Sales tax on members' supplies by unincorporated associations upheld after the Forty-sixth Amendment and mutuality limitation.

Registration under the Societies Registration Act does not by itself create incorporation, so a registered society may remain an unincorporated association for sales tax purposes. After the Forty-sixth Amendment, supply of goods by an unincorporated association to its members for valuable consideration falls within the expanded concept of sale and is taxable where the statute so provides. A claimed contrary administrative letter cannot defeat the correct levy, because Article 14 does not require repetition of an unlawful tax benefit granted to others. The petitioner's challenge to taxability therefore failed, and the tax position was upheld.

---

---

Issues: (i) whether the petitioner society was an incorporated body or an unincorporated association for the purpose of sales tax liability; (ii) whether supply of goods by the petitioner to its members for valuable consideration was taxable after the Forty-sixth Amendment; (iii) whether discriminatory treatment based on an alleged contrary administrative letter could prevent levy of tax.

Issue (i): whether the petitioner society was an incorporated body or an unincorporated association for the purpose of sales tax liability.

Analysis: Registration under the Societies Registration Act does not by itself confer incorporation. The statutory scheme provided for registration, management, holding of property and litigation through a committee or authorised officer, but did not contain words showing an intention to incorporate. The petitioner therefore fell within the category of an unincorporated association.

Conclusion: The petitioner was an unincorporated association and not an incorporated body.

Issue (ii): whether supply of goods by the petitioner to its members for valuable consideration was taxable after the Forty-sixth Amendment.

Analysis: Clause 29-A of Article 366 expanded the concept of sale and specifically brought within tax net supply of goods by an unincorporated association to its members for cash, deferred payment or other valuable consideration. The earlier doctrine of mutuality and the pre-amendment understanding of sale no longer controlled such transactions. The statutory levy under Section 2(n)(v) was consistent with the constitutional amendment.

Conclusion: The supply made by the petitioner to its members was exigible to sales tax.

Issue (iii): whether discriminatory treatment based on an alleged contrary administrative letter could prevent levy of tax.

Analysis: An erroneous order or administrative view in favour of another person cannot be relied upon to compel repetition of illegality. Equality under Article 14 does not permit perpetuation of an unlawful benefit, and the impugned letter could not override the correct legal position or bind the taxing authority.

Conclusion: The petitioner could not claim exemption or relief on the basis of alleged discrimination.

Final Conclusion: The challenge to the taxability of the petitioner's supplies failed, and the Tribunal's order was left undisturbed.

Ratio Decidendi: After the Forty-sixth Amendment, supply of goods by an unincorporated association to its members for valuable consideration is taxable where the statute so provides, and Article 14 cannot be invoked to perpetuate an illegal tax benefit granted to others.

---