RANCHI GYMKHANA CLUB v. STATE OF BIHAR — 1997 DIGILAW 450 (PAT)

JUDGMENT AFTAB ALAM, J. 1. Petitioner No. 1 is a society registered under the Societies Registration Act, 1860 in the name and style of, "Ranchi Gymkhana Club"; petitioner No. 2 one of the members of the society, describes himself as its Chief Administrator. The society provides certain facilities and means of recreation and supplies food, refreshments and beverages to the different categories of its members in the manner normally associated with a members' club. 2. In this writ petition the two petitioners seek a declaration that the society is not a dealer within the meaning of the Bihar Finance Act, 1981 (hereinafter referred to as "the Act") and the supply of the food, refreshments and beverages to its members does not constitute sale so as to attract the levy of sales tax under the provisions of the Act. They also seek quashing of orders dated August 15, 1982 and October 18, 1995 passed, at the first instance, by the Assistant Commissioner, Commercial Taxes and, then in revision, by Joint Commissioner, Commercial Taxes, rejecting the petitioners' claim that the supply of food, refreshments and beverages to the different categories of the members of the society did not attract the provisions of the Act. 3. The facts and circumstances leading to the filing of this writ petition can be simply stated thus : On August 23, 1991 the Deputy Commissioner, Commercial Taxes, issued a notice to petitioner No. 1 under section 17(5) of the Act. In the notice, it was pointed out that though engaged in the sale of food articles and alcoholic beverages, petitioner No. 1 had neither got itself registered nor was it making payment of sales tax as provided under the Act. It was accordingly asked to produced its books of account and the records relating to the sales and purchases made by it on a date specified in the notice. In response to the notice, a petition was filed on behalf of petitioner No. 1 making a prayer to drop the proceedings initiated under section 17(5) of the Act on the plea that the supply of food, refreshments and beverages made by the society to its members did not attract the provisions of the Act. In response to the notice, a petition was filed on behalf of petitioner No. 1 making a prayer to drop the proceedings initiated under section 17(5) of the Act on the plea that the supply of food, refreshments and beverages made by the society to its members did not attract the provisions of the Act. By order dated August 15, 1992 (annexure 8), the Assistant Commissioner, Commercial Taxes, rejected the petition filed on behalf of petitioner No. 1 and turned down the prayer to recall the notice, holding that petitioner No. 1 was a dealer within the meaning of the Act. Against this order, a revision was filed under section 46(2)(a) of the Act on behalf of the petitioners which was finally dismissed by order dated October 18, 1995 (annexure 13) passed by the Joint Commissioner, Commercial Taxes. This writ petition was then filed in this Court seeking the reliefs as noted above. 4. During the pendency of this writ petition, the respondent authorities passed ex parte orders of assessment and issued demand notices for tax periods 1990-91 to 1994-95. The authorities also gave a notice dated March 20, 1996 under section 27 of the Act to the Branch Manager, Indian Overseas Bank, Ranchi, where the petitioners had their account intimating that the account was put under attachment and asking him to pay from the petitioners' account a sum of Rs. 23,44,292 payable by petitioner No. 1 as arrears of sales tax. The order(s) of assessment and the demand notices were brought on record and were sought to be challenged by the petitioners by filing an amendment petition in this case. The demand notice(s), and the notice given to the Branch Manager of the bank remain unenforced in compliance with some interim observations/directions given by this Court on May 3, 1996. 5. At this stage, it needs to be clarified that at the time of hearing of the case, the submissions on behalf of the petitioners were confined to the basic objection that petitioner No. 1 was not a dealer within the meaning of the Act and the supplies of food, refreshments and beverages made by it to its members did not constitute sale; no arguments were made on the merits of the assessment order. This was for the simple reason that in case the petitioners succeeded in their main challenge, that would be the end of the matter but in case their main plea was unacceptable to this Court and in case this Court came to the conclusion that the petitioners were covered by the provisions of the Act, it would be up to the petitioners to challenge the assessment order(s)/demand notices and to seek appropriate reliefs within the four corners of the Act. 6. Mr. B. Poddar, learned counsel appearing for the petitioners, raised two points in support of the petitioners' claim that they were under no liability to pay sales tax. Relying upon the Supreme Court decision in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386, Mr. Poddar first submitted that the supply of food and beverages in a club did not constitute sale but amounted to "ministering to a bodily want or to the satisfaction of the human need" and, therefore, the service of meals and drinks by petitioner No. 1 to its members was not taxable under the Act. Learned counsel secondly submitted, and in fact this was the main plank of the petitioners' case, that even though the supply of food articles and drinks by a hotel or restaurant to its customers may normally constitute sale within the meaning of the Act, it will not do so in the case of petitioner No. 1. According to the learned counsel, petitioner No. 1 is purely a members' club through the agency and instrumentality of which its members alone are provided certain facilities including service of meals and drinks and in making the supplies of meals and drinks petitioner No. 1 merely acted as an agent of its members. In those supplies, therefore, there was no element of sale for the simple reason that there could be no sale between an agent and its principal. The learned counsel further submitted that if it was found that petitioner No. 1 was acting as an agent of its members, there could be no sale so far as its transactions with its members were concerned and petitioner No. 1 would, therefore, be not liable to pay any sales tax. 7. It is clearly the second point raised by Mr. 7. It is clearly the second point raised by Mr. Poddar that calls for some attention by this Court because after the Forty-sixth Amendment of the Constitution there is hardly anything left in the first point that supply of food (made by a hotel, restaurant or club) was part of services rendered and it could not be held to be a transaction of sale. A brief outline of the constitutional amendment and the consequent amendments in the State Finance Act would be sufficient to reject the first submission made on behalf of the petitioners. 8. It may be noted that the decisions of the Supreme Court in (i) State of Himachal Pradesh v. Associated Hotels of India Ltd. [1972] 29 STC 474 and (ii) in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 led to the enactment of the Constitution (Forty-sixth Amendment) Act, 1982, section 4 of which introduced clause (29A) in article 366 of the Constitution. The newly introduced clause (29A) provided tax on the sale or purchase of goods included, amongst others, vide sub-clause (e) : "a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration." And vide sub-clause (f) of clause (29A) : "a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration." 9. Following the constitutional amendment the definitions of "dealer" and "sale" as provided in sub-sections (e) and (t) respectively of section 2 of the Bihar Finance Act, 1981 were amended and recast by the Bihar Finance Act, 1984. Following the constitutional amendment the definitions of "dealer" and "sale" as provided in sub-sections (e) and (t) respectively of section 2 of the Bihar Finance Act, 1981 were amended and recast by the Bihar Finance Act, 1984. After their amendments, the definitions of "dealer" under section 2(e) and "sale" under section 2(t) in so far as they are relevant for this case are as follows : "2(e) 'dealer' means any person who carries on (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods, directly or indirectly, for cash, or for deferred payment, or for commission, remuneration or other valuable consideration and includes - (i) a local authority, a body corporate, a company, any co-operative society or other society, club, firm, Hindu undivided family or other association of persons which carries on such business; (ii)............. (iii)............ Explanation I.......... Explanation II......... 2(t) 'sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration but does not include a mortgage or hypothecation of or a charge or pledge on goods, and includes - (i) to (iv)............... (v) supply of goods made by a society, trust, club or association, whether incorporated or not, to its members or otherwise; (vi) supply by way of or as part of any service or in any other manner, whatsoever, of goods being food or any drink whether or not intoxicating; And such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply, and all grammatical variation and cognate expression shall be construed accordingly. And............ Explanation I............. Explanation II............" 10. In view of introduction of clause (29A) in article 366 of the Constitution by the Constitution (Forty-sixth Amendment) Act, 1982, followed by the amendments introduced in the definitions of "dealer" and "sale" in the Bihar Finance Act, 1981 it would be futile to contend that supply of food articles and beverages does not constitute "sale" within the meaning of the Act. 11. This clears the deck to examine Mr. Poddar's main argument in support of the petitioners' claim. Mr. Poddar submitted that sub-clause (e) of article 366(29A) related to an unincorporated club and did not relate to an incorporated club like petitioner No. 1. 11. This clears the deck to examine Mr. Poddar's main argument in support of the petitioners' claim. Mr. Poddar submitted that sub-clause (e) of article 366(29A) related to an unincorporated club and did not relate to an incorporated club like petitioner No. 1. He further submitted that though sub-clause (f) of article 366(29A) of the Constitution followed by the corresponding amendments in the Bihar Finance Act, 1981 brought the supply of food articles and drinks within the meaning of sale, it did not override the application of the law of agency in the case of a members' club as distinct from a proprietary club. He further submitted that petitioner No. 1 was a members' club. It operated on the principle of agency and its relationship with its members, of all categories, was based on the doctrine of mutuality. Having regard to its nature as a members' club the supply of food articles and beverages made by it to its members did not constitute sale notwithstanding the definition of "dealer" and "sale" as provided in the Bihar Finance Act, 1981 following the introduction of sub-clause (f) of article 366(29A). The submission advanced by Mr. Poddar clearly involves two questions : first, whether a given club (in the present case petitioner No. 1) is in reality a members' club and whether it operates on the principle of agency and its relationship with its individual members, of all categories, is based on the doctrine of mutuality ? This question must first be decided in the light of the provisions of the memorandum of association, rules and regulations and the bye-laws constituting the club and governing its relationship with the individual members. In case this question is answered in the petitioners' favour, that is to say, if it is found that petitioner No. 1 was a members' club and operated on the principle of agency, the second question would be whether in that case the supply of food and beverages made by it to its members would not constitute sale notwithstanding the legal functions created by sub-clauses (e) (the definition of "dealer") and (t) (the definition of "sale") of section 2 of the Act ? This would be a question of law to be answered on an interpretation of the provisions of the Act read with sub-clauses (e) and (f) of article 366(29A) of the Constitution. 12. This would be a question of law to be answered on an interpretation of the provisions of the Act read with sub-clauses (e) and (f) of article 366(29A) of the Constitution. 12. The argument plainly proceeds on the basis that prior to the 46th Amendment of the Constitution there were two separate reasons for holding that supply of food, refreshments and beverages by a members' club to its members was not taxable. The first reason which applied, in addition to clubs, was based on the principle that there was no sale when food and drinks were supplied to guests residing in a hotel or eating at a restaurant, the supply of meals could not be identified as a transaction of sale as it was essentially in the nature of service provided to the guests by the hotel/restaurant. This principle was upheld by the Supreme Court in State of Himachal Pradesh v. Associated Hotels of India Limited [1972] 29 STC 474 and in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 where it was observed as follows : "It has already been noticed that in regard to hotels this Court has in Associated Hotels of India Limited [1972] 29 STC 474 (SC) adopted the concept of the English law that there is no sale when food and drink are supplied to guests residing in the hotel. The court pointed out that the supply of meals was essentially in the nature of a service provided to them and could not be identified as a transaction of sale. The court declined to accept the proposition that the revenue was entitled to split-up the transaction into two parts, one of service and the other of sale of food-stuffs. If that be true in respect of hotels, a similar approach seems to be called for on principle in the case of restaurants. No reason has been shown to us for preferring any other. The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need. What has been said in Electa B. Merrill LRA 1915-B 481 appears to be as much applicable to restaurants in India as it does elsewhere. What has been said in Electa B. Merrill LRA 1915-B 481 appears to be as much applicable to restaurants in India as it does elsewhere. In has not been proved that any different view should be taken, either at common law, in usage or under statute." 13. The second reason which applied only in case of a members' club was based on the principle that a members' club, even though incorporated, in making supply of food, refreshments and beverages to its members merely acted as their agent and there being no transfer of property in the goods supplied to the members, there could be no question of any sale taking place. This principle was upheld and enunciated by the Supreme Court in the Joint Commercial Tax Officer v. Young Men's Indian Association, Madras [1970] 26 STC 241. 14. The argument proceeds that the 46th Constitutional Amendment only neutralised the first founded on the Supreme Court decisions in Associated Hotels of India Limited [1972] 29 STC 474 and Northern India Caterers (India) Ltd. [1978] 42 STC 386 and thereby brought the hotels and restaurants within the tax net. But it did not affect or touch upon the second reason founded on the Supreme Court decision in Young Men's Indian Association [1970] 26 STC 241 and, thus the position of a members' club remained unattached and any supply of food, refreshments and beverages made by a members' club to be continued to remain non-taxable. The argument is sought to be supported by the Statement of Objects and Reasons to the Amendment Bill which made a reference to the Supreme Court decisions in Associated Hotels of India Limited [1972] 29 STC 474 and Northern India Caterers (India) Ltd. [1978] 42 STC 386 but made no reference to the decision in Young Men's Indian Association, Madras [1970] 26 STC 241 (SC). 