2020 (9) TMI 420 - HC - VAT and Sales Tax

Constitutional Validity of Section Section 2(15)(ix) and 2 (33(vi), explanation I of Tamil Nadu Value Added Tax Act 2006 - Club and association service - principles of mutuality - incorporation of clubs after 46th amendment to the Constitution - HELD THAT - The theory of mutuality will apply to both incorporated and unincorporated clubs. - Following the decision of Supreme Court in the matter of CALCUTTA CLUB LIMITED / M/S. RANCHI CLUB LTD. 2019 (10) TMI 160 - SUPREME COURT , the petition is disposed off.

Summary

Issues:
Challenge to the validity of Section 2(15)(ix) and 2(33)(vi), explanation I of Tamil Nadu Value Added Tax Act 2006.

Analysis:
The instant writ petitions challenge the constitutionality of specific sections of the Tamil Nadu Value Added Tax Act 2006. The Division Bench of the Madras High Court had previously upheld the validity of these sections. The High Court referred to a recent judgment by the Supreme Court in the case of STATE OF WEST BENGAL & ORS. VS. CALCUTTA CLUB LIMITED, where the Supreme Court addressed the application of the doctrine of mutuality to clubs post the 46th Amendment to the Constitution of India. The Supreme Court clarified that the doctrine of mutuality continues to apply to both incorporated and unincorporated clubs. The Larger Bench of the Supreme Court upheld the decision of the Calcutta High Court, emphasizing that the doctrine of mutuality remains relevant. Consequently, the High Court in Madras decided to intervene in the show cause notice issued by the Assessing Officers proposing tax levies on the petitioners. The Court held that the law laid down by the Supreme Court in the Calcutta Club case is applicable, and the doctrine of mutuality will be considered by the Assessing Authorities for both incorporated and unincorporated clubs.

In conclusion, the writ petitions were disposed of in line with the judgment of the Larger Bench of the Supreme Court, without imposing any costs. The petitioners were permitted to respond to the notice issued by the Assistant Commissioner, with the understanding that the theory of mutuality applies to all clubs, incorporated and unincorporated. The Assessing Authorities were directed to consider this legal principle in their assessments. The writ petitions were closed along with the connected miscellaneous petitions.