1992 (2) TMI 332 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the petitioner-club is a "dealer" u/s 2(e) of the Andhra Pradesh General Sales Tax Act, 1957.
2. Whether the petitioner-club is liable to pay sales tax on the supply of goods to its members.
3. Whether the Constitution (Forty-sixth Amendment) Act, 1982, and subsequent amendments to the Act affect the tax liability of the petitioner-club.
4. Whether the petitioner-club can claim immunity from the provisions of the Act.

Summary:

Issue 1: Definition of "Dealer"
The primary issue is whether the petitioner-club qualifies as a "dealer" u/s 2(e) of the Andhra Pradesh General Sales Tax Act, 1957. The court noted that the definition of "dealer" includes any society, club, firm, or association that buys, sells, supplies, or distributes goods to its members. The court concluded that the petitioner-club falls within this definition, making it a "dealer" under the Act.

Issue 2: Liability to Pay Sales Tax
The petitioner-club argued that it is a non-profit organization and does not carry on business, thus should not be liable to pay sales tax. However, the court found that the supply of goods by the petitioner to its members constitutes a "sale" u/s 2(n) of the Act, which includes the supply of goods by a club to its members. Therefore, the petitioner-club is liable to pay sales tax on its turnover.

Issue 3: Impact of the Constitution (Forty-sixth Amendment) Act, 1982
The court examined the impact of the Constitution (Forty-sixth Amendment) Act, 1982, which inserted clause (29A) in Article 366 of the Constitution, deeming the supply of goods, including food and drinks, as a "sale." The Andhra Pradesh General Sales Tax Act was subsequently amended by Act 18 of 1985 to align with this constitutional amendment. The court held that these amendments make the petitioner-club's transactions taxable.

Issue 4: Immunity from Provisions of the Act
The petitioner-club contended that the Constitution (Forty-sixth Amendment) Act, 1982, does not specifically mention supplies by unincorporated institutions to its members. The court rejected this argument, stating that the amended Act explicitly includes such supplies in the definition of "sale." The court also dismissed the reliance on the Calcutta Swimming Club case, as the Bengal Finance (Sales Tax) Act, 1941, did not have similar provisions.

Conclusion:
The court concluded that the petitioner-club is a "dealer" under the Act and is liable to pay sales tax on its turnover. The writ petitions were dismissed, and the petitioner-club was directed to comply with the provisions of the Act.