Disposed

Five Star Recreation Club v. The State Tax Officer

Madras HC16 Jun 2022WP(MD)/11625/2022

Case brief

AI extract

What is this about?

The Madurai Bench of the Madras High Court addressed a writ petition challenging pre-assessment notices issued to a recreation club. Relying on the doctrine of mutuality from the Supreme Court, the court held that the club must furnish an explanation. The petition was disposed of directing the respondent to conduct an enquiry with a personal hearing before passing a final order.

What did the court decide?

The writ petition is disposed of with a direction to the petitioner to give explanation for the show-cause notice and to the respondent to conduct an enquiry with a personal hearing before passing a f

Five Star Recreation Club Vs The State Tax… — Pension and Retirement Benefits | Madras HC (2022)

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W.P(MD).No.11625 of 2022

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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 16.06.2022 CORAM

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THE HONOURABLE MR.JUSTICE M.NIRMAL KUMAR W.P(MD).No.11625 of 2022 and W.M.P(MD).Nos.8211 and 8213 of 2022

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Five Star Recreation Club, Rep by its Secretary, M.Pandiyan ... Petitioner

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Vs.

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The State Tax Officer, Office of the State Tax Officer, Sattur-I Assessment Circle, Virudhunagar District. ...Respondent

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Prayer : Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Certiorari, calling for the records pertaining to the impugned pre-assessment notices issued by the respondent in Assessment No.33256420794/2017-2018, 2018-2019, 2019-2020, 2020-2021 and April 2021-2021 September, dated 21.12.2021 and consequential impugned order dated 26.05.2022 in ROC; A3/934/19 and quash the same.

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For Petitioner : Mr.E.Marees Kumar For Respondent : Mr.P.Subbaraj Special Government Pleader

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ORDER

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The petitioner is the Secretary of Five Star Recreation Club has challenged the pre-assessment notices issued by the respondent in Assessment No.33256420794/2017-2018, 2018-2019, 2019-2020, 20202021 and April 2021-2021 September, dated 21.12.2021 and consequential impugned order in ROC; A3/934/19, dated 26.05.2022.

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The primary contention of the petitioner is that the preassessment notices cannot be issued to a recreation club, which has been a settled provision in the case of State of West Bengal Vs Calcutta Club Limited reported in 2019 (9) SCC 107 . The Apex Court clearly held that applying the doctrine of mutuality, any facility avail by the members of the club for food, beverages is not a sale transaction between the club and its members and not eligible to be taxed. It is specifically held that no consideration is passed for supplies of food, drinks or beverages and there was only reimbursement of the amount by the members and therefore, no sales tax could be levied. Thus stressing upon the doctrine of mutuality, https://hcservices.ecourts.gov.in/hcservices/

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W.P(MD).No.11625 of 2022

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the demand of tax from the club and its members has been quashed. This proposition has been consistently followed by this Court in W.P.(MD).Nos.25501 of 2019 and 12115 to 12119 of 2019 etc., batch and recently in W.P(MD).No.9856 of 2022.

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The learned special Government Pleader for the respondent

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submits that following the Supreme Court judgment, this Court had passed several orders. It is only a pre-assessment notice and at the initial stage, if at all the petitioner has any explanation to be offered following the above order, they can approach the Assessment Officer. The Assessment Officer would take appropriate decision by following the guidelines issued by the Apex Court as well as this Court. The Apex Court in the case of State of West Bengal Vs Calcutta Club Limited clearly stated that following the doctrine of mutuality and held that there is no sale transaction between the club and its members.

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In view of the same, this Court passed the similar order, which reads as under:

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“5. Therefore, this Court is of the considered opinion that the petitioner shall give explanation for the show cause notice. This writ petition is disposed of with the following directions:-

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(i) The petitioner is directed to give explanation for the show cause notice.

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(ii) The respondent is directed to conduct an enquiry by granting personal hearing and thereafter pass final orders. Until the final order is passed, the respondent shall not take any step to collect the assessment amount. No costs. Consequently, the connected miscellaneous petitions are closed.”

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With the above direction, the writ petition stands disposed of. No costs. Consequently, connected miscellaneous petitions are closed.

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Assistant Registrar (AE)

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// True Copy //

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/06/2022 Sub Assistant Registrar(CS)

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https://hcservices.ecourts.gov.in/hcservices/

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W.P(MD).No.11625 of 2022

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The State Tax Officer, Office of the State Tax Officer, Sattur-I Assessment Circle, Virudhunagar District.

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+1 CC to M/s.E. MAREESKUMAR, Advocate ( SR-26327[F] dated 17/06/2022 )

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+1 CC to M/s.SPL.GP. ( SR-26437[F] dated 17/06/2022 )

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W.P(MD).No.11625 of 2022 16.06.2022

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RD(24.06.2022) 3P 4C

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https://hcservices.ecourts.gov.in/hcservices/

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Five Star Recreation Club v. The State Tax Officer

Case brief

What is this about?

What did the court decide?

Five Star Recreation Club v. The State Tax Officer

Case brief

What is this about?

What did the court decide?

What the court decided

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