The High Court · 2025

ii) Payment: Any member of the petitioner may become a member of this scheme. ‘upon payment ‘of an annual subscription fee (Rs.2,000/- for the first year, and decreasing by Rs.100/- every year, and stabilising at Rs.1,500/-). This membership is for one unit of PPS membership. iii) Benefit: If any member of the scheme faces legal action (for acts done/omitted in the course of his profession), the petitioner engages and pays an advocate to provide legal services to the member concerned. Further, if the litigation results in damages being ordered to be paid by a member of the scheme, the petitioner pays such damages up to a maximum of Rs.10 lakhs for a single case and Rs.20 lakhs for multiple cases in one year. iv) A member may also opt for enhanced protection under this scheme, upon payment of membership fee of Rs.10,000/- p.a. The maximum compensation then payable to such a member of the scheme would be an additional Rs.1 crore. W.A.Nos.1659 & 1487/24 & 468/25 :: 10 :: Hospital Protection Scheme i) Object: The object of the scheme is to protect hospitals, clinics, dispensaries (run by member-doctors/where member-doctors work) from litigation and from harassment by the media for any act of alleged negligence or carelessness or deficiency of service on the part of the doctors/staff. Besides providing legal aid to the member institutions of the scheme, the scheme also aims to undertake social services activities as mentioned in the Professional Protection Scheme above. ii) Payment: Membership fee ranges from Rs.5,000/- to Rs.75,000/- per year depending upon the bed strength of the member institution. iii) Benefit: The maximum compensation paid by the scheme is Rs.10.00 lakhs for a single case and Rs.20.00 lakhs for multiple cases in a year. As with the PPS Scheme above, the petitioner would also engage advocates to act on behalf of member institutions and pay the related legal fees to such advocates. Kerala Health Scheme i) Object: The object of the Scheme is to provide financial assistance to members of the scheme and his/her spouse, parents and children in the event of any person being diagnosed with specified diseases. ii) Payment: The admission fees range from Rs.800/- to Rs.6,000/- depending upon the age of the doctor. All beneficiary members are additionally required to pay an annual membership subscription of Rs.100/- and Advance Finance Assistance Contribution ranging from Rs.2400/- to Rs.7500/- p.a. iii) diseases, compensation ranging from Rs.5,000/- to Rs.5 lakhs is paid. Benefit: Upon diagnosis/hospitalisation for specified Pension Scheme i) life members of the petitioner. Object: The object of this scheme is to provide pension to ii) Payment: Admission fee is Rs.3,000/- to Rs.5,000/-. Every member of the scheme shall also pay an annual membership fee of Rs.500/-. Further, the minimum annual contribution to be made by every member of the scheme is Rs.12,000/-. iii) Benefit: The pension is paid when a member of the scheme requests payment after she or he attains 60 years. 30% of the pension corpus of a member may be paid to the member at the time of starting the pension payment, if so requested by the member. The pension is then paid for the rest of the life of the member from the remaining 70% corpus amount of the member. Upon the death of a member, his nominee may similarly take a lump-sum payment from 30% of the corpus. Full maturity amount is paid to the nominee if pension for spouse is not opted for. If death occurs before the age off 60, the scheme provides for stated pay-outs. W.A.Nos.1659 & 1487/24 & 468/25 :: 11 :: Mutual Benefit Scheme i) Object: The object of the scheme is to provide financial support, encourage the habit of thrift amongst the members, encourage financial planning amongst the members, etc. ii) There were Schemes A, B and C wherein the monthly payment to be made by the member of such schemes was Rs.5,000/-, Rs.10,000/- and Rs.25,000/- respectively. The monthly instalment is payable by the 20th of every English calendar month, upon default of which interest @) 2% per month is payable. Each of the above 3 schemes runs for 20 months. iii) Beginning from ‘the second month “beneficiary amount" was payable by the scheme and increases every month. The member to whom the beneficiary amount for each month was payable was decided by lots among the members who request to be such beneficiaries. Defaulters were not included in the monthly lot. In the event of consecutive default of monthly instalments, the member would be removed from the scheme and the amount already paid would be vested with the funds of the scheme. The Managing Committee decided what amount was to be deducted as services charges and the balance amount was disbursed to members at the end of the scheme. Patient Care Scheme i) Object: The object of the scheme is to institute a corpus fund to provide assistance to deserving patients who seek care in modern medicine, to establish information/assistance centre for patients seeking medical services, to create a network of health care facilities across Kerala to assist poor patients and patients in emergency situation, etc. Payment: Any member of the petitioner may join as a ii) member of the scheme for a period of 3 years on payment of a membership fee of Rs.1,000/-. Members of the scheme are entitled to participate in the general body of this scheme and are eligible to cast their votes. iii) Benefit: The criteria and expenditure of the patient care fund is decided by the managing committee of the scheme from time to time. The payment to deserving patients are made from the corpus of this fund/scheme.”

4. The writ petitioner bona fide believed that it was not liable to pay GST on services rendered by it to its members under the aforesaid Schemes since it was well settled through a line of precedents that the principle of mutuality would insulate services rendered by a Club/Association to its members from the levy of GST on supply of W.A.Nos.1659 & 1487/24 & 468/25 :: 12 :: services. The underlying basis for the non-taxability of such services was the concept that when a Club/Association provides services to its members, there is no separate recipient of the services provided by the Club/Association and that the services were effectively provided by the members of the Club/Association to themselves. The said basis of non- taxability was, however, removed by an amendment of the provisions of Section 2(17)(e) and Section 7(1)(aa) read with the Explanation thereto of the Central Goods and Services Tax Act, 2017 [CGST Act] and the Kerala Goods and Services Tax Act, 2017 [KGST Act] that introduced deeming provisions making the supply of services by a Club/Association to its members a taxable supply for the purposes of the levy of tax. The amendment that was introduced through the Finance Act, 2021 was also made retroactive with effect from 01.07.2017, thereby adding to the financial woes of the petitioner.

