STATE OF WEST BENGAL Vs. CALCUTTA CLUB LIMITED

JUDGEMENT

(1.) BY this application the State of West Bengal has impugned the judgement and order dated 3rd July, 2006 passed by the learned Taxation Tribunal, West Bengal whereby and whereunder several matters being case Nos. RN 17 of 2003, RN 46 of 2004, RN 71,72, 73,120,121, 122 of 2003 filed by Calcutta Club Limited and Hindustan club Limited respectively were disposed of as it was noted by the learned tribunal that the legal controversy 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 our view, Hindustan Club Limited should have been added as party respondent when this judgement impugned has decided the matter filed by the said Club also. Therefore, we record that this judgement will be applicable only in case of Calcutta Club Limited.

(2.) THE undisputed fact is set out hereunder : the Calcutta Club Limited filed the above application before the learned Tribunal praying for declaration that the said Club is not a dealer within the meaning of the West Bengal Sales Tax Act, 1994 as there is no sale of any goods in the form of food, refreshment and drinks by the Club to its permanent 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 quashing and/or setting aside the letters of demand and for nullifying action of the respondents threatening to levy tax on the supplies made to the permanent members.

(3.) THE said Club was not paying sales tax nor was registered as a dealer before the Sales Tax Act, 1994 came into force and even thereafter for sometime. Being encouraged by the judgement and order dated 11th May, 1994 of the Hon'ble Supreme Court in the case of automobile Association of Eastern India, the State authority has started taking action to bring this Club within the purview of the provision of sales Tax Act, 1994 contending that by virtue of definition given in the section 2 (30) of the West Bengal Sales Tax Act, 1994 (hereinafter referred to as the Act, 1994) which is incorporated almost adopting the language mentioned in Article 366 sub Clauses (e) and (f) Clause 29a of the Constitution of India. According to the State, in view of the language mentioned in the aforesaid section read with the aforesaid article of the Constitution of India now the Club whether incorporated or unincorporated, will have to pay tax for supply of foods, drinks, beverages to its members permanent or temporary treating the same being inclusive and/or deemed definition of sale. The learned Tribunal after considering the argument of the State as well as the Club held that there is no substantial change of the definition of sale in the new act though language and phraseology has been changed and/or brought into the statute book borrowing the language of the Article 366 of the constitution of India. The learned Tribunal held that even the language mentioned in Article 366 Clause 29a (e) and (f) of the Constitution of india which is the source of the present definition of sale as mentioned in the said Act does not obliterate and eliminate the concept of mutuality and/or reciprocity of the members of incorporated Club vis-a-vis its permanent members. In substance, the learned Tribunal held that there has been no sale which requires consideration, in the Club as because there has been an identity between the members and the Club which is an alter ego of the members collectively. It is further observed by the learned Tribunal that payment made by the members to the Club is in real sense payment to themselves who are the principals and the Club, though being a separate entity, is an agent and instrument for collection of such payment. According to the learned Tribunal consideration either making payment in cash or otherwise is germane to constitute a transaction being sale. Accordingly, the learned Tribunal allowed the application and granted relief.