15. An argument is accordingly sought to be advanced that the introduction of clause (29A) in article 366 of the Constitution followed by corresponding amendments in the Act had only the effect of bringing the supply of food and refreshments to guests in hotels and restaurants within the tax net but those amendments did not override the law of agency, if otherwise applicable to a case. In support of the submission Mr. In support of the submission Mr. Poddar relied upon the following passage from a decision of the West Bengal Taxation Tribunal in Hindustan Club Limited v. Additional Commissioner of Commercial Taxes [1995] 98 STC 347 : "Mr. Bajoria dwelt upon the 46th Amendment of the Constitution of India by which, inter alia, clause (29A) was inserted in article 366 of the Constitution. He made two submissions on that amendment. Firstly, the new sub-clause (e) of the said clause (29A) enables a State Legislature to enact a law imposing tax on supply of goods by any unincorporated association or body of persons to a member thereof, but no similar provision was introduced enabling the State Legislature to impose a tax on the supply of goods by any incorporated association to a member thereof. In this connection, he referred to the Statement of Objects and Reasons of the said 46th Amendment, in which a wrong assumption was allegedly made to the effect that sale by a club having corporate status to its members had already been taxable, while it was not so in view of the decision of the Supreme Court in the case of Joint Commercial Tax Officer v. Young Men's Indian Association [1970] 26 STC 241; AIR 1970 SC 1212 . Mr. Bajoria contended that in view of this decision, the 46th Amendment did not lend any enabling provision to the State Legislature to impose tax on supply of goods, being foods, drinks, etc., by an incorporated club like the applicant, to its members. Secondly sub-clause (f) of clause (29A) makes supplies of food, drink etc., exigible to tax, where the supply is for cash, deferred payment or other valuable consideration. According to Mr. Bajoria, this enabling provision does not override the application of the law of agency in the case of members' club, as distinct from a proprietary club, there being identity between the supplier and the receiver of supply in the case of the former club. As regards the first point, Mr. Bajoria seems to be on a sound footing. Bajoria, this enabling provision does not override the application of the law of agency in the case of members' club, as distinct from a proprietary club, there being identity between the supplier and the receiver of supply in the case of the former club. As regards the first point, Mr. Bajoria seems to be on a sound footing. In the Statement of Objects and Reasons (paragraph 3) an assumption was made that - 'while sale by a registered club or other association of persons (the club or association of persons having corporate status) to its members is taxable, sales by an unincorporated club or association of persons to its members is not taxable, as such club or association, in law, has no separate existence from that of the members'. It is also true that in clause (29A) there is nothing to the effect that notwithstanding the law of agency or any other law, supply of food drink, etc., by a club, or by an incorporated club, for cash, deferred payment or any other valuable consideration in any form, would be deemed to be a sale. That being so, the law as settled by the Supreme Court of India on this question will govern the field. As regards the second point urged by Mr. Bajoria, we think, sub-clause (f) of clause (29A) enables the State to impose sales tax on supply of food, drink, etc., for cash, deferred payment, or other valuable consideration, but where the identity of the supplier is different from that of the receiver of supply on the strength of the law laid down by the Supreme Court of India in Joint Commercial Tax Officer v. Young Men's Indian Association [1970] 26 STC 241; AIR 1970 SC 1212 . Mr. D. Majumdar, learned State Representative, submitted that the law of agency is irrelevant in view of sub-clause (f) of clause (29A) and he did not agree with Mr. Bajoria that sub-clause (f) applied to hotels, restaurants, eating places, etc., but not to a members' club. Mr. Majumdar also submitted that reference to Statement of Objects and Reasons is not necessary for interpretation of the sub-clauses of clause (29A) of article 366. It is true that the Statement of Objects and Reasons is not a part of the statute. Bajoria that sub-clause (f) applied to hotels, restaurants, eating places, etc., but not to a members' club. Mr. Majumdar also submitted that reference to Statement of Objects and Reasons is not necessary for interpretation of the sub-clauses of clause (29A) of article 366. It is true that the Statement of Objects and Reasons is not a part of the statute. Nevertheless, it provides an indication as to the purpose of legislation and the remedy sought to be achieved by the relevant provision, thereby helping in determining the intention of the Legislature but it is in no way conclusive even to that extent. In other words, the Statement of Objects and Reasons is one of the means to find out the legislative intent. As observed in Bengal Rowing Club case [1993] 88 STC 389 (WBTT); (1972) 25 STA 41 (WBTT), it is furnished only to indicate in very broad terms the purpose of the Bill; however, the substantive provisions of the statute should prevail. With or without the aid of the Statement of Objects and Reasons, we are of the opinion that sub-clause (e) of article 366(29A) does not apply to an incorporated club, and sub-clause (f) does not override the law of agency, if otherwise applicable to a case." 16. I find myself unable to easily accept this proposition because, in my view, it overlooks certain important passage in the Supreme Court decision in Young Men's Indian Association [1970] 26 STC 241. It is significant to note that in that decision the Supreme Court made the following observations : "The essential question, in the present case, is whether the supply of the various preparations by each club to its members involved a transaction of sale within the meaning of the Sale of Goods Act, 1930. The State Legislature being competent to legislate only under entry 54, List II of the Seventh Schedule to the Constitution the expression 'sale of goods' bears the same meaning which it has in the aforesaid Act. Thus in spite of the definition contained in section 2(n) read with Explanation I of the Act if there is no transfer of property from one to another there is no sale which would be exigible to tax. Thus in spite of the definition contained in section 2(n) read with Explanation I of the Act if there is no transfer of property from one to another there is no sale which would be exigible to tax. If the club even though a distinct legal entity is only acting as an agent for its members in the matter of supply of various preparations to them no sale would be involved as the element of transfer would be completely absent. This position has been rightly accepted even in the previous decision in this Court." 17. From the above, it is apparent that the expression "sale of goods" in entry 54, List II of the Seventh Schedule to the Constitution having been assigned the same meaning as it has in the Sale of Goods Act, the Supreme Court held that the State Legislature was not competent to tax the supplies of food and beverages made by a club to its members because those supplies did not involve a transaction of sale within the meaning of the Sale of Goods Act. But clause (29A) has now given a much enlarged and inclusive definition of "tax on the sale and purchase of goods" and after the 46th Constitutional Amendment the expression "sale of goods" in entry 54, List II of the Seventh Schedule to the Constitution may not be deemed to bear the same meaning as in the Sale of Goods Act. I am, therefore, unable to find the decision of the West Bengal Taxation Tribunal in Hindustan Club Limited v. Additional Commissioner of Commercial Taxes [1995] 98 STC 347 on this point free from doubt. 