5. In the writ petition preferred by the petitioner, the petitioner sought the following reliefs:

1. declare that the provisions of Section 2(17)(e) and Section 7(1) (aa) and the Explanation thereto, of the Central Goods and Services Tax Act, 2017 and the provisions of Section 2(17)(e) and Section 7(1)(aa) and the Explanation thereto, of the Kerala Goods and Services Tax Act, 2017 are unconstitutional and void being ultra vires the provisions of Article 246A read with Article 366(12A), and violative of Articles 14, 19(1)(g), 265 and 300A, of the Constitution of India;

2. in the alternative; issue a declaration that the phrase “shall be deemed to have been inserted with effect from the 1st day of July 2017”, in S.108 of the Finance Act, 2021 is unconstitutional and void being violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India;

3. issue a writ in nature of a writ of prohibition restraining the respondents, their men and agents from provisionally attaching the properties of the petitioner under Section 83 or any other provision of the CGST or KGST Acts, 2017; W.A.Nos.1659 & 1487/24 & 468/25 :: 13 ::

4. The petitioner also prays that this Honourable Court may be pleased to dispense with the translation of the documents produced in the vernacular language; issue such other writ, direction or order as this Hon'ble Court 5. may deem fit and proper in the facts and circumstances of the case, and thus render justice. The findings of the Single Judge:

6. The learned Single Judge, who heard the matter, found that insofar as the amendment to the CGST/SGST Act through Finance Act, 2021 had the effect of removing the basis of the immunity that was hitherto granted to the petitioner on the principle of mutuality, and there was no merit in the contentions of the petitioner as regards manifest arbitrariness of the statutory provisions, the declaration sought for in the writ petition could not be granted. The learned Judge, however, found that the retroactive operation given to the amendment could not be legally sustained on the principles of fairness and set aside the retroactivity envisaged for the amendment. It is therefore that the writ petitioner is before us impugning that portion of the judgment of the learned Single Judge that dismissed its writ petition, while the Union and the State are before us impugning the latter portion of the judgment that set aside the retroactive operation of the amendment. The submissions of the learned counsel:

7. We have heard Sri. Arvind P. Datar, the learned senior counsel, duly assisted by Sri. P.R.Renganath, the learned counsel for the appellant in W.A.No.1659 of 2024, Sri. AR. L. Sundaresan, the learned W.A.Nos.1659 & 1487/24 & 468/25 :: 14 :: Additional Solicitor General in W.A.No.1487 of 2024 and Sri.Mohammed Rafiq, the learned Special Government Pleader (Taxes) for the appellant in W.A.No.468 of 2025.

8. The submissions of Sri. Arvind P. Datar, the learned senior counsel, duly assisted by Sri. P.R.Renganath, the learned counsel for the appellant in W.A.No.1659 of 2024, on the unconstitutionality of levy of GST on activities/transactions between a Club and its members are as follows: A. On the aspect of mutuality, the learned senior counsel would submit as follows: ● Identity between club and members: It is long established common law that there is identity between a club/association and its members, under the principle of mutuality. Consequently, there can be no sale/service by a club to its members. This position in law was recognised even in the 19th century in Graff v. Evans – [(1882) 8 QBD 373]. ● Principle applies even to incorporated clubs: That clubs/associations have long acted upon the faith of this position in law, and that this principle applies even to incorporated clubs, was recognised in Trebanong Working Men's Club and Institute Ltd. v. Macdonald – [(1940) 1 All ER 454]. ● Principle applies even to tax law: Even in taxation laws, the position of a members' club, though incorporated, has been recognised to be quite different i.e., that the members' club was only structurally a company and that it did not carry on trade or business so as to attract the Corporation Profits Tax [Inland Revenue Commissioners v. Westleigh Estates Co. Ltd – 1924 (1) KB 390]. W.A.Nos.1659 & 1487/24 & 468/25 :: 15 :: ● Principle well recognised in India: This position has all along been recognised, and applied, in India by various High Courts, as has been acknowledged even by the Supreme Court. In the manner of stating a well-settled position in law in respect of which no detailed analysis was required, the Supreme Court recognised that in the case of a club the services were to the members themselves, that it was a self-serving institution (even where guests are admitted), that a club was identified with its members, and that it could not be said that a club had an existence apart from the members [Secretary, Madras Gymkhana Club Employees Union v. The Management of the Gymkhana Club - [1967 SCC OnLine SC 51], paras 30-32 : AIR 1968 SC 554]]. ● Incorporation irrelevant: It has been clarified by the Supreme Court that services provided by a club for members have to be treated as activities of a self-serving institution, even if the club is incorporated as a limited company under the Companies Act, and that it was “clear that the Club cannot be treated as a separate legal entity of the nature of a limited company carrying on business” [Cricket Club of India Ltd v. Bombay Labour Union - [AIR 1969 SC 276, para 14]. ● No transfer between a club and its members: It is based on this principle – that there could be no sale or transfer between a club and its members – that the Supreme Court stuck down levy of sales tax on supply of food/beverages made by a club to its members, in JCTO, Madras v. The Young Men's Indian Association (Regd.) - [(1970) 1 SCC 462]. ● 46 th Amendment attempts to bring clubs to tax: In an attempt to legitimise levy of sales tax on a club/association, the Constitution 46th Amendment (1981) had sought to define “tax on sale or purchase of goods” as including a tax on the supply of goods by an unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. ● Mutuality survives 46 Even the 46th Amendment did not do away with the basis of the th Amendment: principle that the club/association and its members are one and the same, W.A.Nos.1659 & 