P.C.BANERJI - (1.) THIS is an application under section 8 of the West Bengal Taxation Tribunal Act, 1987, filed by the Calcutta Swimming Club and its Secretary challenging the notices of assessment for 5 years from April 1, 1984 to March 31, 1989, issued by the Commercial Tax Officer, Esplanade charge.
(2.) THE case of the applicant is that the Calcutta Swimming Club is an unincorporated club constituted by its members for rendering services to them from its premises situated as 1, Strand Road, Calcutta-1. The club is not a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941, (hereinafter called "the Act") and is not obliged to get itself registered under the provisions of the said Act. The club does not sell any goods but merely provides goods to its members acting as their agent. It is, therefore, not liable to pay any tax under the Act as its transactions do not constitute sale within the meaning of the Act. The Legislature did not seek to treat the provision of food, drinks, etc. , by the club to its members as a sale where the club was merely acting as an agent of its members. In case the transaction is in the nature of sale as defined in the Act then only the club would be liable to pay tax in terms of explanation 1 of section 2 (c) of the Act. But if there is no sale at all and the transaction is one between the agent and its principal then the Constitution (Forty-sixty Amendment) Act, 1982, does not seek to make such transaction one of sale. As an unincorporated club has got no separate existence from that of its members and as the definition of "sale" in the Act does not include such a transaction as deemed sale, the club cannot be held to be a dealer. The Forty-sixty Amendment of the Constitution by inserting clause (29a) in article 366 widened the scope and ambit of entry 54 of the State List, namely, "tax on sale or purchase of goods". It, therefore, conferred legislative competence on the State Legislature to levy "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". But the Legislature of the State, though being competent, did not make suitable provision in the Act for making such supply as deemed sale. In view of this position no tax can be levied on the supply of goods by the applicant, which is an unincorporated club. The applicant, therefore, challenged the competence of the respondents to assess tax and prayed that the impugned notices in form VI for assessment for the years in question be quashed. The respondents have opposed the application on the ground that the applicant is a dealer and the transaction between the said club and its members constitutes sale and that the club is not acting merely as an agent of its members as claimed by the applicant. The respondents have claimed that even prior to the Forty-sixty Amendment of the Constitution the definition of the word "dealer" included within its ambit all types of clubs whether incorporated or unincorporated. The taxes, however, were not realised from the unincorporated clubs in view of some legal constraints but with the passing of the said Forty-sixth Amendment such constraints were removed with the result that the taxability of the sales made by made by such unincorporated clubs to its members has now been revived from a state of suspended animation. The respondents have controverted the contention of the applicant that in order to bring the unincorporated clubs within the net of taxation the State Legislature is required to adopt the said Constitutional amendment in so far as it relates to the imposition tax on such clubs. They have claimed that since the provision to tax such clubs was already there in the statute from before the passing of the said Constitutional amendment the said provision which has been lying in a state of dormancy, became operative after the said amendment. Whatever infirmities were there with regard to legislative competence were fully cured and there was no question of any fresh adoption of the constitutional amendment in the State Act. In view of this position they averred that the applicant became a dealer in terms of the definition of the said expression in the Act.
(3.) THE main question for determination in this case in whether an unincorporated club while supplying goods to its members is carrying on the business of selling and is a dealer in terms of section 2 (c) read with section 2 (g) of the Act.;