18. However, the occasion to examine this aspect of the matter will arise only in case it is found that petitioner No. 1 was a members' club operating on the principle of agency and having its relationship with the individual members based on the doctrine of mutuality. To examine the constitution of petitioner No. 1 and its relationship with its members of the different categories. I will now advert to the provisions of its memorandum of association, Rules and Regulations buy-laws, etc. 19. On March 11, 1988, nine persons formed themselves into a society in the name and style of Ranchi Gymkhana Club and adopted its memorandum of association by subscribing their names thereto. I will now advert to the provisions of its memorandum of association, Rules and Regulations buy-laws, etc. 19. On March 11, 1988, nine persons formed themselves into a society in the name and style of Ranchi Gymkhana Club and adopted its memorandum of association by subscribing their names thereto. On April 21, 1988 the society was registered before the Inspector-General of Registration, Bihar, Patna, under section 3 of the Societies Registration Act, 1980. The aims and objects of the society, inter alia, were "to form an association of ladies and gentlemen as a charitable, scientific, literary and social club and offer to them all the usual privileges, conveniences and accommodation of the club" [as provided in clause 3(a) of the memorandum of association] and "to maintain a club house, reading rooms, library, golf course, swimming pool and other convenience and to provide all facilities for scientific development of body and mind of club members by whatever means or activities found necessary and expedient for attaining of the aims [as provided in clause 3(d)]". 20. At the time of its incorporation the society apparently did not have any resources or means to achieve its aims and objects; it did not have any premises, establishment, club building, etc., of its own so as to provide to its members a club-house, reading rooms, library, golf course, swimming pool and other conveniences as contemplated under clause 3(d) of the memorandum of association. 21. On July 27, 1990 the society entered into an agreement with Usha Martin Industries Limited, a company incorporated under the Companies Act, 1956 (hereinafter referred to as "the company"). Under the agreement the society was appointed by the company to run and maintain the company's Welfare Centre at Deepa Toli under Sadar police station in the district of Ranchi. In terms of the agreement the Society was obliged, inter alia, to provide canteen and catering services for the benefit of the employees and officers of the company who "wished to purchase" any goods from the canteen. In consideration of the society's services the company granted licence to the Society and its members to enter upon, use and enjoy the facilities available at the welfare centre subject to their complying with the rules and regulations of the club. In consideration of the society's services the company granted licence to the Society and its members to enter upon, use and enjoy the facilities available at the welfare centre subject to their complying with the rules and regulations of the club. From the schedule at the end of the agreement, it is evident that the premises of the welfare centre in respect of which the society and its members were given licence to enter upon included a large building to be used as club house and sprawling grounds. The provisions contained in clauses 11 and 20 of the agreement are also relevant for our present purpose and the two clauses are accordingly reproduced below : "11. So long as this agreement is in force, the club shall accept and admit as members such number of person who are nominated by UMI. Such persons shall have the right and privileges as applicable to corporate/visiting members of the club, as the case may be. However, such persons shall be liable to pay the monthly subscription fees and bills and other charges for use and enjoyment of facilities provided on charge basis by the club as per the bye-laws of the club in existence from time to time. No security deposit and entrance fees shall be leviable on such members. It is intended that such nominees shall be employees of UMI and/or its associated companies." 20. So long as this agreement shall remain in force. UMI shall be entitled to nominate six members on the managing committee of the club and to remove from such committee any such person or persons and nominate other persons in their place. The members of the managing committee so nominated by UMI shall not be liable to retire nor shall they be suspended or removed by the club. Subject to the aforesaid the said nominee members shall be entitled to the same rights and privileges and subject to the same obligations as any other member of the managing committee of the club. Such nominees who are not founder members shall not, however, be entitled to vote at general meeting, provided, however, that such nomination shall be required to be renewed at each annual general meeting." 22. Such nominees who are not founder members shall not, however, be entitled to vote at general meeting, provided, however, that such nomination shall be required to be renewed at each annual general meeting." 22. It may further be noted that in clause 23, the company reserved for itself, in a father peremptory manner, the right to summarily terminate the agreement without any notice to the club consequent upon which the society/club was bound to deliver to the company all properties records, documents, etc., belonging to it. 23. A supplemental agreement was entered into between the society and the company on July 3, 1990 by which the afore-quoted clause 11 of the original agreement was modified making its provisions further advantageous and favourable to the company and its nominees. 24. A second supplemental agreement dated January 31, 1993, made the company's control over the society/club almost complete and absolute. It modified clause 20 of the agreement in the following terms : "20. So long as this agreement shall remain in force, UMI shall be entitled to nominate six members out of the total strength of nine members in the managing committee of the club and the balance three members would be co-opted from amongst the founder/permanent/resident members of the club by the members nominated by UMI and thus there will be election for the managing committee. UMI will be entitled to remove from the said committee any such person or persons nominated by it and to nominate other person or persons in their place. The members of the managing committee so nominated by UMI shall not be liable to retire nor shall they be suspended or removed by the club. Subject to the aforesaid, the said nominee members shall be entitled to the same rights and privileges and subject to the same obligations as any other member of the managing committee of the club. Such nominee who are not founder members shall not, however, be entitled to vote at general meeting." 25. From the pleadings of the parties, it is not known as to what was the total number of members when the society/club entered into the first agreement with the company. It can however be presumed that there would not have been any substantial increase in its memberships as admittedly till then the society did not have any resources or means of its own to run or maintain the club. It can however be presumed that there would not have been any substantial increase in its memberships as admittedly till then the society did not have any resources or means of its own to run or maintain the club. The other question which comes to mind at this stage is whether some of the original nine subscribers to the society's memorandum of association, shared any interests or positions in the company with which the society was made to enter into the aforesaid agreements ? The pleadings of the parties are silent on this aspect of the matter but I cannot help the suspicion that interesting facts may come to light if this aspect of the matter was further investigated. 