1487/24 & 468/25 :: 16 :: further, even on its terms, the 46th Amendment extended only to supply of goods (and not to provision of services). ● The Supreme Court in State of West Bengal & Ors. v. Calcutta Club Ltd. - [2019 (29) GSTL 545 (SC)] emphatically held that the principle of mutuality continued even after the 46th Amendment. The said decision also recognises that the law has always been that the principle of mutuality extends even to incorporated clubs and not just to unincorporated clubs and that the 61st Law Commission Report which preceded the 46th amendment had not appreciated this. ● No service between club/association and its members: Calcutta Club (para 76) also recognised that the position in law was that there could be no service between a club and its members, confirming the decision in Ranchi Club v. Chief Commr. of Central Excise & Service Tax - [2012 SCC OnLine 306 : (2012) 51 VST 369]. Ranchi Club had laid down that the basic feature common in sale and services was that both required the existence of two parties, that since the issue whether there were two persons or two legal entities in the activities of the members' club had been already considered and decided by the Supreme Court [in Young Men's Indian Association], it had to be held that in view of mutuality and in view of activities of the club, if the club provided any service to its members, it was not a service by one to another as the foundational facts of existence of two legal entities in such transaction was missing. ● Legal position at the time of the constitutional amendment: Thus, the position of law prevailing at the time of the Constitution 101 st Amendment – empowering the Parliament and the State legislatures to levy a goods and services tax under Article 246A – was that there was identity between a club/association and its members. The name of the club/association was but a tool used to compendiously refer to the members. Therefore, Article 246A and 366(12A) have been enacted only on the understanding that this was the law. W.A.Nos.1659 & 1487/24 & 468/25 :: 17 :: B. On the aspect of GST being on “supply”, the learned senior counsel would submit as follows: ● The Constitution 101st Amendment defined goods and services tax as a “tax on supply of goods or services or both”, per Article 366(12A). ● The plain meaning of “supply of goods or services” is supply by one person to another. In other words, it is evident that “supply”, by its very nature, requires two persons. There can be no supply to oneself. ● Thus, the scope of the legislative power granted by the Constitution to levy GST is that such a tax can be levied only where there is supply of goods/service by one person to another. ● While so, by the Finance Act, 2021, Parliament introduced Section 7(1)(aa) retrospectively w.e.f. the date of commencement of the GST regime (01-Jul-17) thereby inserting a legal fiction and artificially deeming a club/association and its members to be two separate persons. Further, the taxable event was also artificially enlarged to include “activities or transactions” between a club/association and its members. ● It is in this context that the ratio laid down in State of Madras v. Gannon Dunkerley & Co. - [AIR 1958 SC 560], and a long line of cases, becomes relevant. While the constitutional power was to levy only a “tax on sale or purchase of goods”, the State legislatures sought to expand this power by inserting an artificial definition in the sales tax legislations to the effect that “sale” would include a “works contract”. This was struck down in Gannon Dunkerly ibid on the ground that the accepted meaning of a term in a constitutional phrase could not be statutorily expanded. ● What a constitutional provision is aimed at is to be construed based on the state of the law then in force. To expand the scope of such a provision by a statute would be to overreach the Constitution. In short, a phrase in the Constitution granting legislative power should be construed according to “known legal connotations” [see para 43 of BSNL, cited in para 16 of Calcutta Club]. W.A.Nos.1659 & 1487/24 & 468/25 :: 18 :: ● When similar situations arose – in fact six different situations – where various States legislatures attempted to broaden the tax net by statutorily expanding the definition of “sale”, the Supreme Court struck down each such amendment as being beyond the meaning of the word “sale” in the legislative entry in the Constitution (entry 54 of List II - “tax on sale or purchase of goods”) were then added to the Constitution through six sub-clauses [(a) to (f)] of a newly inserted Article 366(29A) of the Constitution. [New India Sugar Mills Ltd v. CST - [(1963) 14 STC 316]; State of Madras v. Gannon Dunkerley & Co. - [AIR 1958 SC 560]; K.L. Johar and Co. v. CTO - [AIR 1965 SC 1082]; A.V. Meiyappan v. CCT - [(1967) 20 STC 115 (Mad.)]; CTO v. Young Men's India Assn. (Regd) – [(1970) 1 SCC 462] & Northern India Caterers (India) Ltd v. Lt. Governor of Delhi - [(1980) 2 SCC 167]]. C. On the aspect of Enlarging scope of “supply” by amending Section 7 of CGST Act without amending the Constitution – impermissible and unconstitutional, the learned senior counsel would submit as follows: ● The Supreme Court has recognised the well-established concept of mutuality, and that a club/association is a self-serving institution, and that there could be no “sale”/”service” between a club and its members, and has further held [Calcutta Club] that even the 46th Amendment did not do away with mutuality. Thus, this was the position in law at the time of the 101st Amendment. ● In this legal landscape, a power given to tax “supply of goods and services” can only be construed as applying to sale/service by one person to another, and not to sale/service to oneself (which is the case with respect to clubs/associations, since the club/association and its members are one and the same). After all, the very fact that the CGST amendment [Explanation to Section 7(1)(aa)] states that “notwithstanding any law in force” reaffirms that law in force was mutuality. Further, in this regard, W.A.Nos.1659 & 1487/24 & 468/25 :: 19 :: the “such as” in Section 7(1) is telling. It reveals the extent of the scope of the phrase “supply” as originally understood. It is trite that any new item, anything left unsaid (if at all) should be considered in line with the