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2016 (1) TMI 331 - HC - VAT and Sales TaxLiability under HVAT - whether supplies of food and drinks to its members / non-members involved any element of sale - principle of mutuality - appellant being a member s club fall within the ambit of definition of dealer under the HVAT Act - Dealer - Held that - Apex Court in Cosmopolitan Club v. State of Tamil Nadu and others (2008 (9) TMI 540 - SUPREME COURT OF INDIA) had set aside the said decision of Madras High Court while considering the identical issue as to whether supplies of food and drinks to its members involved any element of sale. Further, under similar circumstances the Supreme Court had remanded the case for reconsidering finding of fact regarding the relationship between the club and its members in the matter of supplying food and drinks viz., whether the club was acting as an agent of the members or whether the property in the food and drinks passed from the club to its members. - Impugned order is set aside - Matter remanded back.
Issues Involved:
1. Jurisdiction of assessing authority without transfer order under HVAT Rules. 2. Classification of appellant as a dealer under HVAT Act. 3. Liability of appellant club for registration under HVAT Act and taxation of services. 4. Judicial indiscipline by Tribunal in not following previous court decisions. 5. Validity of assessment order based on wrong facts. 6. Perversity in Tribunal's finding on principle of mutuality. Analysis: Issue 1: The judgment addressed the jurisdiction of the assessing authority to frame an assessment without a transfer order under Rule 7(5) of the HVAT Rules. The appellant challenged the authority's jurisdiction, arguing that no transfer order was communicated. The court found merit in the appellant's argument and remanded the matter to the Assessing Officer for re-adjudication, emphasizing the need for a definite finding on items provided to members and non-members for tax purposes. Issue 2: Regarding the classification of the appellant as a dealer under the HVAT Act, the appellant contended that only members and their dependents could use the club facilities. The court considered the appellant's submissions, highlighting the need for the Department to prove supply of services to non-members to bring the club under the Act. The judgment referenced previous court decisions and directed the Assessing Officer to re-examine the issue and determine tax liability based on actual supply to non-members. Issue 3: The liability of the appellant club for registration under the HVAT Act and taxation of services was a crucial aspect of the case. The court acknowledged the appellant's arguments regarding the club's membership structure and the need for clarity on tax liability based on services provided to non-members. The judgment emphasized the Assessing Officer's role in re-evaluating the matter and issuing a fresh order after due consideration and hearing. Issue 4: The judgment also addressed the issue of judicial indiscipline by the Tribunal in not following previous court decisions. The appellant raised concerns about the Tribunal's failure to adhere to established legal principles. The court found in favor of the appellant, setting aside the Tribunal's orders and remanding the case for proper consideration by the Assessing Officer. Issue 5: Regarding the validity of the assessment order based on incorrect facts, the appellant argued that reliance on a previous decision was misplaced. The court agreed with the appellant's contentions and directed a re-examination of the matter to ensure accurate assessment based on factual findings. Issue 6: The judgment considered the Tribunal's finding on the principle of mutuality in the appellant's case. The appellant challenged the Tribunal's conclusion, alleging perversity in the decision. The court acknowledged the appellant's concerns and remanded the matter for a fresh assessment to address the issue of mutuality conclusively. In conclusion, the judgment disposed of the appeals by remanding the matter to the Assessing Officer for a thorough re-evaluation of the factual and legal issues raised, emphasizing the importance of clear findings on tax liability based on services provided to members and non-members.
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