26. Coming now to the rules and regulations of Ranchi Gymkhana Club, as they stand after the amendments following the three agreements, one cannot fail to notice at least three features which seem to contradict the claim that it is a members' club. These are as follows : (i) The number of categories of members (nine) is uncommonly large; (ii) The entrance fee and interest-free security deposit payable by the different categories of members are not uniform but vastly disparate; (iii) The third and the most significant feature which is directly referable to clause 20 as modified by the second supplemental agreement is the total and complete exclusion of all categories of members from having any say in the affairs of the club. 27. Rule 2 which deals with the membership of the club is as follows : "2. Categories of members. - Persons shall be eligible for membership of the club under the following categories; (a) Founder/permanent member : A permanent resident of Ranchi and its periphery may be admitted as a founder/permanent member. The maximum number of such members will be restricted to 200 (two hundred only). The first person up to such limit will be called founder members and persons admitted thereafter under this category will be called permanent members. (b) Resident member : A permanent resident of Ranchi and its periphery may be admitted as resident member. However, such person would be initially admitted as "Resident member elect" for a period of not more than 6 months from the date of payment of refundable security deposit. The entrance fee will be payable after confirmation of resident membership by the managing committee. However, such person would be initially admitted as "Resident member elect" for a period of not more than 6 months from the date of payment of refundable security deposit. The entrance fee will be payable after confirmation of resident membership by the managing committee. (c) Non-resident member : A resident member who shifts his place of residence outside the periphery of Ranchi may be classified as non-resident member at his option. Provided further that if such person re-shifts his place of residence within the periphery of Ranchi he shall be reinstated as a resident member. (d) Temporary member : A person who is not a permanent resident of Ranchi may be admitted as a temporary member of the club for a period not exceeding 3 (three) years at a time. (e) Honorary member : Any person may be invited to become honorary member for a period/periods as may be decided by the managing committee at its pleasure. The maximum number of honorary members shall not be more than 10 (ten) at any time. (f) Corporate member : Any company, corporation or organisation may be admitted as a member of the club under this category. Such member shall be permitted to nominee up to 4 (four) persons per unit of membership. The nominations shall be at the pleasure of the managing committee and the nominees shall be bound by the rules and bye-laws of the club. For the purpose of nomination beyond the number prescribed per unit of membership, additional units of memberships may be permitted with the prior approval of the managing committee. (g) Sports member : Any person showing promise or who has down outstanding ability in any game or sports may be admitted by the managing committee as a sports member for such period and on such terms and conditions as may be decided by it from time to time. Note. - Persons who have represented the State or the country at any game or sports events of National level or State level may also be admitted under this category. (d) Visiting member : A person residing outside the periphery of Ranchi may be admitted as a visiting member, provided that such membership shall stand automatically terminated on such member shifting his place of resident within the periphery of Ranchi. (d) Visiting member : A person residing outside the periphery of Ranchi may be admitted as a visiting member, provided that such membership shall stand automatically terminated on such member shifting his place of resident within the periphery of Ranchi. This rule shall be governed by the following provisions : (i) For the purpose of these Rules "Ranchi and its periphery" shall mean and include an area within a radius of 50 kms. from registered office of the club. (ii) Persons under the age of 21 years shall not be eligible for admission to membership in any class. (iii) A permanent resident is one who has been a resident of Ranchi and its periphery and has a place of resident and/or occupation within the area specified hereinbefore. (i) Courtesy member : A person serving in Government/Semi-Government/Defence/Judicial Services may be admitted as a courtesy member during the tenure of his posting at such post at Ranchi, as the managing committee may determine from time to time, provided that such membership shall automatically cease if such member is transferred outside Ranchi or at any other post at Ranchi." 28. According to rule 4 membership of the club can be by invitation only. 29. Rule 5 fixes the rates of entrance fee and interest-free security deposit payable by the different categories of members in the following manner : "5. Subscription : Unless otherwise determined by the founder/permanent members of the club at general meeting, the following shall be entrance fee and amount of the security deposit payable by the person at the time of admission as member : Class Entrance Interest-free security deposit ee refundable after 12 years or upon cessation of membership whichever is earlier. Rs. Rs. (a) Founder-permanent 1,000 12,000 member (b) Resident member 10,000 40,000 25,000 (for dependents of members) (c) Temporary member Nil Nil (d) Non-resident member Nil Nil (e) Corporate member 3,000 50,000 (per unit) or 15,000 (per nominee whichever is less). (f) Sports member 500 2,500 (g) Visiting member 10,000 10,000 Provided that the managing committee may raise entrance fee and the amount of interest-free deposit for any class of membership from time to time." 30. Clause 6 of the bye-laws similarly fixes the rates of monthly subscription which are slightly different in case of some of the categories of members. 31. Clause 6 of the bye-laws similarly fixes the rates of monthly subscription which are slightly different in case of some of the categories of members. 31. Rule 6 with the marginal heading 'Rights of members' permits the members to bring to the club their dependent children or guests with the prior written permission of the President or the Honorary Secretary of the Club. The same rule also provides for the suspension of a member and initiation of a "disciplinary proceeding" against him at the conclusion of which he may be expelled from the club as provided under rule 10. 32. The most anomalous feature of the rules and regulations relates to the management of the club and in this regard great care seems to have been taken to shut out completely, practically, all the members from any participation in the club's management. This would be evident from rules 12 (voting rights), 13 (Management) and 14 (Meetings) which are reproduced below : "12. Voting rights : Save and except founder/permanent member of the club, no member shall be entitled to any voting rights or shall be permitted to contest for or participate in the managing committee or vote at any general meeting held for any purpose whatsoever. No member shall be entitled to vote with any dues or payments outstanding in his account. 13. Management : (a) The affairs of the club shall be managed by the managing committee comprising of 9 (nine) members out of which six would be nominated as mentioned in sub-clause 13(aa) of the Rules and Regulations of the club. The other three members of the managing committee shall be co-opted from amongst founder/permanent/resident members by the nominated members of the managing committee and the first members of managing committee shall be : (i) Mr. Brij K. Jhawar, 'Jhawar House', Kanke Road, Ranchi. (ii) Mr. Rana Pratap, 'Arpan', Lake Avenue, Kanke Road, Ranchi. (iii) Mr. S. K. Kumra, 'Jhunjhunwala House', Misir Gonda, Dam Site, Kanke Road, Ranchi. (iv) Mr. R. S. Harlalka, 'Harlalka Niket' Kanke Road, Ranchi. (v) Mr. D. S. Sharma, 'Usha Kiran', Cosy Road, Burdwan Compound, Ranchi. (vi) Mr. R. K. Kapur, Argora Colony, Ranchi. (vii) Mr. Binod Poddar, Advocate, Gosala Road, Ranchi. (viii) Mr. Sushil Lohia, 41, Court Road, Ranchi. (ix) Mr. Ajay Maroo, 55, Baralal street, Ranchi. (iv) Mr. R. S. Harlalka, 'Harlalka Niket' Kanke Road, Ranchi. (v) Mr. D. S. Sharma, 'Usha Kiran', Cosy Road, Burdwan Compound, Ranchi. (vi) Mr. R. K. Kapur, Argora Colony, Ranchi. (vii) Mr. Binod Poddar, Advocate, Gosala Road, Ranchi. (viii) Mr. Sushil Lohia, 41, Court Road, Ranchi. (ix) Mr. Ajay Maroo, 55, Baralal street, Ranchi. (aa) Notwithstanding anything to the contrary contained in these Rules and Regulations, so long the club enjoys the facilities and conveniences of welfare centre of Usha Martin Industries Ltd. 