character/principle underlying the enumerated cases. It would be seen that all enumerated cases contemplate the involvement of two parties. ● Only the Constitution can expand what the Constitution has given: If this legislative power granted by the Constitution is to be expanded beyond the known legal connotations, it can be done only by a constitutional amendment doing away with the long-established and well-recognised concept of mutuality i.e., by a constitutional amendment which invests the Parliament and State legislature with the power to levy GST on self-sale/self-services between a club and its members. A statutory amendment, howsoever creatively worded, and ingeniously couched as a clarification, would not suffice. ● Why a validating statute will not suffice: If judgments [e.g. YMIA, Ranchi Club, Calcutta Club] merely state a position of statutory law, it could be undone by a validating statute. But where the judgments recognise a long-standing principle of law, which has a bearing on the extent of a power bestowed by the Constitution to legislatures, then, that power can be enlarged only by a constitutional amendment and not by the legislatures through a statutory amendment. ● What could be done only by constitutional amendment earlier cannot be done by statutory amendment now: a) Indeed, the very fact that a constitutional amendment was required [46th Amendment] and that statutory definitions did not suffice [struck down in Young Men's Indian Association] its testimony that Section 71(1)(aa) is insufficient for its intended purpose. b) In fact, the 61st Law Commission expressly recognised that expanding the concept of “sale” for the purpose of legislative power of the States, could “be achieved only by amending the Constitution”. W.A.Nos.1659 & 1487/24 & 468/25 :: 20 :: c) In other words, it would not suffice for statutes to state that club/associations would be deemed to be doing business, or that they and their members were deemed to be two different persons. ● In any case, 46 th Amendment does not cover services: Even assuming, but not for a moment admitting, that the 46th Amendment has done away with mutuality and would stand in aid of the impugned statutory provisions, it has done so only with respect to goods. Thus, as regards services, the position would continue to be governed by the known legal connotations of mutuality. Consequently, there could be no levy of GST on “service” by a club/association to its members. ● “ Supply of goods and services ” cannot cover all activities/transactions: Moreover, Article 246A speaks only of “supply of goods and services”. Section 7(1)(aa) though expands it to mean “activities or transactions”. If indeed, supply naturally meant activities or transactions there would have been no need for such an artificial definition. This artificiality in itself betrays its reach beyond the scope of the constitutional phrase, and is self-defeating. ● In fine, the effect of judgments may be nullified by legislative act removing the basis of the judgment. However, where a judgment recognises a position of law – especially a well-entrenched position in vogue for ages – which position in turn is determinative of the scope of power conferred on a legislature by a constitutional provision, then any amendment to that position of law can be made only by a constitutional amendment and not by a statute by the legislature. D. On the aspect of retrospectivity, the learned senior counsel would submit as follows: ● Retrospective cannot be unreasonable/confiscatory: It has been recognised that legislatures have the power to pass retrospective laws. However, such laws cannot be unreasonable or arbitrary. Where the retrospective law is confiscatory, it would unreasonable and thereby unconstitutional [Jayam & Co. v. Asst Commr - (2016) 15 SCC 125]. W.A.Nos.1659 & 1487/24 & 468/25 :: 21 :: ● New levy by overturning long-established position: In the instant case, given, inter alia, the ratio in Calcutta Club, there could have been no levy of GST on clubs and associations prior to the insertion of Section 7(1)(aa) and Explanation thereto. The said insertions thus created a new levy. This is done by overturning a long-held position of law i.e., the mutuality of clubs and association. Jayam & Co. cited above [see para 19 of the SCC report], held that a new provision inserted for determining input tax credit could not be retrospective. ● Substantial unforeseen prejudice: The new levy is made effective from the year 2017. Consequently, SCN no.58/2024-25 (GST) dt. 02-Aug-24 has been issued by the DRI (the 1st appellant herein) seeking to demand a huge sum of money from the appellant association for transactions done over the last 6 years. The appellant could have had no notion about such a levy and consequently no amounts were collected from the members towards the tax. The demands proposed in the said SCN are for GST on the admission fee, annual subscription fee, renewal fees, fraternity contribution, etc, and are as follows: a) Rs.45.32 crores towards GST under Section 74(1), alleging suppression; b) c) of the CGST Act, 2017; interest from 01-Jul-17 onwards; penalty under Section 122(1) read with Section 74(1) d) personal penalty on three past Secretaries (i.e., Secretaries during the period from 2017-2023) of the respondent under Section 122(3). The above SCN is in addition to an earlier SCN no.17/2023-24 dt. 18- Aug-23 seeking to demand Rs.2.71 crores, plus interest and penalty thereon on the membership fees. A heavy, unforeseen burden is thus cast on the appellant. The appellant would also not be in a position to collect the same from its members. The appellant’s vested right to its funds thus stands affected. Indeed, the appellant’s activities are liable to be gravely affected. The retroactive levy thus also violates Article 19(1). In this regard, it may be noted that it has been held that a statute whose retrospective operation covers a comparatively short period may yet, given the nature of the restriction imposed by it, be of such a character W.A.Nos.1659 & 1487/24 & 468/25 :: 22 :: as to introduce a serious infirmity in the retrospective operation [Rai Ramakrishna v. State of Bihar - 1963 SCC OnLine SC 31 : AIR 1963 SC 1667 (para 17)]. Indeed, in Jayam & Co. cited above, an amendment stretching back to just three-and-a half years was struck down. ● a) Undoing of settled law