSIONER. "

0? CoMMERc1AL"rAXE3.I'» _ 10TH Ai3Dm0NAL..c:;RcLE "

BANGALQRE. %

2 fi'HE svrmg {:37 KARNATAKA I3EpIz;i3Y'--'1T$ SECR_ETAR'£ WIANCE. I)EI'ﬂ¢\RT'.1$§'E.i§4fI' VIDHANA S-OU¥3HA"~--

BANC§ALORE _ ...RESP()NDENTS " SR1 HAA.M.vw».NJUNATH«GA) ix}; W.A;.D§9;38 ?M:/O5:

.B5~%. e¢n: ' ' 5 "

M] s. ESAHGALORE GOLF CLUB , V " REPR: BY ITS HODLSECREARY V. j V» RVISWANATH _ =N'o».-i3%.SANi{EY ROAD _ HIGH GROUNDS __BA3\rGALoRE 550 .001 APPELLANT (BY M/9.. vAs cIATEs~ADw 1 THE ASST COMMISSIONER OF COMMERCIAL TAXES {LUXURY TAX) BANGALORE 2 S'I'A'f'E OF KARNATAKA REPR:BY ms SECRETARY FINANCE DEPARTMENT d VIDHANA SOUDHA ' _ BANGALORE _ }._.RESPONV£*ENTS (BY SR: H.M.MAN3UNATi~i{dA ma-1R'1'V»&f"2)x'ﬂ' d . Ag o'.(,}"'(')':.'Vd.:'j4 A V These W.As are zliamataka High Court Act against th,C"CGEf£§BOI'1'e,_Oi'(i€If dated 30--9----2005 passed in wrmgeeeen Ne; 21 A1'4e8e,e* 2090 and connected W.Ps. ~ « e on for dictating judgment before the Cnuﬁ; thi.f$ .déi:.<', Gopaia Gowda, J dictated the feI1owing:~""~~ _ d*aUneMENT T. Av1},:}Tif1fTEC writ appeals are filed by Bangalore L113-ildngalore Golf Club against the common order" deiﬁed 30-9~--2005 passed by the learned single dismissing the Writ petitions. In the writ __g§etitioz:zs, the "petitioners sought to declare the amendments made to Sectioa 2(4) of the Karnataka Tax on Luxuries Act, 979 ( reinaﬁer referred to as 'the Act') by Act No.5 of 2000 as unconset;;ue:;g:: _ beyond the powers of the State Gover'r11ne:1f4.: V 4

2. By the aforesaid ..

included in the deﬁnition of--.:f:I:~i~ote1'.iji1der_SectioVii"'2'(4) er"

the Act and an eXpIa1..1ation""ie«'Vc_:i.ﬁV¥se1jLed.'Asame is extracted hereunder:-- dd J V "2(#~'!».]é '§~_Iote1'- or part of a bi.1i1d;§1'ig whefe lodging accommodation with? or:Wiﬁ':e.u£ by way of bzxsiness provid.ed- for .C£10I1fﬁfii,?fy consideration, and iiiéludets a houées club and holiday Exp1on'e1;ie1if*\.cVA club, a lodging house and a. holiday for which charges are _; eeilecteéiio for V providing accommodation ' wjhe'ther or":'1ot in the course of business . _, sheilbtrdeemed to be a hate} for the purpose " ' e.ajf4t,V11,'-3' Ac:

Tfxejddaboved: amendment, to the d6ﬁZ}itiOI1 clause of "-Hotel " with retrospective effect as the amended ["':V'pro€i3ion shall aiways be deemed to have been inserted. . Mwihat prompted the State Legelature to include club in the deﬁnition of Hotel is the decision rendered by this Coiilri: in the case of BANGALORE GOLF CLIIB vs ASST. COHMZR., LUXERY '1"AJ& reported in (3.999) 'W 115 s'rc 333 (kar). In that case it is held -ifietel does not include club. In order to ever-cg:-ﬁe'{l';eL:'*~s§a§d:"

deeisien, the amendment in que_s1:ioz_1 has"¥'a?e"e:jv by " "

