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Judgement Analysis: State of West Bengal vs Calcutta Club limited
By the application, the state of West Bengal has challenged the judgement and order dated July 3, 2006, reported as Calcutta Club limited deputy Commissioner of Commercial taxes and Hindustan Club Ltd v Commercial Tax officer (2007) 10 VST 385 (WBTT) Passed by the learned Taxation Tribunal, West Bengal whereby and where under several matters being case Nos RN 17of 2003, RN 46 of 2004, RN 71,72,73,120,121 and 122 of 2003 filed by the Calcutta Club Limited and Hindustan Club limited, respectively, were disposed of as it was noted by the learned Tribunal that the legal disputes involved in these matters are identical and similar
However, The present application has been filed against Calcutta Club Limited and not against Hindustan Club limited. In view, Hindustan Club limited should have been added as party respondent when this judgement challenged has decided the matter filed by the said club. Therefore we record that this judgement will be applicable only in the case of Calcutta Club Limited
The undisputed fact is set out thereunder
The Calcutta Club limited filed put the above application before the learned Tribunal praying for a declaration that the above-mentioned club is not a "dealer " within the meaning of the West Bengal Sales Tax Act, 1994 as there is no sale of goods in the form of food, drinks and refreshment by the club to its regular members and as such the club, the applicant is not liable to pay sales tax thereon under the west Bengal Sales-tax Act, 1994 and for cancelling or setting aside the letters of demand and for making it avoidable action of the respondents threatening to levy a tax on the supplies made it to the regular members.
The above-mentioned club was not paying sales tax nor it was registered as a dealer before the Sales Tax Act, 1994 came into force and even thereafter for some time. Being encouraged by the judgement and order dated on May 11, 1994, of the honourable Supreme Court in the case of Automobile Association of Eastern India vs State of West Bengal. The state authority has started taking steps to bring the club within the purview of the provision of the Sales Tax Act, 1994 contending that by the goodness of definition given in Section 2(30) of the West Bengal Sales Tax Act, 1994. Which is assimilated almost adopting the language stated in Article 366.
According to the state, given of the language stated in the above-said article of the constitution of India now the club whether assimilated or not assimilated will have to pay tax for the supply of food, drinks, beverages to its members permanent or regular treating the same being inclusive or deemed definition of "sale"
The Tribunal after considering the argument of the State as well as the club held that there is no considerable change of the definition of "sale" in the new Act through language has been changed.
Mr L.K Gupta the learned senior Advocate coming with Mrs Seba Ray in support of this application contends that after the constitutional changes and given the definition mentioned in 1994 Act and particularly by the goodness of clause(f) of Article 366 (29A) of the constitution of India.
Mr R.N Bajoria the learned senior Advocate, coming with Mr.J.P Khaitan and Mr BK Roy on behalf of the Calcutta Club Limited submits that the judgement of the learned Tribunal is well- reasoned and taken into consideration dealing with all the laws on the subject concerning the fact of the existence of mutuality and reciprocity between the members and the club itself through an incorporated one.
He further submits that sub-clause(f) suggests supply for consideration. There can be no supply by an agent to a principal of any consideration thereof. The agent acts for and on account of his principal and not oppose him. The principal cannot supply to himself or pay consideration to himself as a servant making a purchase for the master and agent buying raw materials for the principal.
In the case of Automobile Association of Bengal v Commissioner of income tax, the same principle was repeated by the court that the principle of mutuality should come into play in case of members club and there must be and their mist he similarity between the contributors to the fund and the participants therein this view has been followed in every case.
Article 366 Clause (29A) sub-clause (e) and (f) and also the explanation of Section 2 of (30) of 1994 Act
(e) a tax on the supply of goods in any unincorporated organization or body of persons to a member thereof for cash, deferred payment or other valuable consideration
(f) a tax on supply by way of or as a part of any service or in any other matter what so ever of goods, being food or any other article for human use or any drink
The constitutional amendment was incorporated in the State Tamil Nadu as well as the State of Andhra Pradesh there has been two amendment definition of "sale" adopting in substance with the constitutional provision.
Mr Bajoria has rightly contended that by going with the language in the definition of "sale" in the Act as well as the amendment provision of the Constitution. The concept of mutuality is not destroyed. The provision of the Act would have been appropriate and the mutuality concept could have been said to have destroyed.
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