passed off as a clarification: Though the amendment seeks to overturn a well-settled position in law, it is unfortunately couched in the language of clarification (i.e., “it is hereby clarified that”) in a vain attempt to pass muster in the event of a constitutional challenge. b) While so, the mere legislative assertion that an amendment is a clarification is not conclusive, and whether a change is clarificatory or whether it is a substantive change (and therefore not retrospective) is a matter of statutory interpretation and therefore for the courts to adjudicate [Union of India v. Martin Lottery Agencies Ltd (2009) 12 SCC 209, para 52]. c) Further, the very fact that Section 7(1)(aa) itself states employs “deemed” twice amply demonstrates that the pre-amendment position was different from the post-amendment position, and that the use of “it is clarified” is but a vain smokescreen. d) Even assuming the two phrases are equally balanced, the interpretation in favour of the assessee is to be adopted. ● No interest: No GST was payable prior to the Finance Act, 2021 amendment, which was notified on 01-Jan-22. The impugned amendments were inserted by Section 108 of Finance Act, 2021. Under Section 1(2) of Finance Act, 2021, the Government was empowered to specify the date of commencement of any provision thereof. In exercise of the said power under Section (2), the Government issued notf. no.39/2021 dt. 21-Dec-21 specifying 01-Jan-22 as the date on which the aforesaid Section 108 comes into force. However, the said Section 108 itself states that the insertion of Section 7(1)(aa) in CGST ACT 2017 shall be deemed to have been made with effect from 01-Jul-17. Thus, W.A.Nos.1659 & 1487/24 & 468/25 :: 23 :: prior to 01-Jan-22 (or in any case 21-Dec-21) it could not have been known that GST ought to be paid by clubs/associations. Interest is merely compensation for belated payment of what ought to have been paid earlier. But, the question of payment earlier did not arise i.e., it was impossible to know, or to pay, earlier. It is trite that the law does not expect the impossible [lex non cognit ad impossibilia]. Thus, there can be no levy of interest for any period prior to 01-Jan-22. [see Star India (P) Ltd v. CCE - [(2005) 7 SCC 203], para 8] ● No penalty: There can be no retrospective imposition of penalty or confiscation of goods [JK Spinning & Wvg. Mills Ltd. v. UOI - [1988 SCR (1) 700]]. ● Retrospectivity falls foul of govt-constituted committee report #1 – manifestly arbitrary/unreasonable: Pursuant to the Vodafone saga, the Standing Committee on Finance presented its report on Current Economic Situation and Policy Options to Parliament on August 30,

2012. The Committee inter alia found that the investment climate in the country had suffered a serious setback and investors confidence had been hit mainly because of the concerns over the impact of retrospective tax laws and new General Anti Avoidance Rules (GAAR). The Government then constituted an Expert Committee headed by Dr. Parthasarathi Shome on GAAR on July 13, 2012. After examining the matter in some detail, the relevant conclusion of the Committee was summarised as below: The Committee concluded that retrospective application of tax law should occur in exceptional or rarest of rare cases, and with particular objectives: first, to correct apparent mistakes/anomalies in the statute; second, to apply to matters that are genuinely clarificatory in nature, i.e. to remove technical defects, particularly in procedure, which have vitiated the substantive law; or, third, to “protect” the tax base from highly abusive tax planning schemes that have the main purpose of avoiding tax, without economic substance, but not to “expand” the tax base. Moreover, retrospective application of a tax law should occur only after exhaustive and transparent consultations with stakeholders who would be affected. [Indeed, reflecting the challenges behind just and correct application of retrospective application, there is a constitutional or statutory protection against it in several countries. Countries such as Brazil, Greece, Mexico, Mozambique, Paraguay, Peru, Venezuela, Romania, Russia, Slovenia and Sweden have prohibited retrospective taxation.] [Emphasis added] W.A.Nos.1659 & 1487/24 & 468/25 :: 24 :: ● Retrospectivity falls foul of govt-constituted committee report #2 – manifestly arbitrary / unreasonable: In 2013, the World Bank published a report downgrading India in the index of investment friendliness-from its position of 131 in 2011, India was moved to 134. India's position remained below countries like Uganda, Ethiopia, Yemen etc. while its smaller neighbours like Sri Lanka fared better. To address this fall in confidence, the government appointed a committee headed by another eminent Indian Mr. Damodaran. The remit of this committee was generally to examine issues which contributed to this decline, the committee squarely addressed the question of retrospective taxation and had the following to say: It has often been said that death and taxes are equally undesirable aspects of human life. Yet, it can be said in favour of death that it is never retrospective. Retrospective taxation has the undesirable effect of creating major uncertainties in the business environment and constituting a significant disincentive for persons wishing to do business in India. While the legal powers of a Government extend to giving retrospective effect to taxation proposals, it might not pass the test of certainty and continuity. This is a major area where improvements should be attempted sooner rather than later …. [Emphasis added] ● Not “small repairs” or “play in the joints” or “greater leeway”: It cannot be contended that the impugned amendment makes only “small repairs” or that the legislature is entitled to “play in the joints” or to “greater leeway in tax legislation”, at least in the present case. Clearly, it is not “small repairs”, “play in the joints”, etc. when the well- established law of mutuality is sought to be abolished, or when a Supreme Court judgment is sought to be reversed, or when a liability of enormous proportions is sought to be imposed. ● Department’s arguments invalid: The above being so, the Department’s arguments for back dating are dealt with below: a) Existence of Section 7(1)(a) and Section 2(17)(e) of no matter: The Department contends that