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TMI Blog2001 (12) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... etition that had been filed before this Court was transferred, that Section 2(n)(v) of the Tamil Nadu General Sales Tax Act which provides for levy of tax on supply of goods on unincorporated association to it's members for valuable consideration was unconstitutional. In this petition which challenges the order of the Tribunal dismissing the petition before it, question of alleged unconstitutionality was not argued. Petitioner now accepts the constitutionality of that provision. 3. Mr. M.L.Verma, learned senior counsel for the assessee submitted that the law declared by the apex Court in the decision rendered by a six member Bench of the apex Court in the case of Joint Commercial Tax Officer vs. Young Men's Indian Association, (1970) 26 STC 241, would squarely apply to the facts of this case, and that the law so declared is still good law, notwithstanding the subsequent amendment to Article 366 of the Constitution and the introduction of Clause 29-A therein, and the amendments thereafter made to the definition of `sale' in Section 2(n) of the Tamil Nadu General Sales Tax Act ( the Act). 4. The question considered by the Court in that case was "whether the supply of the various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply, whether or not as part of service of food or any other articles of human consumption, or any drink, for valuable consideration would be regarded as a sale. That subclause had the effect of altering the law in relation to supply of such refreshments in Members' Club which was the issue considered by the Supreme Court in the case of Youngmen's Indian Association. We have also held in the case of Cosmopolitan Club vs. Tamil Nadu Taxation Tribunal in W.P.No.7694 of 1999 and connected matters dated 5.12.2001 that the supply of food and drink by Members' club to it's members is a sale and is taxable as such. 8. Counsel submitted that sub-clause (e) of Clause 29A of Article 366 refers to the supply of goods by any unincorporated Association and, therefore, it is implicit in that clause that supply of goods by incorporated Associations, would not be covered by that clause. Counsel further submitted that supply by incorporated Associations would not be covered by any other clause of Article 29-A and, therefore, such supply by incorporated Associations to their members would not be taxable. 9. Attention was invited by counsel in the case of Commissioner of Income-tax, Bombay vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mportant point to be noticed in this connection is that in the various provisions of the Societies Registration Act, 1860, there are no sufficient words to indicate an intention to incorporate; on the contrary, the provisions show that there was an absence of such intention. Section 2 no doubt provides for a name as also for the objects of the society. Section 5 however states that the property belonging to the Society, if not vested in the Trustees, shall be deemed, to be vested in the governing body of the Society and in all proceedings civil and criminal, the property will be described as the property of the governing body. The Section talks of property belonging to the society; but the property is vested in the Trustees or in the governing body for the time being. The expression "property belonging to the Society" does not give the society a corporate status in the matter of holding or acquiring property; it merely describes the property which vests in the trustees or governing body for the time being. Section 6 gives the society the right to sue or be sued in the name of the President, Chairman, etc. and Section 7 provides that no suit or proceeding in a civil Court shall abat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e privileges conferred by the Act. 15. The fact of being registered under the Societies Registration Act, whether under the Central Act or the State Act, therefore, does not necessarily result in the society becoming incorporated. 16. Learned counsel for the petitioner submitted that since the petitioner is registered under the Tamil Nadu Societies Registration Act 1975, the law laid down by the Apex Court regarding the effect of registration under the Societies Registration Act, 1860 would not apply to the petitioner society. This submission does not fully bring out the true status of the society. The petitioner society was first registered in the year 1971. That registration was under the Societies Registration Act, 1860 and it is deemed to be registered under the State Act only by virtue of sub-section (2) of Section 4 of the State Act. Counsel took us through the various provisions of the State Act, and submitted that despite the absence of a specific provision in the Act providing for the incorporation of a society which is registered under the Act, it should nevertheless be held that the society registered under the State Act is an incorporated body. 17. The preamble to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as strangers. Section 3 0 provides for amalgamation and division of the registered societies. Section 34-A deals with supersession of the committee. Section 37 deals with cancellation of registration; Section 39 deals with the effect of such cancellation, and provides that when the registration of a society is cancelled, the society shall forthwith cease to carry on its business, except so far as may be required for the beneficial winding up thereof. Section 40 provides for winding up of the society. Section 41 deals with dissolution of the registered societies and the adjustment of their affairs on dissolution. Section 42 provides that on dissolution no member is to receive profit. 19. The provisions of the State Act nowhere provide that the society when registered shall be an incorporated body. The society is required to have a committee and action is to be brought by a person authorised under the bye-laws. While the fact of being registered confers certain rights on the society, such registration does not, ipso facto, result in it being incorporated. What has been said by the Apex Court in relation to the Societies Registration Act of 1860 would thus apply with respect to a so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are members, and the goods are not made available to any non-member, such supply would not amount to a sale, as the incorporated entity would only be an agent of the members. The question that was considered in that case has already been set out. That case dealt with the limited question regarding the taxability of refreshment supplied to members in Members' clubs; that question was answered in the light of the law which then prevailed, namely that in law there could be no sale without transfer of title to the goods. 24. We have, in the case of Cosmopolitan Club considered the effect of the amendment to Article 366 in Clause 29-A and of the corresponding provision in the State Act, and held that sales of refreshments in members clubs, whether or not incorporated are taxable. While so holding it was observed that, "The doctrine of mutuality, in the field of sales tax, has been done away with after the introduction of Clause 29A in Article 366. That doctrine was applied initially to unincorporated bodies members of which collectively obtained goods and thereafter released their rights in favour of each other in the goods supplied to each member. That doctrine was later expanded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the other person might be legal and valid or it might not be. That has to be investigated first before it can be directed to be followed in the case of the petitioner. If the order in favour of the other person is found to be contrary to law or not warranted, in the facts and circumstances of his case, it is obvious that such an illegal or unwarranted order cannot be made the basis of issuing a writ compelling the respondent authority to repeat the illegality or to pass another unwarranted order." 27. In the case of Gursharan Singh vs. New Delhi Municipal Committee, AIR 1996 SC 1175, it was held that "the guarantee of equality before law is a positive concept and it cannot be enforced by a citizen or court in a negative manner" and that "if an illegality or irregularity has been committed in favour of any individual or a group of individuals, the others cannot invoke the jurisdiction of the High Court or of the Supreme Court, that the same irregularity or illegality be committed by the State or an authority which can be held to be a State within the meaning of Article 12 of the Constitution, so far such petitioners are concerned, on the reasoning that they have been denied t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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