P L D 1977 Karachi 843 (PLP)

Z. A. CHANNA, J.‑These two constitutional petitions raise a common question, namely, the liability of a hospital, which is being run without profit, to pay education cess under the Workers' Children (Education) Ordinance, 1972, hereinafter referred to as the said Ordinance. This judgment will dispose of both these petitions.

2. The petitioner in Constitutional Petition No. 702/1973 is the Holy Family Hospital, which is stated to be a non‑profit‑making institution, dedicated to service of God and humanity, and run on charities and donations from abroad as well as Pakistan. Donations given to the said hospital have been exempted from payment of income‑tax by a notification issued under section 15‑D of the Income‑tax Act, 1922. Furthermore, it has been held by a Junior Labour Court that the said hospital is not an 'establishment' for the purposes of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968. The petitioner applied to the Director, Excise and Taxation, the respondent No. 2, for exemption from the payment of education cess under the said Ordinance, but its request was rejected and it was intimated that it fell within the definition of 'establishment' as given in the said Ordinance and was required to submit a return and to pay education case amounting to Rs. 31,000 at the rate of Rs. 100 per employee. It is this order that is being impugned in this petition.

3. The petitioner in Constitutional Petition No. 745/1973 is the Liaquat National Hospital, which, like the Holy Family Hospital. is being run by a Society registered under the Societies Registration Act, 1860. This hospital also is being run on non‑profit basis and one of its objects is to train and to provide technical assistance to Medical Assistants. The contributions of this hospital are also exempted from the payment of income tax. Furthermore, the lands and buildings of this hospital have been exempted from payment of property tax under the Sind Immovable Property Tax Act, 1958, and also from the payment of tax and charges of the Local Bodies. However, the petitioner received a notice from respondent No. 2, the Excise and Taxation Officer, requiring it to submit returns under the said Ordinance for payment of education cess. The petitioner represented against this notice but its representations were turned down and the petitioner was finally informed that it was required to pay the education cess and cannot be exempted from the payment thereof. It is in these circumstances that the petitioner has filed this constitutional petition.

4. Mr. Shaikh Haider has appeared for both the petitioners and assailed the impugned orders/notices for the payment of education cobs on the ground that the two petitioners are not 'establishment' for the purposes of the said Ordinance. It was submitted by the learned counsel that an examination of the definition of 'establishment' as contained in the said Ordinance shows that only such organization, institution, firm or undertaking can be deemed to be an 'establishment' for the purposes of the said Ordinance as is being run for purposes of profit. According to him, the common factor of all the institutions/organizations which have been included in the definition of 'establishment' is profit or gain. He submitted that since the two petitioners are charitable and non‑profit hospitals, they do not fall within the definition of 'establishment' as contained in the said Ordinance, and therefore, the demand of the respondents from the petitioners for payment of education cess is clearly wrong and in violation of law.

5. In order to appreciate the contentions raised by the learned counsel for the petitioners, we may refer to certain provisions of the said Ordinance. Section 3 (1) of the Ordinance provides for the levy of education cess, and reads as follows : "3.‑(1) Every employer of an establishment in which the number of workers employed at any time during the year is twenty or more shall pay to the Provincial Government an education cess at the rate of one hundred rupees per worker per annum."

6. We may also refer to the definitions of 'employer' and 'establish ment' as contained in the said Ordinance. They read as follows "(a)'employer' in relation to an establishment means the person who has ultimate control over the affairs of the establishment (b) 'establishment' means any office, firm, industrial unit, undertaking shop or premises in which workers are employed for the purpose of carrying on any business, trade, manufacture, calling, service, employ ment or occupation."

7. It may be stated here that the above definition of 'establishment' was substituted by the Workers' Children (Education) (Amendment) Ordinance, 1972, for the original definition, which was to the following effect ; "(b) 'establishment' means an establishment engaged in any business, trade, manufacture, calling, service or occupation."