the State Legislature by ixaeludirig of "Hotel". _ V I

3. Pursuant to me prevision Of Section 2(4)' and -_c: }ause, notices wem issued to' the £2 'ef the Act read with R1ﬂe§.'£-;"i3e(3wcj3' 1979 calling upon A' for regswation in the departmeeriteeef Taxes. Being aggtieved by the gsa-me, fhe, h€I'€iI} and others ﬁled writ }before this Court seeking to deciare the 3n:4;:;s:¢::%eeorfeauns in the deﬁnition of "Hotel" and the €Xﬁ1%1I};'&it§{GIi'aI'€: uneonstitutionai and beyond the powers V. efe .§he '"State Government and therefore requested to t;g,:a.s5:1 the notices and prayed to gent other reiiefs. The '"Iea:meé single Judge has upheld the amendment and dismissed the writ petitions by passing the impugled order. Being a,w' y the same these appeals are 0» ﬁled by the Appellants urgng various '3 prayer to set aside the impugned orderéiquaohii impugned notiﬁcation and "do§=§§i1_ provision. A 9 9 i A' 9

4. Since the matteriilioo in a cogzrioass, it is not necessary fortitis legal contonﬁons the into service by the learneci In the facts and circumstai1peisu';»'A:Vof oé1se,iihe gounds urged, ooniefstions the decisions relied upon by the ioarriiedo the afgpellants, the foﬂowhzg V. mat "wo1._._1_1dv arise for consideration of this ' ﬁa) Viiheziior the inciusion of 'club' in the éiofiziiﬁon of 'ho-tol' and insertion of " Eiézplanaﬁon to Section 2(4) of the Act and

-. gving tho amended provision retrospective ' effect is iega}, valid and correct?

13) Whether the order of learned single warranto iI1t€I'f6I'€¥1C6?

\x+/ huge membership fee to acquire membership "is not so in respeot of 3. hotel.

6. With am the above distiIi(:t4featu1es,':vi_t 'is.1no"x, proper and correct for the to club on par with a ' is it lacking in the clubs' of' A oardirial principle to levy by the Apex Court in the. of Pradesh V. :95 am. is 15 we 644. The reIeva:it_p:wt'tioti ffom Bangalore Golf Club case, (19%) 952.1 :.s,fisip.33s, which is reproduced v ./,hemti-exzéiér: _____ .. e _ "i"fE'he expression 'business' though exte§*:siV€i§I"" used is a word of indeﬁnite in taxing statutes it is used in the of an occupation, or profession which occupies the time, attention and labour of a _ [ pers{>n, normally with the object of making V proﬁt. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. But to be a dealer 3. person need not follow the activity of buyiing, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profmmotive, wiii not make a person dealer within the meaning of the Act, \\\\\/ but a person who consumes a comntyeéity "

bought by him in the course of his t1fe7(Ie," "

use in manufacturing another cemmédiity jfer"

sale, would be regarded as e,H;ieale1'..*""" e ~ > e

7. The words used 1:1 :néeedef;i1:u'o:;e,,o:e2em+:1*ine«,, Section 2(4) of the Act .._-my V. éV.b;.1eiI1ess".

Therefore, to attract. the Act to levy luxuxy Tax # the ciub, the eieznent of are meant to ewxy on biﬁy but not clubs.

C1ub§V.,9/gféé cultural, sports and reerealéioge *e!~en1ent of 'business' is totally euteide the"'fp-:§1viewAef eelub. Therefore, a club cannot "e{1uafeC3 ..«witI§§éVe,"TViotel under the defuiition to ievy ' L. 2 x ' ~ . :j..

the ﬁefuzitien of Hate: expressiy V' eierxtiens "by way ef business", in the explanation ' ieeefted, the wards "Whether or net: in the course ef " business" is inehzcied. This is in conﬁict with the word "business" in the deﬁnitien clause. Therefore, treating \«/ the unequals equally amounts to discrimhlatimfg is in violation of Article 14 of the Censtituﬁqfi' of. "

