Madras High Court
King Club vs The Government Of Tamil Nadu on 13 November, 2019
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
W.P.(MD)Nos.10981 & 912 of 2017
& 1105 to 1110 of 2019
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 13.11.2019
CORAM:
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
AND
THE HONOURABLE MRS.JUSTICE R.THARANI
W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019
and
W.M.P.(MD)Nos.8407 & 8408 of 2017 & 925 to 936 of 2019
W.P.(MD)No.10981 of 2017:
King Club,
Rep. by its Secretary T.Murugesan,
S/o. Thangavel,
No.624, A.Kalaiyamputhur,
Kolumam Road, Neikkaranpatti,
Palani – 624 615.
Dindigul District. : Petitioner
Vs.
1.The Government of Tamil Nadu,
Rep by its Principal Secretary,
Department of Commercial Taxes,
Fort St.George, Chennai-600 009.
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W.P.(MD)Nos.10981 & 912 of 2017
& 1105 to 1110 of 2019
2.The Commissioner of Commercial Taxes,
Commercial Taxes Department,
Ezhilagam, Chepauk,
Chennai-600 005.
3.The Assistant Commissioner (CT-I),
Commercial Taxes Department,
Palani,
Dindigul District.
4.The Commissioner of
Prohibition and Excise Department,
Ezhilagam,
Chennai. : Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution
of India, to issue a Writ of Declaration, declaring that the
definition in Sec.2(15)(ix) to Explanation I and Sec.2(33)(vi) to
Explanation I of Tamil Nadu Value Added Tax Act, 2006 are void,
unconstitutional, inoperative and unenforceable and the
recoveries pursuant thereto are without authority of law and
infringe Article 19(g) and 265 of the Constitution of India.
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W.P.(MD)Nos.10981 & 912 of 2017
& 1105 to 1110 of 2019
For Petitioner : Mr.T.Bashyam
For Respondents : Mr.S.Angappan
Government Advocate
[In All Writ Petitions]
COMMON ORDER
[Common order of this Court was made by T.S.SIVAGNANAM, J] Heard Mr.T.Bashyam, learned counsel appearing for the petitioner and Mr.S.Angappan, learned Government Advocate appearing for the respondents.
2.By consent on either side, these writ petitions are taken up for disposal.
3.These writ petitions have been filed with an identical prayer for a writ of declaration to declare the definition of Sec. 2(15)(ix) to Explanation I and Sec.2(33)(vi) to Explanation I of Tamil Nadu Value Added Tax Act, 2006, as void, unconstitutional, inoperative and unenforceable and the recoveries pursuant thereto are without authority of law and infringe Article 19(g) and 265 of the Constitution of India. 3/10 http://www.judis.nic.in W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019
4.We need not go to decide the prayer sought for in the writ, as very recently the Hon'ble Supreme Court has settled the issue in the case of STATE OF WEST BENGAL & ORS. VS. CALCUTTA CLUB LIMITED, in Civil Appeal No.4184 of 2009, dated 03.10.2019. The issue before the Hon'ble Supreme Court was whether the judgment and order passed by the Division Bench of the Hon'ble Calcutta High Court affirming the view expressed by the West Bengal Taxation Tribunal and disposing of the appeal preferred by the dealer along with other connected appeals holding, inter alia, that the assessee, the Calcutta Club Limited, was not liable for payment of sales tax under the provision of the West Bengal Sales Tax Act, 1994. The Hon'ble Supreme Court by judgment dated 04.05.2016, referred the matter to the Larger Bench framing the following questions for consideration:
“i.Whether the doctrine of mutuality is still application to incorporated clubs or any club after the 46th amendment to Article 366 (29A) of the Constitution of India?
ii.Whether the judgment of this Court in Young Men's Indian Association (supra) still holds 4/10 http://www.judis.nic.in W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019 the field even after the 46th amendment of the Constitution of India; and whether the decisions in Cosmopolitan Club (supra) and Fateh Maidan Club (supra) which remitted the matter applying the doctrine of mutuality after the constitutional amendment can be treated to be stating the correct principle of law?
iii.Whether the 46th amendment to the Constitution by deeming fiction provides that provision of food and beverages by the incorporated clubs to its permanent members constitute sale thereby holding the same to be liable to sales tax?”
