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TMI Blog2013 (7) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... v. with Mr V N Nair For Nanavai Nanavati, Mr Mihir Joshi, Sr. Adv. with MR V N Nair For Nanavati Nanavati, Adv. For the Respondents : Mr Jitendra Malkan, Adv., Mr R J Oza, Adv., Mr Y N Ravani, Adv. JUDGEMENT:- PER : Ravi R Tripathi Three different clubs of City of Ahmedabad, named, Sports Club of Gujarat Limited, Rajpath Club Limited and Karnavati Club Limited are before this Court making almost identical prayers. Prayer made in SCA No.13654 of 2005 by petitioner - Sports Club of Gujarat Limited in Para.16(A) is as under : 16(A) Your Lordships be pleased to issue a writ of or in the nature of mandamus declaring Section 65(25a), Section 65(105) (zzze) and Section 66 of the Finance (No.2) Act, 1994 as incorporated /amended by the Finance Act, 2005 to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, as being ultra vires, beyond the legislative competence of the Parliament, unconstitutional, illegal and void. 2. It is also prayed in Clause (B) that, 16(B). Your Lordships be pleased to issue a writ of or in the nature of mandamus commanding the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of taxing statute of the Madras Sales Tax, the Hon'ble Supreme Court, in the case of the Joint Commercial Tax Officer Vs. The Young Mens' Indian Association, considered the definition of the 'dealer' by which the club was declared dealer and after considering the definition of sale as given in the Act of 1959 and explanation-I appended to Section 2(n), specifically declaring the sale or supply or distribution of goods by a club to its members whether or not in the course of business was declared deemed to be a sale for the purpose of the said Act. In that situation, Hon'ble Supreme Court considered the issue that the club is rendering service or selling any commodity to its members for a consideration then whether that amounts to sale or not. Hon'ble Supreme Court held that it is a mutuality which constitutes the club and, therefore, sale by a club to its member and its services rendered to the members, is not a sale by club to the members. In sum and substance, the ratio is that for a transaction of sale, there must be two persons in view of this judgement as well as in view of the Full Bench Judgement of this Court delivered in the petitioner&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, no licence need to be taken out if liquor is supplied only to the members. If some of the shareholders are not members or some of the members are not shareholders, that would be the case of a proprietary club and would involve sale. Proprietary clubs stand on a different footing. The members are not owners of or interested in the property of the club and then the Hon'ble Supreme Court observed that above view was accepted by the various High Courts in India. The Hon'ble Supreme Court, relying upon other judgements held that members' club is only structurally a company and it did not carry on trade or business so as to attract the corporation profit tax. Therefore, in spite of specific inclusion of the club in the definition of the dealer in the Madras General Sales Tax Act, 1959 by providing an explanation to include the clubs which are selling or distributing the goods to its members for cash have been included in the definition of dealer and by explanation I to Section 2(n) defining the sale the statutory provision was made to include any transfer of property by club to its members to be a sale for the purpose of the said Act, Hon'ble Supreme Court categorica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the careful consideration of the facts of the case, the Division Bench of the Jharkhand High Court held as under: 18. However, learned counsel for the petitioner submits that sale and service are different. It is true that sale and service are two different and distinct transaction. The sale entails transfer of property whereas in service, there is no transfer of property. However, the basic feature common in both transaction requires existence of the two parties; in the matter of sale, the seller and buyer, and in the matter of service, service provider and service receiver. Since the issue whether there are two persons or two legal entity in the activities of the members' club has been already considered and decided by the Hon'ble Supreme Court as well as by the Full Bench of this Court in the cases referred above, therefore, this issue is no more res integra and issue is to be answered in favour of the writ petitioner and it can be held that in view of the mutuality and in view of the activities of the club, if club provides any service to its members may be in any form including as mandap keeper, then it is not a service by one to another in the light of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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