9. The explanaﬁen tn the dvf3.l.°'_}4I1i¥..i.'('JiHI';l V"; .§H'(;te}&V'»ir1'é V' the Act cannot have CV61'-I'1i'€1iIi§ " 'Teﬁ'e<§t"~ ..§);; "

deﬁrﬁtion. This position of is"':v__e1E.VVse:ttLi*e'd""Vin: the"

decision of !:he Ap€x'}'§£%.S;S.uneIaramvv'§PiIlai V. V'.R.Pattahi:'am.an "1985 SC 582, 'Wh6I'6iI'1 it wasfileld to a statutozy provision sh.«;;: to it and the object of addizig e;3:p}.Aé-;ii"x;:4.ti.()fr1e _ai=e"menﬁoned at pamgraph 52 in that caee;__t:heV eigfnétcted hereunder:

"5'i£".v,'E'hus., ﬁem a conspectus of the A' ;a:1ti1§)rities"'iiefen*ed to above, ii: is manifest _V .Vt.}:1.ai:. 4' the object of an Explazmation £0 a V - _$€atL1t0_1'§_'g.. provision is - to explain the meaning and ' intez1dmen£ of the Act itself. (23) where there is any obscurity or vagueness in the main enactmeat, to clarify the same so as to make it consistent with the domimmt:

object which it seems to subserve. ({3} to provide an additional support to 1: e do ' ant: object 91' the Act: 11

in order to make it mea:1iI::gf1.},1 and purposeful.

((1) A31 Explanation cannot in any '2%?'i3.3;:"L"-VT:'< interfere with or change;"""t;bje. " » enactment or any part thereof where some gap is leit . V relevant for thc:_,.oi'-Tithe-.i'.» L" A Explanation, i11v=._()I'(fEI'z to ' suppressv-J ; T A the mischief ai1d'~«_advat1ee'~..the " object of the.__ Act it "can e.'he1;r_V_or assist the iz1'--.inte1_f;3retiiig the true pm'p'o1_"t and intendment of the enactment; aizﬁ J6) {_i"£._V_caIf;.!1ot, h_o%;f«eve:,'""'take away a StEit.LltGf§f '"z:ig§1t"V,Awitt1 which any " _u:1de_1f afstatute has been .. cfoVthed._&" or set at naught the V "VV.'wto1*"'1g'of3n Act by becoming an

- V iiiiidragioe the interpretation of _ The§<e§<pIa:1atio13V:etgoeid also be in conformity with the » Vproyieioia th_e Act to which it is attached. This portion is ' 'eiear the observation made in the decision 1967 so 389. The relevant; portioa is we extzracted in Sundaramk case at paragraph 49, which it; reproéuced hereunder:

" The Explanation must be read so as to harmonise with and eiear up any ambiguity in the main Section. It should not be so construed as to widen the ambit of the Section."

\M/ Hence, the insertien of explanation to clause, Hotel under Secﬁon 2(4) .oi'~t3r1e to it it the deﬁnition provision and is bad li»iw.ll same is liable to be struck

10. The axnenégiient .tl1AeVA¢lief1I}itien of 'Hotel' under remispective in nature, as "shall always be respect of 'tax statutes, te under tax umbrella and to levy teexiforlthe the amendments by way of or siihsﬁtution to the provision of the Act shall Qiieﬁnfespeetive and shall not be retrospective. law is Well settled by the Apex Court in mete ef R.Rajagopal Reédy v. Padmini reported in 1995 ITR Vol.213 relevant portion is extracted:

"It is obvious that when :9: statutery provision creates a new liability and a new eifenee, it would naturaily have prospective operation. "

\M The retrospective amendment is alse batiw. violative of principles of natural justice as ifieicii Supreme Court in the case of National " = operative Marketing Federa£ion::'--sf Union of India reported mom: SC'v:i3fA9V,VVe3hieh«:V:* is referred to by this _v_»cim.isioii_'Are_vf;>orted in 2009 (66) Kar.LJ eatene. of cases. The reason is'. V} from the customers. ..remitteo the Revenue. in respeef; of where tax is not coileeted, tax caﬁset remit the same to the Depertmeni ssﬁiseqtisently. In this View of the matter, 'V eﬁect given to the amended deﬁnition of'fHeiei"i.,iv§oVAV."::iie Act made by the State Legislature by Aeii'*No.=.5 'of'f"2{)00 in question is bad in law and therefore, _ .. . " :;,.'"ie.. amendment is "liable to be struck dawn.

