Madras High Court
Friends Welfare Centre vs The Government Of Tamil Nadu on 8 July, 2021
W.P.(MD)No.11344 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 08.07.2021
CORAM:
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MRS.JUSTICE S.ANANTHI
W.P.(MD)No.11344 of 2021
and
W.M.P.(MD).Nos.8889 and 8891 of 2021
Friends Welfare Centre,
Rep. by its Secretary P.Jeyaraj
S/o.Ponnaiya,
No.297A, Food In Fun Complex,
Kodaikanal Road,
Palani-624 601,
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.
2.The Commissioner of Commercial Taxes,
Commercial Taxes Department,
Ezhilagam, Chepauk,
Chennai-600 005.
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W.P.(MD)No.11344 of 2021
3.The Assistant Commissioner(CT),
Palani-1, Assessment Circle,
O/o.The Assistant Commissioner (CT),
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 for issuance of 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.
For Petitioner : Mr.T.Bashyam
For Respondents : Mr.A.K.Manickam,
Standing Counsel for Govt.
ORDER
************
[Order of the Court was made by T.S.SIVAGNANAM, J.]
With the consent on either side, this Writ Petition itself is
taken up for final disposal.
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W.P.(MD)No.11344 of 2021
2.Heard Mr.T.Bashyam, learned Counsel appearing for the
petitioner and Mr.A.K.Manickam, learned Standing Counsel for
Government appearing for the respondents.
3.The petitioner prays for 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.
4.Identical prayer was considered by the Division Bench of
this Court to which one of us [T.S.SIVAGNANAM.J.,] is a party in
W.P.(MD)No.23012 and 23030 of 2019 dated 01.11.2019. The
order reads as follows:
“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 null and 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)No.11344 of 2021
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 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
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W.P.(MD)No.11344 of 2021
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 members' clubs after the 46th
Amendment adding Article 366(29-A) to the
Constitution of India.
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W.P.(MD)No.11344 of 2021
(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.
7.In the light of the recent decision of the
Larger Bench of the Hon'ble Supreme Court, we
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W.P.(MD)No.11344 of 2021
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
petitioner's 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.
9.With the above observations, these Writ
Petitions are disposed of. No costs. Consequently,
the connected miscellaneous petitions are closed.”
5.Following the above order, this writ petition is also disposed
of on the same terms as mentioned in the order dated 01.11.2019.
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W.P.(MD)No.11344 of 2021
However, there shall be no order as to costs. Consequently,
connected miscellaneous petitions are closed.
[T.S.S., J.] & [S.A.I., J.]
08.07.2021
Index : Yes / No
Internet: Yes / No
MR
Note: In view of the present lock down owing to
COVID-19 pandemic, a web copy of the order
may be utilized for official purposes, but,
ensuring that the copy of the order that is
presented is the correct copy, shall be the
responsibility of the advocate/litigant concerned.
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W.P.(MD)No.11344 of 2021
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(CT),
Palani-1, Assessment Circle,
O/o.The Assistant Commissioner (CT),
Palani,
Dindigul District.
4.The Commissioner of Prohibition and Excise Department,
Ezhilagam,
Chennai.
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W.P.(MD)No.11344 of 2021
T.S.SIVAGNANAM., J.
and
S.ANANTHI., J.
MR
ORDER MADE IN
W.P.(MD)No.11344 of 2021
08.07.2021
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