8. It was conceded by Mr. Shaikh Haider that the two petitioners do have premises in which workers are employed for the purpose of carrying on services, but he submittal that the word 'service' as contained in the definition of 'establishment' in the said Ordinance cannot be construed as any type of service, but must be given a meaning akin to the other purposes specified in the definition. The learned counsel was apparently relying on the doctrine of Noscitur a sociis, though he did not expressly say so. According to Maxwell "on the Interpretation of Statutes", Twelth Edition, p. 289 ; "Where two or more words which are susceptible of analogous meaning are coupled together, nocuniur a socits ; they are under stood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general. "However, Maxwell has pointed out that the "maxim noscitur a sociis is always a treacherous one unless you know the societos to which the socil belong." In the case reported in (1965) 1 t2 B 232, the question which arose for consideration was whether in a statute which referred to "negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision)", breach of duty could be understood as confined to causes of action in which actual damage was essential because the cause of action in both nuisance and negligence included the infliction of damage as an essential element. Repel ling this contention, Diplock, L. J., held "That breach of duty cannot be (so) restricted . . . . . . . . for the words in parenthesis expressly extend to a duty which exists by virtue of any contract and the infliction of actual damage is not an essential element in an action for breach of contractual duty."

9. In support of his contention that only such organizations, institutions and premises are liable to tax as are being run for profit or gain, the learned counsel for the petitioner referred us to a number of authorities from the English and Indian jurisdiction. The first of these is the case reported in (1924) 1 K B

390. In that case a Company Limited by guarantee carried on a social club in the ordinary way, the club being a members' club and not a proprietary club. By the Memorandum of Association profits were not distributable among the members nor, in the event of the winding up of the Company, was any surplus distributable among them, but was to be applied as the Committee might determine. For services received at the club premises, such as the provision of meals, etc., members were required to make payments. The question arose whether for the year in which the Company's account showed a surplus of income over expenditure, it was liable to payment of corporation profits tax. It was held that the Company was not carrying on an "undertaking of a similar character" to that of a trade or business, and was therefore not liable to corporation profits tax. It may be pointed out that the decision in that case turned on the question whether the club in question, namely the Eccentric Club, was carrying on any trade or business, and it was held that as it was not carrying on any trade or business but was only rendering services to its members, though on payment, it was not liable to the payment of corporation profits tax, even if it makes profits, because the profits were not from any business or trade.

10. Mr. Shaikh Haider also referred us to passages in Halsbury's Laws of England in regard to the distinction between a 'proprietary club' and other types of club, but we do not consider it necessary for the determination of the issues arising in the instant case to consider that distinction.

11. The next case cited by the learned counsel for the petitioners is reported in A I R 1954 Mad. 1144. In that case, the assessee was a social and recreational club incorporated under section 26 of the Companies Act. The club supplied refreshments to its members at certain standard rates. The Memorandum and Articles of Association of the club clearly showed that it was not a profit‑making concern. The question which arose for consideration was whether the total amount of the bills in respect of the refreshments supplied to the members was chargeable to sales tax. It was held that the club being an association not designed for making a profit nor striving after profit, and there being no taint of commercially in the transaction, the turnover in respect of the sales in question could not be assessed to sales tax. This decision was based on the view that only commercial activities whose goal is profit, whether that goal be reached or not, come within the definition of sale.

12. The learned counsel for the petitioners also relied upon the cases reported in A I R 1958 Andh. Pra. 232 ; A I R 1960 S C 610 1 AIR 1961 S C 1579 ; A I i. 1963 S C 1873 ; AIR 1 968 S C 554 ; A I R 1970 Cal. 170 1 A I R 1970 S C 1407 and a case decided by the Sind Labour Appellate Tribunal, reported in 1976 P L C 207.