'UMI' or its successors or assigns under an arrangement or otherwise the said UMI shall have right to nominate 6 (six) members in the managing committee and to recall from such committee, any such person or persons, so nominated, and nominate other person or persons, in his/their place. The members of the managing committee so nominated shall not be liable to retire nor shall be suspended or removed by the club. Subject to the aforesaid, the said nominee shall be entitled to the same rights and privileges and shall be subject to the same obligation as any other member of the managing committee. Such nominee or nominees who are not founder members, shall not, however, be entitled to vote at any general meeting. (b) The managing committee, after its constitution, shall elect amongst themselves the following office bearers, namely : (i) President (ii) Honorary secretary (iii) Honorary treasurer. The rest shall be known as managing committee members. (c) All co-opted members of the managing committee shall retire immediately on the conclusion of annual general meeting, but shall be entitled to be co-opted again. (d)(i) Any vacancy caused by any resignation/death of a nominated member under sub-clause 13 (aa) of the managing committee will be filled up by said Usha Martin Industries Ltd. (ii) Any vacancy caused amongst co-opted members due to any reason whatsoever will be filled up by the nominated members of the managing committee by co-opting from amongst founder/permanent/resident members. (iii) The managing committee shall continue to function notwithstanding any vacancy or vacancies caused therein. (e) The managing committee shall hold office till the constitution of the new managing committee. Any alteration/change in the nominated members shall not be deemed as constitution of new managing committee. (iii) The managing committee shall continue to function notwithstanding any vacancy or vacancies caused therein. (e) The managing committee shall hold office till the constitution of the new managing committee. Any alteration/change in the nominated members shall not be deemed as constitution of new managing committee. (f)(i) The managing committee shall ordinarily meet at least once in every two months but may meet at such times and places as they think fit and at all meetings three shall form a quorum. If within half an hour after the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the same day in the next week at the same time and place and if at such adjourned meeting, if a quorum is not present, members present will form the quorum subject to a minimum of two. (ii) Meetings can be convened at the request of the president or by any four members of the managing committee after giving not less than 72 hours notice to the other members of the managing committee. (iii) At every meeting of the managing committee, the president or in his absence the managing committee shall elect one of their members to preside. Each member of the managing committee shall have one vote on all matters placed before the managing committee; but in the event of an equality of votes the president shall have a second or casting vote. (iv) The managing committee shall be the governing body of the club and in addition to the powers and authorities by these Rules expressly conferred upon them and as detailed in appendix 1, may exercise all such powers and do all such acts and things as may be done by the club and which are not by these Rules expressly directed to be done by the club in general meeting, but subject nevertheless to such regulations or directions as may from time to time be determined upon, or given at any general meeting of the club provided that no such regulation or direction shall invalidate any prior act of the managing committee which would have been valid if the regulation or direction had not been made or given. 14. Meetings : (a) Annual general meeting. 14. Meetings : (a) Annual general meeting. (i) The annual general meeting shall be held each year at such time and place as the managing committee may decide by giving 30 days' notice to all founder/permanent member. (ii) The ordinary business at an annual general meeting shall be - to confirm the minutes of the last annual general meeting and any extra-ordinary general meeting held during the year; to receive and adopt the annual report and the audited statement of account as presented by the managing committee; to appoint an auditor or auditors and fix their remuneration; to consider any recommendation of the managing committee; and to transact any other business of a formal or unimportant nature as may be allowed by the president. (b) Extraordinary general meeting : (i) Any other general meeting shall be called an extraordinary general meeting and can be convened by giving 14 days' notice by the managing committee or on receipt of a written request by at least 25 per cent of the founder/permanent members as per the register of members of the club. (ii) Notice of all extraordinary general meeting shall be accompanied with an agenda of business to be transacted at such meeting or any adjournment thereof. No business other than the business for which such meeting is called shall be transacted. (c) Quorum : The quorum for every meeting shall be at least 25 founder/permanent members who are entitled to vote. In the absence of quorum the meeting shall stand adjourned to the next week at the same place and same time and if at such meeting the quorum is still not present, the persons present shall constitute sufficient quorum subject to a minimum of five members present personally. The quorum at every meeting shall be determined within half an hour of the appointed time. (d) Voting at general meetings : Every founder/permanent member present and entitled to vote shall have one vote. Voting by proxy shall not be allowed. Save as provided otherwise in this rule, voting shall be by show of hands and all decisions shall be taken by bare majority. In the case of equality of votes the president shall have a second or casting vote in addition to his own vote. In the case of any dispute as to the determination of any decision by vote, the decision of the president shall be final and conclusive. In the case of equality of votes the president shall have a second or casting vote in addition to his own vote. In the case of any dispute as to the determination of any decision by vote, the decision of the president shall be final and conclusive. (e) Chairman at general meeting : The president or in his absence, any member of the managing committee or in their absence any member present and elected by the majority shall be the chairman at the general meeting." 33. At this stage it may also be noted that according to paragraph 6 of the writ petition the total strength of the club 761 out of which 193 are founder/permanent members, 368 resident members, 22 non-resident members, 15 temporary members, 48 corporate members, 1 sports member and 101 visiting members. 34. From the facts and circumstances stated above the picture that emerges is that only founder/permanent members who constitute about 25 per cent of the total number of members have been allowed a very limited participation in the affairs of the club in so far as they are given voting right in the annual general meeting. But the forum of annual general meeting is itself wholly effect and has hardly any role in the club's management. It does not have the right to elect the managing committee of the club and the business assigned to the annual general meeting vide rule 14(ii) is as follows : 14(ii) The ordinary business at an annual general meeting shall be - to confirm the minutes of the last annual general meeting and any extraordinary general meeting held during the year; to receive and adopt the annual report and the audited statement of accounts as presented by the managing committee; to appoint an auditor or auditors and fix their remuneration; to consider any recommendation of the managing committee; and to transact any other business of a formal or unimportant nature as may be allowed by the President." 