5.Subsequently, the matter was placed before the Larger Bench of the Hon'ble Supreme Court, by judgment, which by order dated 03.10.2019 held as follows:
“49.In light of the view that we have taken, it is unnecessary to advert to Shri Dwivedi's arguments that the explanation (1) to Section 2(10) of the West Bengal Sales Tax Act is a stand-alone provision and not an explanation in the classical sense. We, therefore, answer the three questions posed by the Division Bench in State of West Bengal v. Calcutta Club Limited (supra) as follows:
(1)The doctrine of mutuality continues to be applicable to incorporated and unincorporated 5/10 http://www.judis.nic.in W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019 members' clubs after the 46th Amendment adding Article 366(29-A) to the Constitution of India.
(2)Young Men's Indian Association (supra) and other judgments which applied this doctrine continue to hold the field even after the 46th Amendment.
(3)Sub-clause (f) of Article 266(29-A) has no application to members' club.
50.Having gone through the judgment and order of the West Bengal Taxation Tribunal dated 3rd July, 2006 and the impugned Calcutta High Court judgment dated 1st February, 2008, and in view of the answers to the three questions referred to the present Three Judge Bench (as listed hereinabove). We are of the view that no interference is called for in the findings of fact or declaration of law in this case. Accordingly, C.A.No.4184 of 2009 stands dismissed.”
6.In the light of the decision of the Larger Bench upholding the view of the Hon'ble High Court in the Calcutta Club case, the doctrine of mutuality will continue to apply to incorporated and unincorporated members' clubs after the 46th Amendment adding Article 366(29-A) to the Constitution of India. 6/10 http://www.judis.nic.in W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019
7.In the light of the recent decision of the Larger Bench of the Hon'ble Supreme Court, we have to necessarily interfere with the show cause notice issued by the Assessing Officers proposing to levy tax on the writ petitioners. However, we are convinced of the fact that there may be other issues, which may require to be adjudicated by the Assessing Officer and since the prayer sought for in these writ petitions are for declaratory relief, we dispose of these writ petitions by holding that the law laid down by the Hon'ble Supreme Court in the case of Calcutta Club Limited, dated 03.10.2019 holds good and it shall enure in favour of the petitioners' club.
8.Bearing the above legal principles in mind, we permit the petitioners to give suitable reply to the notice issued by the Assistant Commissioner and in the light of the decision of the Hon'ble Supreme Court, the theory of mutuality will apply to both incorporated and unincorporated clubs and this issue should be taken into consideration by the respective Assessing Authorities. 7/10 http://www.judis.nic.in W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019
9.With the above observations, these Writ Petitions are disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
[T.S.S.,J.] & [R.T.,J.]
13.11.2019
Index :Yes/No
Internet :Yes/No
MR
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W.P.(MD)Nos.10981 & 912 of 2017
& 1105 to 1110 of 2019
To
1.The Principal Secretary,
Government of Tamil Nadu,
Department of Commercial Taxes,
Fort St.George, Chennai-600 009.
2.The Commissioner of Commercial Taxes, Commercial Taxes Department, Ezhilagam, Chepauk, Chennai-600 005.
3.The Assistant Commissioner (ST), Commercial Taxes Department, Palani, Dindigul District.
4.The Commissioner of Prohibition and Excise Department, Ezhilagam, Chennai.
9/10 http://www.judis.nic.in W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019 T.S.SIVAGNANAM, J.
AND R.THARANI, J.
MR COMMON ORDER MADE IN W.P.(MD)Nos.10981 & 912 of 2017 & 1105 to 1110 of 2019 13.11.2019 10/10 http://www.judis.nic.in