Gopala Gowda, J.

These three writ appeals are filed by Bangalore Club and Bangalore Golf Club against the common order dated 30-9-2005 passed by the Learned Single Judge dismissing the writ petitions. In the writ petitions, the petitioners sought to declare the amendments made to Section 2(4) of the Karnataka Tax on Luxuries Act, 1979 (hereinafter referred to as ‘the Act’) by Act No. 5 of 2000 as unconstitutional and beyond the powers of the State Government.

2. By the aforesaid amendment, ‘Club’ is included in the definition of ‘Hotel’ under Section 2(4) of the Act and an explanation is inserted. The same is extracted hereunder:—

“2(4) ‘Hotel’ means a building or part of a building where lodging accommodation with or without board is by way of business provided for monetary consideration, and includes a lodging houses club and holiday resorts.

Explanation: A club, a lodging house and a holiday resort for which charges are collected for providing accommodation whether or not in the course of business shall be deemed to be a hotel for the purpose of this Act.

The above said amendment to the definition clause of Hotel is with retrospective effect as the amended provision shall always be deemed to have been inserted. What prompted the State Legislature to include club in the definition of Hotel is the decision rendered by this Court in case of Bangalore Golf Club v. Assistant Commissioner, Luxury Taxes . 1999 115 STC 338 Kar. In that case it is held that hotel does not include club. In order to over-come the said decision, the amendment in question has been made by the State Legislature by including club in the definition of “Hotel”.

3. Pursuant to the amendment to the provision of Section 2(4) and inserting explanation clause, notices were issued to the clubs under Section 2 of the Act read with Rule 2-B (3) of the Luxury Tax Rules 1979 calling upon them to file applications for registration in the department of Commercial Taxes. Being aggrieved by the same, the appellants herein and others filed writ petitions before this Court seeking to declare the inclusions of Clubs in the definition of “Hotel” and the explanation are unconstitutional and beyond the powers of the State Government and therefore requested to qush the notices and prayed to grant other reliefs. The Learned Single Judge has upheld the amendment and dismissed the writ petitions by passing the impugned order. Being aggrieved by the same these appeals are filed by the Appellants urging various grounds with a prayer to set aside the impugned order, quash the impugned Notification and struck down the amended provision.

4. Since the matter lies in a narrow compass, it is not necessary for us to refer to the various legal contentions and the decisions pressed into service by the Learned Counsel for the parties. In the facts and circumstances of the case, the grounds urged, contentions canvassed and the decisions relied upon by the Learned Counsel for the appellants, the following points that would arise for consideration of this Court:—

a) Whether the inclusion of ‘club in the definition of ‘hotel’ and insertion of Explanation to Section 2(4) of the Act and giving the amended provision retrospective effect is legal, valid and correct?

b) Whether the order of Learned Single warrants interference?

5. In order to answer the points, one has to compare hotel with club and see the distinction between the two. A club cannot be equated to a hotel. Both have different activities. The object and purpose of establishing them are different. A club is formed with the Association of several persons with certain definite objects. The hotels are established to do business for profit. Hotel may be proprietary or partnership concern or company. Only members are entitled to use the club and general public are not allowed in club. Members of other clubs are allowed to avail the facilities of a club on reciprocal basis. In the case of hotel, anybody can avail and utilise the facilities provided by it. Hotels are meant for doing their commercial business with profit making motive. There is no such element in club. The profit earned by hotel goes to its proprietor or partners or share holders. There is no profit making motive in a club. To become member of a club, one has to fulfill the eligibility criteria and pay huge membership fee to acquire membership but it is not so in respect of a hotel.

6. With all the above distinct features, it is not proper and correct for the State Legislature to treat a club on par with a Hotel as the element of business is lacking in the clubs which is one of the cardinal principle to levy luxury tax, as observed by the Apex Court in the case of State of Andhra Pradesh v. H. Abdul Bakshi and Bros . 1964 15 STC 644. The relevant portion is extracted from Bangalore Golf Club (Supra) which is reproduced hereunder:

“The expression ‘business’ though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making 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 a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e, without a profit-motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer”.

7. The words used in the definition of ‘Hotel’ in Section 2(4) of the Act are “by way of business”. Therefore, to attract charging Section under the Act to levy luxury Tax upon the members of the club, the element of business is a must. All hotels are meant to carry on commercial business only but not clubs. Clubs are meant for doing social, cultural, sports and recreation activities. The element of “business’ is totally outside the purview of a club. Therefore, a club cannot be equated with a Hotel under the definition to levy luxury tax.

8. While the definition of Hotel expressly mentions “by way of business”, in the explanation inserted, the words “whether or not in the course of business” is included. This is in conflict with the word “business” in the definition clause. Therefore, treating the unequals equally amounts to discrimination, which is in violation of Article 14 of the Constitution of India.

