Apex Court’s bench found no clear authority on the issue of ‘Doctrine of Mutuality’ after 46th Amendment to Indian Constitution, thus matter referred to Larger Bench for decision
Civil Appeal No. 4184 of 2009
Bench: Justice Dipak Misra; Justice Shiva Kirti Singh
Case Brief: In the present case, the appellants here brought challenge against the impugned judgement and order which was passed by the Division Bench of the High Court, wherein that Court had confirmed the findings of the West Bengal Taxation Tribunal and disposed of the appeal, holding that the Calcutta Club Limited- Assessee was not liable for the payment of sales tax under the West Bengal Sales Tax Act, 1994. In the facts of the case, the assessee- Club was issued with the notice by the Assistant Commissioner of Commercial Taxes and informed that it had failed to make payment of sales tax on sale of food and drinks to the permanent members during the quarter ending in 2002. However, Respondent- assessee claimed a declaration to the effect 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. Before Tribunal also a similar prayer were made and also claimed to nullify the action of the revenue threatening to levy tax on supply of food to the permanent members. Thus, Tribunal allowed the respondent’s plea and opined that it is not exigible to tax under the said Act. The Revenue, thus preferred to file writ petition before the High Court, and that Court had concurred the opinion of the Tribunal.
Now this bench observed that Respondent being the registered company it charges and pays sale tax when it sells products to the non-members or guests who accompany the permanent members, but it was pointed that when invoices were raised in respect of supply made in favour of the permanent members, no sales tax is collected. Here, this bench also found that it is transpired in the course of hearing that the learned senior counsels for both the parties/ sides at one point of time, had submitted that this court can remand the matter to the larger bench, following the decision in Cosmopolitan Club … and Fateh Maidan Club.. and it was also seen that in both of such cases Court had observed that the authorities below had not recorded any finding with the regard to the exact relationship or the mutuality facet, which is connected and most relevant issue in this case too. Thus, this bench found that the controversy had arisen to be authoritatively decided by a larger bench. The bench also decided to refer the important issues for the consideration by the larger bench, in which the whether the doctrine of mutuality is still applicable to incorporated clubs after 46th Amendment to Constitution and other issues were referred.
Read the Judgment: State of West Bengal and Others Vs Calcutta Club Limited