Section 7(1)(a) and Section 2(17)(e) existed effective 01-Jul-17 and that by itself made supplies of goods/services by clubs/associations to its members taxable effective 01-Jul-17 irrespective of the newly introduced Section 7(1)(aa) notified on 01-Jan-22. The argument is manifestly incorrect since a plain reading of the Section 7(1)(a) & Section 2(17)(e) on the one hand, and of the new Section 7(1)(aa) and Explanation on the other, would make it clear that the W.A.Nos.1659 & 1487/24 & 468/25 :: 25 :: latter are plainly wider in scope. It is the latter which seek to nullify the long- established principle of mutuality. Verily this scenario was considered Calcutta Club where Article 366(29A)(f) akin to Section 7(1)(a) and Section 2(17)(e) was held insufficient to nullify mutuality. It is recognising this that Parliament itself has sought introduce an expansive 7(1)(aa) and Explanation. [Incidentally, in this context, it may be mentioned that it is submission of the respondent herein (IMA KSB) that such a specific provision as Section 7(1)(aa) & Explanation ought to have been brought in through a constitutional amendment. This has been argued in detail in W.A. 1659 of 2024.] b) No demand raised earlier: The contention that the levy was always in existence from 01-Jul-14, even when Section 7(1)(aa) was absent, is also incorrect. Till 2022, no demand was raised as the Department was fully aware that these transactions are not taxable. The amendment is attempted to apply GST to medical associations for the first time through Section 7(1)(aa) and the Explanation thereto. Further, the present appeal involves welfare schemes for doctors where neither supply of goods nor supply of services is made. c) Other assessee’s cannot/do not determine constitutionality/statutory meaning: The Department contends that most clubs/associations in the country had taken registration and started paying GST even before the insertion of Section 7(1)(aa) without any doubt as to the liability to pay GST even going by Section 7(1)(a). Such an argument needs to be stated only to be rejected. The action of assessees cannot determine the interpretation of taxation provisions. Indeed such a dare is dangerous even for the broader interests of the Revenue, for, if this proposition were to be accepted, it would, simply put, mean that henceforth all batch tax litigations ipso facto ought to be ruled in favour of the assessees. d) Income Tax PAN in the name of the respondent does not nullify mutuality: The contention of the Department that the respondent and its members have all along been different persons since the respondent association had obtained an income-tax PAN is bewildering. The reference to income-tax is – thankfully for IMA KSB – self-defeating for the Revenue. Indeed, income tax law has always recognised mutuality and continues to do so till date. PAN is obtained by clubs/associations only because there is non-mutual income such as interest on deposits, consideration paid by non- members, etc. W.A.Nos.1659 & 1487/24 & 468/25 :: 26 :: ● In fine, looked at from the point of view of law or economics, the retrospective amendment unsettling well-established law, is unreasonable and arbitrary. It militates starkly against fairness in taxation and the rule of law. This is all the more when, as in the present case, the provision is retroactive. It is also disproportionate inasmuch as, whatever be the merits of the amendment, the retroactivity is uncalled for, without any determining principle, and capricious. What is more, passing off what earlier required a constitutional amendment (46th Amendment) in the language of a clarification through a statutory amendment is a colourable exercise.

9. The submissions of Sri. AR. L. Sundaresan, the learned Additional Solicitor General in W.A.No.1487 of 2024, briefly stated, are as follows: ● The thrust of the argument of the appellant is that IMA is an incorporated association and its members are considered to be one and the same and hence there is no question of supply of goods or supply of services by IMA to its members and law in this regard has been settled by Hon’ble Supreme Court in State of West Bengal and Others v. Calcutta Club Ltd. reported in (2019) 19 SCC 107 wherein the Hon’ble Supreme Court has held that the doctrine of mutuality survives even after amendment to the Constitution under 46th amendment by which Article 366(29A) was introduced. ● The respondents respectfully submit that the said argument deserves to be rejected for the following reasons:- a) The judgment in Calcutta Club case cannot come to the aid of the appellant as it was on the interpretation on the WB Sales Tax Act and imposition of service tax which are traceable to entry 54 of List 2 and entry 97 of List 1 which in turn are traceable Article 246 of Constitution of India. W.A.Nos.1659 & 1487/24 & 468/25 :: 27 :: b) The source of power for enacting the Central Goods and Services Tax Act and Kerala Goods and Services Tax Act is from Article 246A and Article 366(12A). As extracted above in Articles 246 and 254, Parliament and Legislature of every State shall have power to make laws with respect to Goods and Services Tax. Article 366(12A) provides that Goods and Services Tax means tax on any supply of goods or services or both, except taxes on supply of alcoholic liquor for human consumption. c) As such nothing in Articles 246 or 254 or any judgment interpreting a law under the said Articles and referable to List 1 entry 97 and entry 54 of List 2 would be applicable, as Article 246A is an enabling provision notwithstanding Articles 246 and 254 of the Constitution. d) Neither in Article 246A nor 366(12A) there are any limitations imposed on the Parliament or State Legislature with regard to imposition of such tax. e) When there are no limitations or restrictions imposed by the Constitution, no such limitations or restrictions can be read into such power. f) When no limitation or restriction with regard to the term supply or person has been provided for in the Constitution, the field is wide open for the Parliament and the Legislature to identify the person to be taxed and to define what would be supply and to define what would be referable to the term person. Accordingly Section 7 of the Act as it was rad with Section 2(17) and amendment 7(1)(aa) which defines supply and thereby providing that supply of