New Delhi: In a significant judgment, the Supreme Court has held that supply of food, drinks and beverages by an incorporated members’ club to its permanent members is not liable for sales or service tax. However, in the case of sales tax, both incorporated and un-incorporated members’ clubs are exempt from liability, the Apex Court held.
A Bench of Justices Rohinton F. Nariman, Surya Kant and V. Ramasubramanian reasoned that such supply of goods between a members’ club and its permanent members lack the one essential aspect of a ‘sale’ — a seller and a buyer. Here the legal entity called the club and its members are one and the same. “There is no sale by one person to another for consideration as one cannot sell something to oneself,” Justice Nariman, who wrote the 76-page judgment, pronounced on Thursday and published on Oct.4.
