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TMI Blog2009 (11) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... r and no cold drink was sold. The amended definition of "sale" as contained in section 2(h) was not up for consideration before the appellate court, nor was considered. The appellate authority proceeded to address the controversy treating that the assessee was a society nor indulged in sale and purchase transaction and is running on no-profit and no-loss basis. On these facts, it cannot be said that initiation of reassessment proceeding is based on change of opinion. Appeal dismissed. - Writ Tax No. 324 of 2005 & 493, 494 of 2003 - - - Dated:- 24-11-2009 - PRAKASH KRISHNA AND SUBHASH CHANDRA NIGAM , JJ. The judgment of the court was delivered by PRAKASH KRISHNA J. By means of the present writ petitions, the validity and legality of the circular dated February 17, 2004 issued by the Commissioner, Trade Tax, U.P. wherein it has been provided that sale and purchase of eatable goods by the club to its members is taxable as the same is included within the extended definition of sale and purchase after 46th Amendment of the Constitution in article 366(29A) of the Constitution of India, has been challenged. All the three petitions were heard together and it was submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opriate remedy for quashing the proceedings and the notices as also the circular dated February 17, 2004. A detailed counter-affidavit has been filed wherein the proceedings initiated against the petitioner assessment years-wise and the various dates fixed in those proceedings have been highlighted. A preliminary objection as regards to the maintainability of the writ petition has been raised and it is pleaded that the petition is liable to be dismissed on the ground of laches and concealment and/or non-disclosure of material facts in the writ petition. In addition thereto, plea of alternative remedy by way of appeal has also been set out. The plea that the petitioner is not a dealer or is not carrying on any business of sale or purchase has been disputed. It has been stated that the proceedings were initiated much prior to the impugned circular dated February 17, 2004 which fact is evident from the order dated September 24, 2003 from the order of the Additional Commissioner granting authorization under the proviso to section 21(2) of the Act. Further case of the Department is that the writ petition has been filed on false and baseless claims. The audited accounts of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitution (46th Amendment) Act also in view of the extended definition of sale as contained in section 2(h) of the U.P. Trade Tax Act, the impugned circular issued by the Commissioner, Trade Tax providing for levy of trade tax on the sale and supply of goods by a club is liable to be taxed, will not apply to a club or organization which is incorporated. Reliance to clause (e) of the article 366 (29A) of the Constitution of India was placed in particular. Elaborating the argument, he submits that the said clause contemplates the tax on the supply of goods by any unincorporated association. The similar definition finds place in section 2(h)(iv) of the Act. The submission is that the petitioner is indisputably incorporated under the Companies Act, the supply of food and drink by it to its members does not amount to sale . He further submits that to constitute a sale two legal entities are required, i.e., seller and buyer . In the case of club, club being incorporated, supply is made by the club to its members in the sense that the club is agent of the members. To put it differently, the supply of food articles by the club to its members, is a supply by self and it does not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and drinks to its members only. Considered the respective submissions of the learned counsel for the parties and examined the documents referred by them. Having noticed the arguments of both the sides, the following points for consideration fall before this court: 1.. Whether the petitioner-company is not a legal entity and is distinct from its members, being incorporated to constitute transfer of property by it to its members, within the meaning of sale as defined under the Trade Tax Act, as the petitioner contends? 2.. Whether the petitioner-club is a members' club and not proprietary club, and the petitioner-club and its members are one and the same thing? 3.. Whether impugned circular is bad as it on its own does not draw a distinction to an unincorporated association or body of persons, and an incorporated association or body? Taking the first point first, the petitioner submits that there is no sale of eatables, etc., by the petitioner to its members within the meaning of sale under the Act, as the club and its members are not separate legal entities. It is difficult to agree with the said broad proposition. Indisputably, the petitioner is incorporated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demonstrate before this court that the petitioner-company is or akin to propriety club. We were taken through the annexure CA. 4 which discloses the purchases and sales of the year 19992000 of refreshment, cold drink, ice cream, mineral water, tobacco and coupon sale. He submits that taking into consideration the large volume of these purchases and sale as disclosed therein, the petitioner is nothing but propriety club. We were also taken through the balance sheet, income and expenditure account for the year ended as on March 31, 2000 that the petitioner themselves has shown excess of income over the expenditure transferred to balance sheet. The matter requires consideration by the assessing officer if so raised by the petitioner and will be decided after taking into consideration the entire material available on record uninfluenced by any of the observations made in the present writ petition. It will not be out of place to mention here the recent judgment of the apex court which was relied upon by the petitioner, in the case of Cosmopolitan Club v. State of Tamil Nadu [2009] 19 VST 456 (SC). In this very case, the apex court has remanded the matter to the statutory authority by m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced below: (29A) 'tax on the sale or purchase of goods' includes (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The Constitution (46th Amendment) Act, 1982 amended article 366 of the Constitution thereafter by inserting clause (29A) therein. By reason of this amendment, the State became entitled to levy tax on the supply of food and drinks. The State of U.P. also amended the definition of sale as it originally contained in section 2(h) of the Act in the line of clause (29A) of article 366. The definition of dealer as contained in section 2(c) was also amended accordingly. The business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or commission, remuneration or other valuable consideration by a person who carries on in Uttar Pradesh is a dealer within the meaning of section 2(c) of the Act. The definition of dealer is very widely worded and includes therein not only buying and selling but also supplying or distributing the goods directly or indirectly. After the 46th Amendment of the Constitution there has been a sea change of the definition of sale within the meaning of the Constitution of India and the corresponding amendments in the U.P. Trade Tax Act. The learned standing counsel submits that the activity of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom one to another and there is no sale which would be exigible to tax. Noticeably, the aforestated decision was rendered before 46th Constitution Amendment. After the said Constitution amendment, a very wide meaning has been assigned to the word sale by inserting clause (29A) in article 366 of the Constitution of India. The corresponding Amendments have also been incorporated by the State Legislature in the State of U. P. Clauses (v) and (vi) of section 2(h) which are presently relevant, for the sake of convenience, are reproduced below: 2. (h)(v) the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; and (vi) the supply, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration. Undoubtedly, clause (v) talks about the supply of goods by any unincorporated association or body . . . to a member thereof. It does not follow that the said clause is applicable to supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer, delivery or supply becomes subject of levy of sales tax. Article 286 was also amended. In view of the above discussion, we see no illegality in the impugned circular of the Commissioner, and the submission of the petitioner to the contrary is misconceived. It was also submitted that since the Commissioner has issued a circular, it will bind all the assessing authorities, which is factually not correct. In the case on hand, the reassessment proceedings were initiated earlier in point of time than the issue of the impugned circular. It was rightly pointed by the learned standing counsel that in the writ petition No. 324 of 2005, even the petitioner by not correctly stating the fact, has got the regular assessment proceedings stayed relating to the assessment years 1997-98 and 2000-01 and 2001-02. There was absolutely no justification for getting the regular assessment proceeding stayed through the present writ petition. Lastly, reliance was placed upon a Division Bench decision of this court in the case of S.K. Traders, Modi Nagar, Ghaziabad v. Additional Commissioner, Grade I, Trade Tax, Zone, Ghaziabad [2009] 26 VST 601; [2008] UPTC 329 and it was submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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