9. The explanation to the definition of ‘Hotel’ in the Act cannot have over-riding effect on main definition. This position of law is well settled in the decision of the Apex Court in S.S Sundaram Pillai v. V.R Pattabiraman . 1985 1 SCC 591, wherein it was held that any explanation to a statutory provision shall be supplemental to it and the object of adding explanation are mentioned at paragraph 52 in that case, the same is extracted hereunder:

“52. Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is—

(a) to explain the meaning and intendment of the Act itself.

(b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve.

(c) to provide an additional support to the dominant object of the Act in order to make in meaningful and purposeful.

(d) An Explanation cannot in any way interfere with or change the enactment or any part therefore but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and

(e) It cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same”.

The explanation should also be in conformity with the provision of the Act to which it is attached. This portion is clear from the observation made in the decision reported in AIR 1967 SC 389. The relevant portion is extracted in Sundaram's case at paragraph 49, which is reproduced hereunder:

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

Hence, the insertion of explanation to the definition clause, Hotel under Section 2(4) of the Act is contrary to the definition provision and is bad in law. Therefore, the same is liable to be struck down.

10. The amendment in question to the definition of ‘Hotel’ under Section 2(4) of the Act is retrospective in nature, as the words used therein are “shall always be deemed to have been inserted”. In respect of tax statutes, to bring an assessee under tax umbrella and to levy tax for the first time, the amendments by way of insertion or substitution to the provision of the Act shall always be prospective and shall not be retrospective. This position of law is well settled by the Apex Court in the case of R. Rajagopal Reddy v. Padmini Chandrasekharan . 1995 ITR Vol. 213 P. 340, relevant portion is extracted:

“It is obvious that when a statutory provision creates a new liability and a new offence, it would naturally have prospective operation”.

The retrospective amendment is also bad being violative of principles of natural justice as held by the Supreme Court in the case of National Agricultural Co-Operative Marketing Federation of India Limited v. Union of India . 2003 5 SCC 23, which is referred to by this Court in the decision reported in 2009 (66) KAR LJ 425 (HC) and in a catena of cases. The reason is, tax has to be collected from the customers instantly and remitted to the Revenue. In respect of past transactions where tax is not collected, tax cannot be collected and remit the same to the Department subsequently. In this view of the matter, the retrospective effect given to the amended definition of “Hotel” to the Act made by the State Legislature by Act No. 5 of 2000 in question is bad in law and therefore, the impugned amendment is liable to be struck down.

11. For the reasons stated above, the justification of the impugned order of the Learned Single Judge sought to be made by the Learned Additional Government Advocate on behalf of the respondents cannot be accepted. The Learned Single Judge, in our view, is not correct in making the observation at paragraph 30 of the order that if the Legislature wants to levy tax on clubs etc., irrespective of their business activity, it is entitled to do so. The same is contrary to the words “by way of business” in the definition of hotel under Section 2(4) of the Act and violative of Article 14 of the Constitution of India and law laid down by the Apex Court in the case referred to above. When clubs are not run on non-profit basis and in the absence of element of business, the observation of the Learned Single Judge in the impugned order is contrary to the definition.

12. The further observation of the Learned Single Judge that it matters little whether the activity of the Club is by way of business or otherwise, is also not legally correct. It is well-settled that each word of a statutory provision must be given its weight and in this connection the famous words of Judge Learned hand extracted in the case of K.P Varghese v. Income Tax Officer, Ernakulam . 1981 Vol. 131 ITR page 97, are reproduced hereunder:

“……………it is true that the words used, even in their literal sense, are the primary and ordinarily the most reliable source of interpreting the meaning of any writing; be it a statute, a contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning”.

For the reason that the Legislature with object and intendment certain words and phrases are used in the provision of the statutory enactment and attempt shall not be made to re-write the statutory provisions by giving explanation to such provision, that would defeat the object and purpose for which words and phrases that are used by the State Legislature in the definition clause of Hotel under Section 2(4) of the Act. That being so, the Learned Single Judge has committed an error in law in holding at the end of paragraph 30 as under:—

“The question whether the explanation should further be watered down or read down to be, as one in consonance with the main provision, namely, the definition clause, is examined and if such an attempt is made, the entire explanation is rendered nugatory, in the sense, what is sought to be done by adding the explanation, is put at knot”.

When the words in the explanation “whether or not in the course of business” are against the words “by way of business” used in the definition clause of the statute prominence cannot be given to the words used in the explanation.

13. For the reasons stated above, we hold that inclusion of club’ in the definition of Hotel’ and the explanation inserted to Section 2(4) of the Act by way of an amendment with retrospective effect are not legal, valid and correct, therefore point (a) is answered accordingly.

14. In the result, the appeals are allowed and the common order of the Learned Single Judge is set aside. The writ petitions are allowed. The amended provision with explanation thereto are struck down as bad in law and the impugned notices are quashed. It is declared that Club cannot be equated to Hotel for the purpose of levying luxury tax under the Act.