35. The remaining 3/4th membership of the club is not even allowed a semblance of participation and is bluntly, completely and totally excluded from the management of the club. The remaining 3/4th membership of the club is not even allowed a semblance of participation and is bluntly, completely and totally excluded from the management of the club. The crowning irony is that resident members who alone constitute 48 per cent club's membership and who along with visiting members constitute more than 60 per cent of the club's membership and who pay 10 times more than founder/permanent members as entrance fee and 3.5 times more as interest-free security deposit are totally debarred from the club's management. In these circumstances I cannot even see how it can be claimed that petitioner No. 1 is a members' club. There is not an iota of evidence to uphold the claim that the so-called club is founded on the doctrine of mutuality and operates on the principle of agency. It will indeed be a strange case of agency where an overwhelmingly large number of members who are said to constitute the principal have absolutely no control over the agent but on the contrary it is the agent who has control over them; it will be a classic situation where it is not the dog who is wagging the tail but it is the tail which is wagging the dog. 36. Mr. Poddar submitted before us that it was necessary to have stringent control over the club's management in order to maintain its efficiency and high standard of service. I am readily willing to accept that the club has a high degree of efficiency and maintains a very superior standard of service but having regard to the facts and circumstances stated above I find myself unable to accept that it is a members' club. 37. Mr. Poddar further submitted that all categories of members paid equal charges for the food, refreshments and beverages supplied to them by the club and to that extent made equal contribution in the common fund and had an equal right of participation in the common fund. The submission is wholly unacceptable. The right of participation in the management of the collective body is basic to the right of participation in the common fund. In the present case no member of the club except nine constituting the governing body has any right to participate in the management of the club. It is, therefore, futile to suggest that members have equal right to participation in the common fund of the club. In the present case no member of the club except nine constituting the governing body has any right to participate in the management of the club. It is, therefore, futile to suggest that members have equal right to participation in the common fund of the club. I even fail to see that in this case there is a common fund of the nature generated in a members' club. So far as making equal payments for the food and drinks supplied to the members that alone would not create a members' club because even in a hotel or restaurant guests make equal payment for food, refreshments, beverages, etc., ordered by them. In this case it will not be correct to describe even founder/permanent members as real members of the club. Even assuming that founder/permanent members, having a vestige of some right qualify as some kind of members of the club, that would still leave a large majority of members comprising 3/4th of the total membership still outside the pale of real membership. The claim, therefore, that Ranchi Gymkhana Club, petitioner No. 1 is a members' club is wholly unacceptable. In fact it will not be far from truth to say that it is the company who runs a recreation centre and an eating house through the agency of the society, under the assumed name of "club", and the so-called members are no more than "licensed customers", to borrow the expression used in the respondents' counter-affidavit. In the facts and circumstances of this case it cannot be said that the members have collectively created an agency and formed an instrumentality to subserve their common needs and to provide to themselves certain facilities and conveniences as a class. 38. Mr. Poddar next submitted that having a category of temporary members who paid no subscription at all and had no voting right was not destructive of a club's mutuality and in support of the submission relied upon a decision of the Andhra Pradesh High Court in Commissioner of Income-tax v. Merchant Navy Club [1974] 96 ITR 261. In that decision, a Bench of the Andhra Pradesh High Court held as follows : "The paying members contribute to the common fund of the club by paying subscriptions. They also contribute to the club by paying something extra over the cost for the amenities they receive from the club. In that decision, a Bench of the Andhra Pradesh High Court held as follows : "The paying members contribute to the common fund of the club by paying subscriptions. They also contribute to the club by paying something extra over the cost for the amenities they receive from the club. Similarly, the non-paying members also contribute to the club by paying something extra over the prices of those amenities provided to them by the club. It is, therefore, not correct to say that non-paying members do not contribute to the common fund of the club. On the facts it is evident that both paying members as well as non-paying members as a class contribute to the common fund of the club." 39. As regards the decision in Merchant Navy Club [1974] 96 ITR 261 (AP), it is first to be noted that the case arose under the Income-tax law and the decision was prior to the 46th Amendment of the Constitution. It is further to be noted that in that case the court was considering a category of temporary members who paid to subscription and had no voting right. Presumably they constituted a very small portion of the total membership of the club. The position here is that an overwhelmingly large number of members who pay ten times more as entrance fee and 3.5 times more as security deposit have been debarred from participation in the affairs of the club. As noted, above, the Rules and Regulations governing petitioner No. 1 are singularly different and, therefore, the decision in Merchant Navy Club [1974] 96 ITR 261 (AP), is of no help to the petitioners in this case. 40. Moreover, it may be noted that a Bench of West Bengal Taxation Tribunal in Bengal Rowing Club v. Commissioner of Commercial Taxes, West Bengal [1993] 88 STC 389, on consideration of a number of decisions, including the decision in Merchant Navy Club [1974] 96 ITR 261 (AP), held that having a category of rowing members who had no right in the management of the club was destructive of the identity between the members and the club. In paras 36 and 37 of the judgment, it was observed as follows : "36. In paras 36 and 37 of the judgment, it was observed as follows : "36. It appears from the constitution of the applicant-club that there is a class of members known as rowing members, who cannot take part or vote in any general meeting and do not have any right in the management of the club. They cannot be elected as members in the governing body. They are entitled to such of the other privileges of the ordinary members as may be prescribed by the rules and the bye-laws. They are governed by the special rules applicable to them. According to these rules, a rowing member is not permitted to introduce guests but, however, can bring his wife only inside the club premises. He can enjoy certain club facilities like paying badminton, table tennis free of charge and use the swimming pool on payment of a fee. As regards cards and billiard rooms, these can be used by him only as a guest of an ordinary member. Refreshments can be served to them and all payments are required to be made by the rowing members by coupons available on cash. 37. It is evident from the foregoing paragraph that rowing members, though not shareholders of the club, enjoy certain club facilities and the club has direct relationship with them in certain matters. They can have refreshments and pay for these directly