STATE OF WEST BENGAL AND OTHERS versus CALCUTTA CLUB LIMITED

Citation: [2016] 6 S.C.R. 748 · Decided: 04-05-2016 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Matter referred to larger bench

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Judgment (excerpt)

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[2016] 6 S.C.R. 748 
STATE OF WEST BENGAL AND OTHERS 
v. 
CALCUTTA CLUB LIMITED 
(Civil Appeal No. 4184 of2009) 
MAY 04, 2016 
[DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.] 
Constitution of India - Art. 366 (29A) - Sale of food and 
drinks to the permanent members of incorporated club or any club 
- Exigibility to sales tax - Whether on the basis of 'doctrine of 
mutuality' such sale would not be exigible to sales tax or after 
insertion of Clause (29A) to Art. 366 of the Constitution by 46'" 
Constitutional amendment 'doctrine of mutuality' has no applicability 
and such sale would amount to deemed sale - Held: In the decisions 
in *Fateh Maidan Club case and **Cosmopolitan Club case (which 
are post 46'" amendment cases) 'doctrine of mutuality' was regarded 
as the base of imposition or non-imposition of sales tax - However, 
these decisions have not clearly expounded as to when a club can 
be held as acting as an agent of its members and thus not be 
construed as a party which sold the goods - The decisions have 
also not addressed the issue as to whether the fact of mutuality 
survives after the 46'" amendment - The issue in the present case, 
therefore, has to be authoritatively decided by a Larger Bench -
West Bengal Sales Tax Act, 1994 - s. 2(30). 
Doctrine - 'Doctrine of mutuality' - Meaning of. in the context 
of Art. 366(29A) of the Constitution of India. 
Referring the matter to Larger Bench, the Court 
HELD: 1. The decisions in *Fateh Maidan Club case and 
**Cosmopolitan Club case have drawn a distinction when a club 
acts as an agent of its members and when the property in the 
goods is sold, i.e., the property in food and drinks is passed to 
the members. In the decisions principle of mutuality has been 
regarded as the base of imposition or non-imposition of sales 
tax. However, the decisions do not elucidate and clearly expound, 
when the club is stated and could be held as acting as an agent of 
the members and, therefore, would not be construed as a party 
748 
STATE OF WEST BENGAL AND OTHERS v. CALCUTTA CLUB 
749 
LIMITED 
which had sold the goods. The agency precept necessarily and 
possibly refers to a third party from whom the goods, i.e., the 
food and drinks had been sourced and provided to by the club 
acting as an agent of the members, to the.said members. These 
are significant and relevant facets which must be elucidated and 
clarified so that there is no ambiguity in appreciating and 
understanding the concepts "acting as an agent of the members" 
or when property is transferred in the goods sold to the members. 
The Court has also not addressed the issue whether the facet of 
mutuality survives after the amendment to the Constitution. 
[Paras 22 and 25) [762-B-E; 764-C] 
2. The controversy that has arisen in the present case has . 
to be authoritatively decided by a larger Bench in view of the law 
laid down in **Cosmopolitan Club case and *Fatelt Maidan Club 
case. Therefore, the matter should be referred to a larger Bench 
to decide the following three questions: (i) Whether the doctrine 
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of mutuality is still applicable to incorporated clubs or any club 
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after the 46'h amendment to Article 366 (29A) of the Constitution 
of India? (ii) Whether the judgment of this Court in ***Young 
Men's Indian Association case still holds the field even after the 
46'h amendment of the Constitution of India; and whether the 
decisions in **Cosmopolitan Club case and *Fatelt Maidan Club 
case 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 46'h 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? [Para 27) [764-H; 765-A-E] 
Hindustan Club Limited v. Additional Commissioner of 
Commercial Taxes and Ors. (1995) 98 STC 347; The 
Automobile Association of Eastern India v. State of West 
Bengal and Ors. (2002) 40 STA 154; Bharat Sanchar 
Nigam Ltd. and Am: v. Union of India and Ors. (2006) 
3 SCC 1:2006 (2) SCR 823; Fateh Maidan Club v. 
Commercial Tax Officer, Hyderabad (2008) 12 VST 598 
(SC); Cosmopolitan Club v. State of Tamil Nadu & Ors. 
(2009) 19 VST 456 (SC); Northern India Caterers 
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SUPREME COURT REPORTS 
[2016) 6 S.C.R. 
(India) Ltd. v. Lt. Gov

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