11. For the reasons stated amve, the justification of the impugned order of the learned single Judge sought to be made by the learned Addlﬁovemment Advocate on behalf of the respendents cannot be W . ., ;}§1'i19éiti€§n.'Vl' accepted. The learned single Judge, in our "

correct in making the observation at the order that if ihe Legislature'AA'iVar11;s'..' ex:

clubs etc, irrespective of theirv'b__u1si11ess ';;1ci':i'£'i§y',--;_4i2;~.%i?s~.VV entitled to do so. The same' "by V' Way of business" in Section 2(4) of the Act 14 of the C-o:1stit1.22;i0I1;'~' by the Apex Court in When clubs are not in the absence of elemeet ~ observation of the learned single. order is contrary t0 the

-- fuyther observation of the learned single ...¥"¥_z.-*.:l:ige matters liiztlc Whether the activity of the Club thy way of business er otherwise, is also not correct. It is W€H~S6tﬂ(i'd that each word of 3. ll ..._$§atuto1}f provision must be gven its weight and in this connection the famous W(}3f'C1S of judge Learned hand extracted in the case at' K.P.Varghese '9'. Income Tax \\N/ Officer, Emakulam reported in 1981 Vol. page 97, are reproduceci hereunder: V V it is true that _T_h€._'_J30I'CiS {leek}, even in their iiteral se11se,gare_the 'V A _ A aﬂd ordinarily the most :*e1ia§o_ie*iso{"xrCe_o§'A A T interpreting the meaoing of any 4 be it a statute, a eont;'a4C£_0r aiiyt}1i;If3g~,eIee;"' But it is one of the sums: inéexes' "of mature and de;3.{e1ope£1----jurisprudence...not to make a fortne'ss«s céutof --1;he"'dictiona1y; but to remember'£}1at'etéA;utesev .a!w'ays have some purpose object.» to'~vVao£:oi11p1ish, whose _ ..eympa;._the£i'e.: ' imaginative discovery }1i's_ the 'guide to their }}'(}I°'i'f;l'1x{:3"j;1'e€;i:.'FL'§$31'1 i;'iatitI2e"1egis1atLu*e with object and iI1teI3<iVi3,f1ei:it phrases are used in the provision' of tizewwstéitliteiiy enacment and attempt shali ﬂ0i1j.:made the statutory provisions by to such provision, that would defeat purpose for which Words and phrases that used by the State Legelature in the defmition of Hotel under Section 2(4) of the Act. That being K the ieamed single Judge has committed an error in law in holding at the ené of paragraph 39 as under:-- "The question whether the expizmation shouid further be Watexfed down or read \N/ down to be, as one in consonance with the---'ij'*.i. main provision, nameiy, the defniiiioxi is clause, is examined and if such an attemp,t;"' i is made, the entire explanation is_--reIiC§eted * _ riugaeory, in the sense, whafisesetgxghi to be ' . done by adding the explanation; is put at :;_* not" 2 *_ -.~.«. -' when the words in the expiaﬁation "*¢a;IietE;eI4"1.g)rVVi'1ot in V the course of weeds "ey way of business" used in the iof the statute prominence '--€11€..feJ«drds used in the expianaticiri. V V ' '4 V above, WC hold that inclusiteir of' ﬂefmition of 'Hotel' and the expl;i.e.atioi1'i§iser{ed'toiSection 2(4) of the Act by way of . V. "ean1en.d1;ient retrospective eﬁect are not legal, Vieczifrect, 'therefore point (a) is answered aecQréi_:1g]j;} A 2 ~ In the result, the appeals are aiiowed and the Gammon order of the learned single Judge is set aside.

'4 The Writ petitions are alieweci. The amended pmvisier; with explanation thereto are struck down as bad in law and the impugxieé notices are quashed. it is declared \m/ {hat Club (:3-nmot be equated to Hotel fer ievying luxury tax uncier the Act.

MP    V

Unlock Advanced Research with PRISMAI

Karnataka High Court