goods and services by an Association to its member will be deemed to be supplies for the purposes of this Act is well within the power of the Parliament and the Legislature. g) The following judgments are relied for the proposition that no restrictions can be placed on the power of the Parliament or the State Legislature to impose a tax and make necessary provisions to achieve the end of maximisation of collection of tax: (i) Andhra Pradesh Para 21, 22, 30, 33, 34, 35, 36, 37, 42, 43 and 50. (2008) 2 SCC page 254 Karnataka Bank v. State of W.A.Nos.1659 & 1487/24 & 468/25 :: 28 :: (2012) 6 SCC 312 State of Madhya Pradesh v. Rakesh (2001) 3 SCC 654 Municipal Council Kota Rajasthan v. (ii) Kohli para 9, 15, 17, 20, 30. (iii) Delhi Cloth and General Mills Company Limited para 16, 18, 22 (iv) of Gujarat para 15, 22 to 26 (v) v. State of Gujarat para 54, 62 to 65. (2008) 5 SCC 449 Ramanalbailal Patel v. Government (2022) Vol. 15 SCC 364 Parmar Samantsinh Umedsinh ● TEST OF VIRES OF TAXATION LAW: (i) There is always a presumption in favour of Constitutionality of a law made by the Parliament or the State Legislature. (ii) No enactment can be struck down by saying that it is arbitrary or unreasonable or irrational but some Constitutional infirmity has to be found. (iii) The Court is not concerned within the wisdom or unwisdom, the justice or injustice of the law as Parliament and State Legislature are supposed to be alive to the needs of the people whom they represent and they are the best judge of the Community by whose suffrage they come into existence. (iv) Hardship is not relevant in pronouncing on the Constitutional validity of a fiscal stature or economic law, and (v) In the field of taxation, the legislature enjoys a greater latitude for classification. ● SETTLED PRINCIPLES in Challenge Constitutionality of any Law: (a) In a challenge to the vires of a Statute, there is always presumption in favour of the Constitutionality. (b) The Court while examining the constitutional validity of a statute is not concerned with the wisdom or un-wisdom of the Legislature and would not substitute its wisdom for that of the Legislature. Law enacted by the Legislature can be struck down by the courts only if: It lacks legislative competence. It offends any of the fundamental rights guaranteed (i) (ii) under Part III of the Constitution and; (iii) Later the third ground was also conceived by the Hon'ble Supreme Court, namely, that the law is so manifestly arbitrary and capricious. The present Section 7(1)(aa) does not come within anyone of the above vice to be declared as unconstitutional. W.A.Nos.1659 & 1487/24 & 468/25 :: 29 :: ● Without prejudice to the above submissions, if at all it is considered that the judgment in Calcutta Club case would be applicable even after Articles 246A and 366A introduced by the 101st amendment, it is always open to the Legislature to amend the law to remove the basis of the judgment. The judgment in Calcutta Club case was on the basis of the words used in Article 366(29A) and the relevant provisions of the Finance Act and the West Bengal Sales Tax Act which did not provide that an Association and its members can be considered as two different persons. The phrase used in Article 366A(29A) was only unincorporated association or body of persons. That basis is sought to be undone by introducing the amendment by way of Section 7(1)(aa) and the explanation thereto. It is settled law that the Legislature has the power to amend the law and thereby remove the basis of an earlier judgment. On that ground also the attack to Section 7(1)(aa) and the explanation thereto and Section 2(27)(e) deserves to be rejected. The respondents rely upon the judgment in (2020) 5 SCC 274 - Union of India and Others v. Exide Industries and another para 7, 15, 16, 21, 25 to 27, 47. ● While amending Section 7(1) by introduction of 7(1)(aa) amendment has been introduced to the word 'supply' but not to the word 'service'. However there is no flaw in the same since under Section 9 the taxable event is supply of goods or services or both. Since it is the supply of goods and services which is a taxable event, the definition of supply and amending the said definition of supply to include an association and its members as two different persons would be sufficient and there is no necessity to define service in such way that service by an association to its member would be a taxable service. There is no flaw in the amendment and the amendment as it is would serve the purpose and object to be achieved. ● Assuming for the purpose of argument without admitting there is a flaw in not having amended the definition of service, the respondent respectfully submits that while interpreting any law, the courts will have to harmoniously read the provision keeping in mind the objects that is sought to be achieved by the Legislation. If while W.A.Nos.1659 & 1487/24 & 468/25 :: 30 :: interpreting the provision of law, the Court comes to the conclusion that something is missing and ought to have been introduced for the purpose of giving life to the Section, the Courts would supply the words to give effect and life to the provision. Reliance is placed on the decisions in (1988) 2 SCC 513 – Hamidia Hardwar Stores v. Mohanlal Sowcar where words which were absent in Section 10 (3) (a) sub clause (iii) but were available in Section 10 (3) (a) (I) were read into Section 10 (3) (a) (iii) by the Court, for the purpose of giving life to the section and to ensure that the objection of the Act namely protection against unreasonable eviction of the tenant is achieved. Reliance is also placed on (1991) 2 SCC 87 - Surjit Singh Kalra v. Union of India and Anr. para 19. ● The respondent respectfully submits that the purport of the definition of the word 'supply' so as to include supply made by an association to its members should be read as referable both to goods as well as services as it was never the intention of the Legislature and could not have been the intention of the Legislature to treat supply of goods by the association to its members as taxable and supply of service by the association to its members as not taxable. If such an interpretation is given it would be absurd and defeat the object of taxation and hence such an interpretation ought not to be given and the Court should liberally interpret the provision in a harmonious way to give life to the Section. ● The appellant is a registered Society under the Travancore- Cochin Literary Scientific and Charitable Societies Registration ct,

