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2023 (3) TMI 1268 - HC - VAT and Sales TaxClub and Association Services - applicability of doctrine of mutuality - supply of goods/services/amenities/luxuries by the club to its members - supply effected by one person to another for consideration or not - HELD THAT:- In Lotus Club [2018 (10) TMI 452 - KERLA HIGH COURT], the Division Bench essentially followed an earlier division bench judgment of this Court in Trivandrum Club v. Sales Tax Officer (Luxury Tax) [2013 (1) TMI 606 - KERALA HIGH COURT] that unambiguously held that under the KTL Act, the charging section recognised the club as the person liable to luxury tax. The Division Bench therefore recognised the club as the person on whom the incidence of tax fell. Since the later division bench in Lotus Club did not find any cause for doubting the propositions laid down in Trivandrum Club and dismissed the appeal preferred by Lotus Club by following the decision in Trivandrum Club, we cannot read the observations of the Division Bench in Lotus Club as having laid down the proposition that the incidence of tax under the KTL Act is on the person enjoying the luxury and not on the ‘proprietor’ who provides the luxury. Similarly, the observation of the division bench of this court in M/s Madhavaraja Club [2013 (2) TMI 614 - KERALA HIGH COURT] that the doctrine of mutuality is relevant only for the purposes of the Income Tax Act and is not apposite in the context of the KTL Act cannot be seen as laying down the correct law in the light of the subsequent judgment of the Supreme Court in Calcutta Club Ltd [2019 (10) TMI 160 - SUPREME COURT] where the doctrine of mutuality was held applicable in the context of legislations regulating the levy of indirect taxes such as VAT and Service Tax - the principle recognised in Calcutta Club Ltd, that the absence of two distinct persons to a transaction viz. a supplier/provider of goods/ services/ amenities/ luxuries and a recipient thereof, makes the transaction a supply to oneself, which cannot be taxed under the statute, applies equally to the KTL Act which contemplates the levy of tax whenever a luxury is provided by one specified person to another. Matters remanded to the assessing authority for de novo assessment taking note of the observations in this judgment as also the applicability of the mutuality principle to the assessment of members' clubs under the KVAT Act, as declared by the Supreme Court in Calcutta Club Ltd. - petition allowed by way of remand.
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