Doctrine of mutuality protects members' club transactions from sales tax treatment despite the 46th Amendment.

The doctrine of mutuality continues to apply to incorporated and unincorporated members' clubs even after the 46th Amendment to Article 366(29-A), and the constitutional deeming fiction does not extend to such club transactions. On that basis, dealings between a club and its members cannot be treated as taxable sales merely by reason of club incorporation or membership structure, so the proposed tax recovery on that footing could not be sustained. The writ petitions were disposed of, while the assessing authority was left free to consider any other issues in accordance with law.

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Issues: Whether the doctrine of mutuality continues to apply to incorporated and unincorporated members' clubs after the 46th Amendment to Article 366(29-A) of the Constitution of India, and whether the impugned provisions and consequential tax recovery could be sustained against such clubs.

Analysis: The decision of the Larger Bench of the Supreme Court in Calcutta Club Limited settled that the doctrine of mutuality continues to apply to incorporated and unincorporated members' clubs even after the 46th Amendment, that earlier authorities on the subject continue to hold the field, and that the deeming fiction in Article 366(29-A) does not apply to members' clubs. In view of that binding ruling, the proposed levy on club transactions could not proceed on the footing that dealings between a club and its members constituted taxable sales. The writ petitions were therefore disposed of while leaving it open to the assessing authority to consider other issues, if any, in accordance with law.

Conclusion: The challenge succeeded to the extent that the doctrine of mutuality was held applicable to the petitioners' clubs, and the impugned tax recovery based on treating club dealings as taxable sales could not be sustained.

Ratio Decidendi: The doctrine of mutuality continues to govern transactions of incorporated and unincorporated members' clubs notwithstanding the 46th Amendment, and such transactions are not brought within sales tax merely by the constitutional deeming fiction.

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