|
Calcutta Club ruling - whether binding on GST and during negative list regime?
Calcutta Club ruling,continued
In continuation of the above Article on Calcutta club I have a few more important observations to make.
The Honble SC has disposed off the case, vide points E,F and G, that too only with reference to the limited aspect of Article 366 29 A f which deals with the solitary case of
f. a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink whether or not intoxicating, where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made.
The relevant points of E, F and G are also reproduced for a close look and appreciation.
E. The doctrine of mutuality continues to be applicable to incorporated and unincorporated members clubs after the 46 th Amendment adding Article 366 29 A to the Constitution of India. There is no intention to do away with mutuality unlike in the case of certain provisions of the Income tax Act involving mutual insurance business. Para 45 of the judgment
F. Young Mens Indian Association and other judgments which applied this doctrine continue to hold the field even after the 46 th Amendment.
G. Sub clause f of Article 366 29A has no application to members clubs
Even while saying so, it restricts the levy in the case of such supplies of food and drinks by the club to its members only and upholds the levy of such supplies made to outsiders, having been approved by the 46th Amendment of such composite supply of food and drinks.
It can be well understood by referring to the relevant point D of the said judgment itself, reproduced below
D. Members clubs are an example of a mutual undertaking, but, where a club extends facilities to non members, to that extent the element of mutuality is wanting.
The large body of the issue of taxability of items covered under Article 366 29A f, namely a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration is not covered under the subject judgment under discussion.
It is needless to say or add therefore that the same with reference to supply of services, by the UAOP to its members, remains equally not dealt or touched by the Honble SC, in the cited judgment above.
It is important that what is not sought to be dealt with in the said judgment is taken clear note of and the relevant portion of the subject matter of transaction between an unincorporated association of persons UAOP and its members and its taxability, is precisely the subject matter not dealt with therein and therefore clearly lying outside the scope of the above judgment.
In respect of the same, namely transactions between UAOP and its members as referred to under Article 366 29A f with reference to goods and as also services as clarified by the Board vide its circulars in the post negative list regime of Service Tax from 1.7.2012, with reference to services and during the Post GST regime from 1.7.2017, with reference to both goods and services, in tune with the relevant amendment of the Act provisions of the Finance Act, 2012 and the CGST Act,2017, will be taxable under the respective Acts for the period commencing from 1.7.2012, is once again the view of the Author, in the light of the above discussion.
K.Srinivasan
Author
Sonal Arora
22/10/2019
 |
