TaxTMI 
TaxTMI 
2016 (6) TMI 476
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....g 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 tr....
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....d Mr. Rana Mukherjee, learned senior counsel along with Mr. Arijit Prasad, learned counsel for the respondent. 7. It is submitted Mr. Vasdev, learned senior counsel that the reasoning of the tribunal as well as the High Court is faulty as there has been erroneous appreciation and application of clause (29A) of Article 366 of the Constitution of India. It is urged by him that after the constitutional amendment, the concept of mutuality and the pronouncements made in that context have no applicability. He has commended us to the decision in Bharat Sanchar Nigam Ltd. and another v. Union of India and others[(2006) 3 SCC 1]. 8. Mr. Mukherjee, learned senior counsel for the respondent, in his turn, would contend that the view expressed by the High Court is absolutely flawless and irreproachable inasmuch as the constitutional amendment does not envision sale by one to himself or for that matter by the agent to those who have engaged it as an agent. It is further argued that the aspect of mutuality still holds the field. For the aforesaid purpose, inspiration has been drawn from the authorities in Fateh Maidan Club v. Commercial Tax Officer, Hyderabad[(2008) 12 VST 598 (SC)] and Cos....
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....ale by the seller, whether the assent of the buyer to such appropriation is prior or subsequent to the appropriation: PROVIDED that where there is a single contract of sale in respect of goods situated in West Bengal as well as in places outside West Bengal, provisions of this Explanation shall apply as if there were a separate contract of sale in respect of the goods situated in West Bengal;." 11. The said provision has been introduced after incorporation of clause (29A) to Article 366 of the Constitution vide 46th amendment, 1982, which reads as follows:- "(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 ....
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....ch seems to be called for on principle in the case of restaurants. No reason has been shown to us for preferring any other. The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need". 14. Earlier the Constitution Bench decision in Joint Commercial Tax Officer v. Young Men's Indian Association[(1970) 1 SCC 462] dealing with the liability of a club to pay sales tax when there is supply of refreshment to its members, had Court concluded thus:- "The essential question, in the present case, is whether the supply of the various preparations by each club to its members involved a transaction of sale within the meaning of the Sale of Goods Act, 1930. The State Legislature being competent to legislate only under Entry 54, List II, of the Seventh Schedule to the Constitution the expression "sale of goods" bears the same meaning which it has in the aforesaid Act. Thus in spite of the definition contained in Section 2(n) read with Explanation I of the Act if there is no transfer of property from one to another there is no sale ....
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....e was challenged in 1993 by the Club by filing a Writ Petition in the High Court which came to be later transferred to the Tribunal. The Tribunal dismissed the matter on merits. That decision of the Tribunal has been confirmed by the impugned judgment. Suffice it to state that in this case there was no determination by the fact finding authorities regarding the relationship between the Club and its members in the matter of supply of food and drinks; that is to say, was the Club acting as an agent of the members or did the property in food and drinks pass from the Club to the members? At this stage it may be mentioned that after the judgment of the High Court dismissing the Writ Petition, the Assessment Order was passed against which the Club has preferred an appeal before the First Appellate Authority which has also dismissed this appeal and as of today the matter, being T.A.No. 17 of 2000, is pending before the Tribunal. In the circumstances, we think it appropriate that the matter should go back to the Tribunal, who will decide, on facts, as to the exact relationship between the parties in the matter of supply by the Club of food and drinks to its members. In ot....
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.... v. CCT[(1967) 20 STC 115 (Mad)]. Sub-clause (e) is the result of CTO v. Young Men's Indian Assn. (Regd.)[ (1970) 1 SCC 462]. Sub-clause (f) is the result of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi (supra) and State of Punjab v. Associated Hotels of India Ltd. (supra)." 18. In addition to the aforesaid paragraphs, learned senior counsel appearing for the appellant has also heavily relied on paragraphs 106 and 107 of the said judgment. They read as follows:- "106. In the background of the above, the history prevailing at the time of the Forty-sixth Amendment and pre-enacting history as seen in the Statement of Objects and Reasons, Article 366(29-A) has to be interpreted. Each fiction by which those six transactions which are not otherwise sales are deemed to be sales independently operates only in that sub-clause. 107. While the true scope of the amendment may be appreciated by overall reading of the entirety of Article 366(29-A), deemed sale under each particular sub-clause has to be determined only within the parameters of the provisions in that sub-clause. One sub-clause cannot be projected into another sub-clause and fiction upon fictio....
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....stress was laid on the decisions of the Supreme Court in CIT v. Royal Western India Turf Club Ltd. (supra), CIT v. Kumbakonam Mutual Benefit Fund Ltd.[ 1964 SCR 204 : AIR 1965 SC 96], Fletcher v. CIT[(1971) 3 ALL ER 1185 : (1972) 2 WLR 14 (PC)]. We do not think it necessary to deal at length with the above decisions except to state the principle discernible from them. We understand these decisions to lay down the broad proposition - that, if the object of the assessee company claiming to be a "mutual concern" or "club", is to carry on a particular business and money is realised both from the members and from non-members, for the same consideration by giving the same or similar facilities to all alike in respect of the one and the same business carried on by it, the dealings as a whole disclose the same profit-earning motive and are alike tainted with commerciality. In other words, the activity carried on by the assessee in such cases, claiming to be a "mutual concern" or "members' club" is a trade or an adventure in the nature of trade and the transactions entered into with the members or non-members alike is a trade/business/transaction and the resultant surplus is certainly profi....
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....The said distinction, it is apparent to us, has been accepted by the two Benches. However, the decisions do not elucidate and clearly expound, when the club is stated and could be held as acting as an agent of the members and, therefore, would not be construed as a party which had sold the goods. The agency precept necessarily and possibly refers to a third party from whom the goods, i.e., the food and drinks had been sourced and provided to by the club acting as an agent of the members, to the said members. These are significant and relevant facets which must be elucidated and clarified so that there is no ambiguity in appreciating and understanding the aforesaid concepts "acting as an agent of the members" or when property is transferred in the goods sold to the members. 23. At this stage, we would appropriately like to refer to some of the arguments raised, to understand the scope and width of the controversy. Learned senior counsel for the State has submitted that the revenue has treated it as a sale under Section 30 and clause (29A) (e) and (f) to Article 366 of the Constitution. Mr. Rana, learned senior counsel appearing for the respondent-assessee would submit that once a....
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....ll the goods to the principal. It only acts as a conduit to pass on the goods and the money whether it is in cash deferred payment or by way of security. 25. Mr. Vasdev has submitted that whether mutuality exists or not is a question of fact, for the contention of the State is assuming the mutuality clause applies then also the respondent assessee is liable to pay tax , for its supply or sale to a member by the club which is a dealer. In Bharat Sanchar Nigam Ltd. (supra), the Court has opined that by virtue of the constitutional amendment, the Parliament has neutralised the rulings of this Court. In Fateh Maidan Club (supra), the three-Judge Bench remanded the matter as there was no determination by the fact-finding authorities as regards the relationship between the club and its members in the matter of supply by the former to the latter of food and drinks and such like. The Court has also observed the relationship would govern the fate of imposition of sales tax. In Cosmopolitan Club (supra), the Court has remarked that there was no determination that the club was acting as an agent of the members or for that matter its property in food and drink has passed from the club to th....