2023 (3) TMI 167 - HC - VAT and Sales Tax

Club or Association Service - Principles of mutuality - sale taking place between the member and the club or not - HELD THAT - Since the issue raised in the present Revision Cases is squarely covered by the law laid down by the Hon ble Supreme Court in Calcutta Club Limited 2019 (10) TMI 160 - SUPREME COURT , wherein it was held that the doctrine of Mutuality continues to be applicable to incorporated and unincorporated member s clubs even after the 46th Constitutional Amendment and sub-clause (f) of Article 366(29-A) to the Constitution of India has no application to member s clubs , which binds this Court under Article 141 of the Constitution of India and also since it is not shown any subsequent deviation from the above position, the question of law raised in the present Revision Cases in favour of the petitioners-assessee. Tax Revision Cases are allowed.

Summary

Issues:
Challenging orders of Sales Tax Appellate Tribunal under APGST Act, 1957 on questions of law regarding the principle of mutuality between clubs and members, applicability of Supreme Court judgments, and the treatment of amounts collected for items supplied in the club as sale consideration.

Analysis:
1. The Tax Revision Cases filed by the petitioners-assessee challenge the Sales Tax Appellate Tribunal's orders under the APGST Act, 1957 for various assessment years. The main issue revolves around the principle of mutuality between clubs and their members, specifically focusing on the applicability of Supreme Court judgments post the 46th Constitutional Amendment.

2. The questions of law raised in the Tax Revision Cases primarily address whether the Tribunal erred in overlooking key judgments of the Hon'ble Supreme Court, such as the Fateh Maidan Club case and the Cosmopolitan Club case, which emphasized the continued application of the principle of mutuality even after constitutional amendments.

3. The petitioners argue that the doctrine of mutuality remains relevant for incorporated and unincorporated member's clubs, citing the Supreme Court's ruling in the State of West Bengal v. Calcutta Club Limited. This decision clarifies that the supply of food by clubs to their members does not constitute a sale subject to taxation under State Sales Tax laws, post-constitutional amendments.

4. The respondent-State, represented by learned Special Standing Counsel, does not contest the applicability of the principle of mutuality as established by the Supreme Court in the Calcutta Club Limited case. The Court acknowledges the binding nature of Supreme Court decisions under Article 141 of the Constitution of India.

5. Given the clear precedent set by the Supreme Court regarding the doctrine of mutuality and its application to club memberships, the High Court rules in favor of the petitioners-assessee in all the Tax Revision Cases. The Court emphasizes that the issue is conclusively settled by the Supreme Court's decision in Calcutta Club Limited, rendering further examination unnecessary.

6. As a result, the Tax Revision Cases are allowed, with no costs imposed on either party. The Court directs the closure of any related pending petitions in light of this final order, bringing resolution to the legal dispute surrounding the taxation of club activities and member transactions under the APGST Act, 1957.