Social clubs are exempt from tax on liquor sales to members, but any allegations against them must be substantiated by evidence.

ORDER :

Krishnan Ramasamy, J.

These writ petitions have been filed challenging the four impugned orders dated 22.10.2024 and one impugned order dated 23.10.2024 passed by the respondent.

2. The learned Senior counsel appearing for the petitioner would submit that in these cases, the petitioner, being a club, is exempted from payment of tax for the sale of liquors to its members. Due to some suspicion, the respondents had conducted a surprise inspection at the petitioner's premises on 18.07.2023 and subsequently, the show cause notice was issued by the respondent by alleging that the petitioner has sold the liquors to the outsiders, who are other than its members. However, the respondent had not produced any oral or documentary evidences to substantiate the said allegation. For the said show cause notice, a reply was filed by the petitioner, wherein it has been stated that the petitioner had obtained FL-2 license to serve liquor to its members, for which they are exempted from the payment of tax and accordingly, they had sold the liquors only to its members and not to the outsiders. However, without considering the same, the impugned orders came to be passed by the respondent.

3. Further, he had also referred to the judgement of the Hon'ble Supreme Court in State of West Bengal vs. Kolkata Club reported in (2019) 19 SCC 107 , wherein it has been held that the social clubs are not liable to pay any tax for the sale of liquors to its members. Hence, he requests this Court to set aside the impugned orders passed by the respondent.

4. On the other hand, the learned Special Government Pleader and the learned Standing counsel appearing for the respondents had strongly opposed the submissions made by the petitioner and would submit that there is no dispute on the aspect that the petitioner is exempted from the payment of tax for the sale of liquors to its members. However, in this case, the liquors were sold by the petitioner not only to its members but also to the outsiders, who are other than members. The said aspect came to the knowledge of the respondent at the time of inspection conducted by them at petitioner's premises on 18.07.2023. Subsequently, the show cause notice came to be issued by the respondent, for which the reply was filed by the petitioner. However, in the said reply, they had not denied the allegations made by the respondent. Under these circumstances, the impugned order came to be passed on 22.10.2024.

5. In reply, the learned Senior counsel appearing for the petitioner would submit that the allegations made by the respondents were not supported by any oral or documentary evidences and hence, the petitioner was unable to file any detailed reply for those bald allegations. Further, he would contend that in absence of any evidences, the respondents were not supposed to pass the impugned order. Hence, he requests this Court to set aside the said impugned order.

6. Heard the learned counsel for the petitioner and the learned Special Government Pleader and the learned Standing counsel appearing for the respondents and also perused the materials available on record.

7. In these cases, there is no dispute on the aspect that the petitioner, being a social club, had obtained FL-2 licence for selling liquors to its members, for which they are exempted from payment of tax. The said aspect was fairly admitted by both the parties.

8. Though the petitioner is exempted from payment of tax for sale of liquor to its members, it does not mean that the respondent will not have any power to make inspection at the petitioner's premises to verify as to whether the liquors are sold only to the members or not. If there is any su