Case Law Details
State of West Bengal & Ors. Vs Calcutta Club Limited (Supreme Court of India)
1. This Appeal arises out of a reference order by a Division Bench of this Court, reported in State of West Bengal v. Calcutta Club Limited (2017) 5 SCC 356. The facts of Civil Appeal No. 4184 of 2009 are set out in the said reference order as follows:
“2. The facts that are necessary to be stated are that the Assistant Commissioner of Commercial Taxes issued a notice to the respondent Club assessee apprising it that it had failed to make payment of sales tax on sale of food and drinks to the permanent members during the quarter ending 30-6-2002. After the receipt of the notice, the respondent Club submitted a representation and the assessing authority required the respondent Club to appear before it on 18-10-2002. The notice and the communication sent for personal hearing was assailed by the respondent before the Tribunal praying for a declaration that it is not a dealer within the meaning of the Act as there is no sale of any goods in the form of food, refreshments, drinks, etc. by the Club to its permanent members and hence, it is not liable to pay sales tax under the Act. A prayer was also made before the Tribunal for nullifying the action of the Revenue threatening to levy tax on the supply of food to the permanent members.
3. It was contended before the Tribunal that there could be no sale by the respondent Club to its own permanent members, for doctrine of mutuality would come into play. To elaborate, the respondent Club treated itself as the agent of the permanent members in entirety and advanced the stand that no consideration passed for supplies of food, drinks or beverages, etc. and there was only reimbursement of the amount by the members and therefore, no sales tax could be levied.
4. The Tribunal referred to Article 366(29-A) of the Constitution of India, Section 2(30) of the Act, its earlier decision in Hindustan Club Ltd. CCT [Hindustan Club Ltd. v. CCT, (1995) 98 STC 347 (Tri)] , distinguished the authority rendered in Automobile Assn. of Eastern India v. State of W.B. [Automobile Assn. of Eastern India v. State of W.B., (2017) 11 SCC 811 : (2002) 40 STA 154 (SC)] and, eventually, opined as follows:
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INSTANT
This is not the first instance of the kind (case llaw) in which the referred Doctrine, a creature of the common law, – not of a legislation (man -made law)- has been forcefully reiterated and settled by the SC. Noteworthy that, besides the Bangalore Club case, cited and followed, attention needs to be focussed on:
“…………This judgment was also followed by this Court in Income Tax Officer, Mumbai v. Venkatesh Premises Cooperative Society Limited (2018) 15 SCC 37. What is of essence, therefore, in applying this doctrine is that there is no sale transaction between two persons, as one person cannot sell goods to itself.”
For a full fledged independent discussion of the basic proposition founded on the said doctrine, also critique on the FIRST PRINCIPLES, – rather not to shy away from treading the overbeaten track (:,
refer the published Articles @
https://taxguru.in/author/vswami/
4. Housing Association & ‘’Mutuality”- (Supplement II)
5. HOUSING ASSOCIATION -Mutuality Principle- Supplement I
6. “Mutuality’ – Doctrine of- A Critical Study
courtesy
With this ruling GST on Hsg societies will not be applicable