Mutuality in members' clubs survives the Forty-sixth Amendment, defeating tax notices based only on club-member transactions.

The doctrine of mutuality was reaffirmed as applicable to incorporated and unincorporated members' clubs after the Forty-sixth Amendment, following the Supreme Court's ruling in Calcutta Club Limited. On that basis, the Court held that the deeming fiction in Article 366(29-A) does not extend to members' clubs and that notices premised solely on treating club-member transactions as taxable sales could not be sustained. The Court left open examination of any other issues by the assessing authority and permitted the clubs to respond to the notices, with the challenged notices set aside to that extent.

---

---

Issues: Whether the doctrine of mutuality continues to apply to incorporated and unincorporated members' clubs after the Forty-sixth Amendment, and whether tax notices premised on the contrary view could be sustained.

Analysis: The judgment followed the law declared by the Supreme Court in Calcutta Club Limited, which held that the doctrine of mutuality survives the Forty-sixth Amendment and that the deeming provision in Article 366(29-A) does not apply to members' clubs. On that basis, the Court held that the impugned notices proposing to levy tax on the clubs could not stand merely on the footing that transactions between a club and its members amounted to taxable sales. The Court also noted that other issues, if any, could still be examined by the assessing authority, and therefore permitted the petitioners to respond to the notices.

Conclusion: The doctrine of mutuality was held to continue to apply to members' clubs, and the writ petitions were disposed of in favour of the petitioners insofar as the challenged notices were concerned.

---