13. In the Andhra Pradesh case, reliance was placed on the decision reported in A I R 1954 Mad. 1154, for holding that the supplies made by the Sikandarabad Club (which was a members' club and not a proprietary club), to its members of refreshments, drinks, etc. cannot be regarded as a vale by a dealer, within the meaning of the Hyderabad General Sales Tax Act, 1950. 14, The various decisions of the Indian Supreme Court relied upon by the learned counsel for the petitioners are. with the exception of the case reported in A I R 1961 S C 1579, on interpretation of the term 'industry' as defined in the Indian Industrial Disputes Act. 1947. In that Act, the word 'industry' has been defined as r "any business, trade, undertaking, manufacture, or calling of employers and includes any calling, service, employment, handicraft, of industrial occupation or avocation of workmen". In the case reported in A I R 1960 S C 610, it wee hold that the maxim noscuniur a. sociis is inapplicable to the definition of 'industry' in section 2 ( j) of the Industrial Disputes Act, 1947, and that the said definition applied to a hospital. In that case it was further held that the fact that the hospital is run by the Government does not make any difference in the inter pretation of the word 'undertaking' in section 2 (j) of the Industrial Disputes Act, 1947, for it was the character of the activity which decides the question as to whether the activity in question attracts the provisions of section 2 ( j) and the question who conducts the activities and whether it is conducted for profit or not do not make any material difference. In the case reported in A I R 1963 S C 1173, it was held that the work of imparting education conducted by the educational institutions like the University of Delhi and the colleges run by it is not an 'industry' within the meaning of section 2 (J) of the Industrial Disputes Act, 1947. The view taken was that education seeks to build up the personality of the pupil by assisting his physical, intellectual, moral and emotional development, and to speak of this educational process in terms of 'industry' sounds so completely incongruous that one is not surprised that the Act has deliberately so defined workmen under section 2 (s) as to exclude teachers from its scope. In the case reported in A I R 1968 S C 554, it was observed that the Madras Gymkhana Club was not an 'industry' for the purposes of the Industrial Disputes Act, 1947. It was observed in that case that before the work engaged in by an employer can be described as an 'industry, it must bear the definite character of 'trade' or 'business' or 'manufacture' or 'calling' or must be capable of being described as an 'undertaking' resulting in material goods or material services. This view was based on the consideration that primarily industrial disputes occur when the operation undertaken rests upon cooperation between employers and employees with a view to production and distribution of material goods, in other words, wealth, but they may arise also in oases where the cooperation is to produce material services. The normal cases thus are those in which the production or distribution is of material goods or wealth and they will fall within the expression 'trade', 'business' and 'manufacture'. In the case reported in A I R 1970 Cal. 170, it was held that the Asiatic Society, a Society registered under the Societies Registration Act, 1860, was not an 'undertaking' for the purposes of the Industrial Disputes Act, 1947, as it was not an 'industry'. In this case it was observed that "an activity will con stitute an industry only if it caters to the material needs (as distinguished from intellectual or cultural needs of the society), and that is done as part of trade or business or as analogous to trade or business". It was also observed in this case that where an institution carries on activities of different kinds, it i3 its dominant purpose which will determine its character as an industry or otherwise, as in the modern world, pure organizations are rarely available. In the case reported in A I R 1970 S C 1437, the decision In A I R 1960 S C 610, that hospitals fall within the definition of 'industry'. was overruled, on the ground that in constituting industry there must be collective enterprise in which employers follow their avocations detailed in definition and employ workmen to fulfil their occupations. It was pointed out in this case that every case of employment is no! necessarily productive or an industry, for domestic employment, administrative services of public officials and service in aid of occupations of professional men, also disclose relationship of employers and employees but they cannot be regarded as in the course of industry. It was held in that case that before the work engaged can be described as an 'industry', it must bear the definite character of 'trade or 'business' or 'manufacture' or 'calling' or must be capable of being described as an undertaking resulting in material goods or material services. It was accordingly held that hospitals run by Government and even by private associations, not on commercial lines but on charitable lines or as part of the functions of the Government Department of Health, cannot be included in the definition of 'industry'. In the case reported in 1976 P L C 207, the question arose whether the Karachi University was an 'industry' for the purposes of the Industrial Relations Ordinance, 1969. It was held, on the basis mainly of the authorities from the Indian Jurisdiction, that the University was not an 'industry' for the purposes of the said Ordinance. The last case on the subject on which reliance was placed by the learned counsel for the petitioners is the case reported in A I R 1981 S C 15711. In that case, the buildings owned by Sewpur Tea Estate in Assam, which was carrying on the manufacture of tea, were requisitioned by the Military Authorities, with the result that the manufacturing of tea by the said organisation was stopped. It was, however, paid compensation for its property requisitioned by the military Authorities. The question arose whether the compensation received by it from the Military Authorities amounted to profits and therefore was liable to payment of income‑tax. It was held that the payment of compensation could not be treated as partaking the character of profits because business pat having been done by it during the 2 years since the requisitioning of the buildings, no question of profits taxable under section 10 of the Income‑tax Act arose, and the whole of the amount received by the assesses, was therefore, not assessable.

