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A. K. JAYASANKARAN NAMBIAR, MOHAMMED NIAS C. P.
Madhavaraja Club – Appellant
Versus
Commercial Tax Officer (Luxury Tax) – Respondent
JUDGMENT :
A.K. Jayasankaran Nambiar, J.
These O.P (Tax) cases, O.T Revision cases and Writ Appeal are taken up together for consideration since they pertain to the same assessee and involve a common issue regarding the applicability of the principle of mutuality in tax matters.
O.P.(TAX).NO.9/2016; O.P.(TAX).NO.23/2016 & W.A.NO.601/2021:
THE FACTS IN BRIEF:
In O.P(Tax).No.9 of 2016, the petitioner M/s Madhavaraja Club impugns an order of the Kerala Sales Tax Appellate Tribunal that confirmed the demand of penalty on the petitioner under the Kerala Tax on Luxuries Act, 1976 (hereinafter referred to as the ‘KTL Act’ for brevity) for the assessment years 2009-10, 2010-11 and 2011-12. O.P.(Tax).No.23 of 2016 is filed by the same assessee viz. M/s Madhavaraja Club impugning the order of the Appellate Tribunal that conformed penalty on it under the KTL Act for the assessment year 2008-09. W.A.No.601 of 2021 is preferred by M/s Madhavaraja Club aggrieved by the judgment of a learned Single Judge in W.P(C).No.2942/2021 that dismissed the writ petition that impugned the assessment orders and first appellate orders passed against the appellant under the KTL Act for the assessment years 2014-15,
The amendments to the Central and Kerala GST Acts that retrospectively impose taxes on services rendered by clubs to members violate the principle of mutuality, rendering them unconstitutional.
The principle of mutuality exempts clubs from GST, but legislative amendments introduced to tax such transactions do not apply retrospectively.
The principle of mutuality exempts clubs from GST on services provided to members; amendments to tax laws undermining this principle are unconstitutional.
The surplus from clubs' member activities is exempt from tax under the mutuality principle since services provided carry no profit motive.
Incorporated members' clubs are not subject to service tax under mutuality principles; service tax demand against the appellant based on erroneous distinction from P&I Club rejected.
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