to the club and not as guests of members. It cannot, therefore, be said that there is identity between the members and the club. In the matter of supply of refreshment it cannot be held that the club has transactions only with its constituent members, that is, the principal. It has transactions with others also, who are not the principal. The obvious conclusion is that the applicant-club is not a members' club and hence the question of agency does not arise at all." 41. Again in Hindustan Club Limited v. Additional Commissioner of Commercial Taxes [1995] 98 STC 347, the West Bengal Taxation Tribunal took the view that temporary members and permanent members could not be treated to constitute a single body of members and, therefore, the principle of mutuality would apply only in respect of the supply of food and refreshments, etc. made by the club to the permanent members as their agent but as regards the temporary members the same principle could be applied. made by the club to the permanent members as their agent but as regards the temporary members the same principle could be applied. There was no reciprocity or mutuality and consequently there was no common identity as between the temporary members and the club. Therefore, the supply of food, drinks and refreshments made by the club to the temporary members would amount to to sale within the meaning of section 2(g) of the Bengal Finance (Sales Tax) Act, 1941. It accordingly segregated the transactions of the club in respect of its permanent members and temporary members. 42. Mr. Poddar also relied upon a decision of this Court in Commissioner of Income-tax v. Bankipur Club Ltd. [1981] 129 ITR 787. This case also was decided under the Income-tax Act and on facts was totally different from the present case. 43. Learned counsel also relied upon a decision of the Gujarat High Court in Sports Club of Gujarat Ltd. v. Commissioner of Income-tax [1988] 171 ITR 504. This decision too was under the Income-tax Act and it was held that the principle of mutuality was not destroyed by the presence of transactions which were non-mutual in character. In such cases the principle of mutuality could be confined to transactions with "members" and the two activities in appropriate cases, could be separated and the profits derived from non-members could be brought to tax. 44. Mr. Poddar also cited a decision of the Madras High Court in Commissioner of Income-tax v. Madras Race Club [1976] 105 ITR 433. The facts of that case were wholly different from the facts of the case in hand and, therefore, this decision too has no application to the present case. 45. Mr. Poddar also relied upon a Full Bench decision of this Court in Commissioner of Income-tax, Bihar v. Ranchi Club Ltd., Ranchi [1992] 196 ITR 137; 1992 (1) PLJR 252. This also was a case under the Income-tax Act and if anything this decision actually goes against the petitioners. In para 17 of the decision, it was held as follows : "17. This also was a case under the Income-tax Act and if anything this decision actually goes against the petitioners. In para 17 of the decision, it was held as follows : "17. Now, coming to the facts of the present case, it is clear from the articles of association that 'temporary members' were never accepted to be members of the company because they are neither obliged to contribute to the assets of the company nor do they give any guarantee for payment of the debts and the liabilities of the company as provided in clause (4) of the memorandum. Similarly, the aforesaid class of persons are not entitled to any share in the surplus of the company upon its winding up or dissolution. Further, this class is neither entitled to vote nor can they participate in the management of the club. According to section 12 of the Companies Act, 1956 (section 5 of 1913 Act), a person having undertaken the liability as per clause (4) of the memorandum can only be deemed to be a member of the company and section 9 of the Companies Act provides that the provisions of the Act have an overriding effect over the provisions contained in the memorandum and articles of association. Keeping in view all these considerations it has to be held that 'temporary members' are not members of the club and the principle of mutuality cannot have any application in respect of transactions held with them." 46. Having thus taken into consideration the submissions made on behalf of the parties and having gone through the decisions cited at the Bar and having given my careful thought to this matter I come to the conclusion that the following principles are to be applied for determining the true character of a club and for judging its liability to pay sales tax on the supplies of food, refreshments and beverages, etc., made by it. The right to participate in the management of the club is basic to the right of participation in the common fund and goes to the root of the principle of mutuality. The right to participate in the management of the club is basic to the right of participation in the common fund and goes to the root of the principle of mutuality. It, therefore, follows that: (i) persons who are admitted to the membership of a club for a short and specified period or persons who are admitted as members with no voting right or any other means for participation in the club's management cannot be said to be the real members of the club inasmuch as in such cases there would be no reciprocity or mutuality between the club and those classes of members. (ii) in case the number of such members is a very small fraction of the total membership of the club and the payments made by them forms an insignificant part of the club's total turnover, their existence may be disregarded from a practical point of view and it may be said that the club's mutuality remains unaffected : (iii) in case, however, their number is significantly large and the club has substantial transactions with them, those transactions may be segregated in order to save the club's mutuality in relation to its real members; (iv) in case, however, the number of such persons is very large and the transactions with them form the major portion of the club's turnover that would certainly destroy the club's mutuality and in that event the club cannot be described as a members' club; and (v) in which of the above categories a particular club would fall would be a question of fact to be decided on an examination of all the material facts and circumstances. 47. In the present case I have no hesitation in holding that Ranchi Gymkhana Club is not a members' club; it is not founded on the doctrine of mutuality and it does not operate on the principle of agency. It, therefore, qualifies as a "dealer" within the meaning of section 2(e) and the supply of food, refreshments and beverages made by it are covered by the definition of "sale" within the meaning of section 2(t) of the Act and are taxable under the Act. 48. It, therefore, qualifies as a "dealer" within the meaning of section 2(e) and the supply of food, refreshments and beverages made by it are covered by the definition of "sale" within the meaning of section 2(t) of the Act and are taxable under the Act. 48. In view of the above findings, I do not propose to go into the question whether the supply of food, refreshments, beverages, etc., made by a members' club to its members is non-taxable notwithstanding article 366(29A) of the Constitution and the consequent amendments in the Bihar Finance Act and I leave this question open to be decided in an appropriate case. 49. It may further be clarified that this case has been decided only on the question of applicability of the Act to petitioner No. 1 I have not gone into the merits of the assessment orders passed against petitioner No. 1. It will be open to the petitioners to challenge the assessment orders by filing appeal, revision, etc., in accordance with law. In case an appeal or revision as provided under the Act is filed within six weeks from today, it will not be dismissed on the question of limitation alone. 50. In the result, this will writ petition is dismissed subject to the observations and directions made above. There will be no order as to costs. I agree. Writ petitions dismissed.