15. We have carefully considered the various rulings cited by the learned counsel for the petitioners. but in our view, none of these rulings are applicable to the facts and circumstances of the present case. The two petitioners are neither being taxed on any profits nor on the basis that they are an 'industry". They are being taxed b.‑cause they are an 'undertaking' or 'premises' in which workers are employed for the purpose of carrying on 'service'. The word 'service has not been defined in the said Ordinance and we see no reason for restricting its application to service analogous to business, trade or manufacture. Even if the word 'services' as contained in ,t the definition of 'establishment' in the said Ordinance is to be construed as material services, as held in the case decided in A I R 1970 S C 1407, the services which are rendered by the employees of the two petitioners are, in our view, clearly material services.

16. It may also be pointed out that not only the said Ordinance is a taxing statute but it is a statute meant for beneficial purpose. In the case reported in (1911) 1 K B 64, Rowlatt, J. observed : "In a taxing Act, one has to look merely at what it clearly said. There is no room for intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied, one can only look fairly at the language used." The strictness of interpretation in a taxing statute obviously is not to ensure to the subject's benefit, for if the person sought to be taxed comes within B the letter of the law, he must be taxed, however, great the hardship may appear to the judicial mind to be, as observed by Lord Cairns in (1869 L R 4 H L 100.

17. The learned counsel for the petitioners finally contended that the word 'service' in the definition of 'establishment' in the said Ordinance must be read ejusdem generic with the words 'business'. 'trade' and 'manufacture'. In support of his contention the learned counsel relied upon the cases reported in (1920? 1 K B 773 and (1953) 2 Ail E L R

559. In the case first mentioned. section 43 of the Customs Consolidation Act, 1876, came up for consideration. It provided that : "the importation of arms, ammunition, gun‑powder or any other goods may be prohibited by proclamation, order or other grounds". It was held that : "the words 'any other goods' is restricted to the things of the same class as those previously specified". In the case reported in (1953) 2 All E L R 559, it was held that an estate agent is not a 'tradesman or other person' within the meaning of the Sunday Observance Act. and, therefore, a contract entered into on a Sunday to employ an estate agent to effect the Pale of land in consideration, of the payment to him of a commission on the price obtained is not prohibited 8y that section.

18. According to Maxwell, unless there is a genus or class or category, there is no room for any application of the ejusdem generic doctrine. Furthermore, the ejusdem generic doctrine, according to him, "is by no means an absolute one, and if it can be seen from a wider inspection or the scope of legislation that the general words are to be construed generally, they are so construed, notwithstanding that they follow more particular expressions. In the instant case, we are unable to discover any genus or class or category. In cur humble opinion, the words 'business', 'trade', 'manufacture', 'calling', 'employment', 'occupation' or 'service' cannot by considered to be of the same category, genus, or class. As such, in our view, the doctrine of` ejusdem generic will have no application. We have already referred to the fact that the said Ordinance is a beneficial statute providing for funds o for education of Workers' Children, and hence it is to be construed liberally, so that its object could be achieved. In Marker Employees' Union v. Marker Alkoloids Ltd. (1976SCMR82) it was held by their Lordships of the Supreme Court that the provisions of a notice in a beneficial statute, such as the Industrial Relations Ordinance, 1969, are not to be equated with similar provisions in laws dealing with rights in property‑ In dealing with beneficial laws, it is essential to keep in view the object of the statute. In our opinion, the word: 'service' as contained in the definition of 'establishment' is not restricted to service which results in profit or gain but would embrace services of various kinds. It may be pointed out that only such offices, undertakings, premises, etc., are deemed to be 'establishment' for the purposes of the said o Ordinance in. which workers age employed for the purposes of carrying on any business, trade, manufacture, calling, service, employment or occupation. The definition of 'worker' in the said Ordinance makes it clear that element of profit or gain is not an essential ingredient of the definition of 'establishment', for the definition of 'worker' specifically excludes persons in the service of State, including members of the Armed Forces, Police Force and Railway Service and also persons in the service of Local Council. Municipal Committees, Cantonment Boards or other Local Authorities, who ordinarily are not employed with a view to profit or gain. Their specific exclusion would indicate that except for that they would also be deemed to be workers employed in an 'establish ment'. Their exclusion, in our opinion, seems to remove any doubt that the word `service' in the definition of 'establishment' necessarily means a service[, for purposes of profit or gain, as may be in the case of trade or business.

19. For the reasons stated by us above, we are of the opinion that there is no merit in these petitions and that the petitioners have been rightly served with notice for payment of the education cess under the said Ordinance. We would accordingly dismiss these petitions with costs. S. A. H. Petitions dismissed.