1955. It is an admitted position that in the event of termination of a member and even dissolution of the society, property of the association is not allowed to be distributed among the members, but is to be given to any other non-profitable organisation having the same objects in view of the provisions contained in the above said Act. It is legal entity which can sue and can be sued in its own name. Even in case of any dispute between the society and its members, the society is entitled to initiate proceedings against its members in the court of law. As such the concept of mutuality and that the association and the members are W.A.Nos.1659 & 1487/24 & 468/25 :: 31 :: one and the same would not arise. As there is no concept of mutuality, there is no locus for the IMA to challenge the impugned provisions on the ground of mutuality. ● IMA Kerala is engaged in diverse business ventures encompasing the provision of hotels, bar and guest houses, bio-medical waste treatment plant, construction of residential complexes, as well as the facilitation of health insurance for its members and their families. Some of the schemes floated by IMA, Kerala are as follows: ● IMA Kerala floated an entity named IMAGE, acronym for IMA Goes Ecofriendly, which has an annual turnover of around Rs.50 Crore per annum. This business venture collects bio-medical wastes from hospitals for treatment at their plant. The profits are periodically transferred to the accounts of IMA, Kerala. ● IMA Kerala actively manages a Professional equipment and employment protection scheme, wherein special rates for equipment procurement are negotiated on behalf of its members; Also this scheme supplies colour coded bags to various hospitals for the collection of waste by IMAGE, an entity floated by IMA Kerala. ● Indian Medical Association also undertakes brand endorsements of big Scorporates and accrues income out of it. Major brands like Pepsico, Asian Paints, Kent water purifier etc. are their clients. ● IMA Kochi runs a bar attached hotel by name 'IMA House' which provides rooms to public on payment. The property is advertised in e- commerce platforms also. ● The membership fee for IMA is collected by the local branch of IMA and the due shares are transferred to State and HQ as per the bylaw of the national body. Though state units of IMA are functioning independently with separate PAN and registration, an average member is investing for the services of the association due to the vast assets and income earned by the body through various business activities and thus the association cannot claim the benefits of mutuality of a membership association. ● The accounts of IMA Kerala including various schemes was audited by as many as seven different Chartered Accountants but they never informed the department about their activities except that of IMAGE which was functioning after obtaining another PAN. Only after the inspection proceedings by the department, the association started paying GST on various schemes floated by IMA. ● Retrospective effect a) In so far as Section 7(1)(aa) is concerned, it comes to effect from 01.07.2017. W.A.Nos.1659 & 1487/24 & 468/25 :: 32 :: Such retrospectivity is valid and the contention agaisnt the same deserves to be rejected for the following reasons:- (i) (ii) (iii) The Legislature has power to make laws prospectively and retrospectively. Clarificatory amendments are always retrospective in operation. The present amendment introducing Section 7(1)(aa) and the explanation are clarificatory. The liability was always there even under Section 7(1)(a). (b) So far as the arguments of the appellant that the amendments cannot given retrospective effect, the same is untenable and deserves to be rejected. It is settled law that the Parliament has got the authority to make laws prospectively and retrospectively. Only limitation can be that a vested right cannot be taken away by the retrospective enactment in the present case. The appellant relied upon the judgment in Jayam & Co. v. State of Tamil Nadu - [(2016) 15 SCC 125] wherein the entitlement of input tax was reduced to the extent tax collected at the time of sale of the goods if the goods are sold at a discount. It was contended that such a reduction of the entitlement of availing in the tax credit cannot be given retrospective effect. That was on the basis of the principle of law that a vested right cannot be taken away by retrospective amendment. That is when the assessee had the right to adjust the entire tax credit in full, by an amendment it cannot be retrospectively reduced and that a vested right was sough to be curtailed. The said ratio will not apply since there is no vested right of the appellant association which is being taken away. It is only the liability which was always on them is sought to be enforced by way of the amendment. (c) In the alternative, the respondents submit that after the (2019) 19 SCC page 107 judgment of the Hon'ble Supreme Court in State of West Bengal & Ors. v. Calcutta Club Ltd., a doubt arose with regard to the correct position and hence the amendment was made by the Parliament to remove any such doubt on the basis of the judgment in Calcutta Club was corrected and hence it was made with retrospective effect and the respondents are entitled to make it with retrospective effect. (d) Retrospectivity cannot be a ground of attack if it is within the power of Legislature and such retrospective law is not manifestly arbitrary and confiscatory in nature. W.A.Nos.1659 & 1487/24 & 468/25 :: 33 :: (e) In the present case, the entire community has understood the fact and purpose of Section 7(1)(a) and almost all the Associations/Clubs/Incorporated Bodies and un-Incorporated Bodies have been collecting and paying service tax for the supply of goods and services to their members. Hence, appellant cannot contend that they are taken by surprise or that the imposition was unforeseen and could not have been anticipated by them. Respondents rely upon the following judgments to justify the retrospective effect:- 1965 SCC Online SC 39 – Para 18 and 25 (Jawaharlal v. State (1985) 2 SCC 197 – Para 28 nd 29 (Lohia Machines Ltd. v.

1. of Rajasthan) 2. Union of India 3. Union of India) 4. 5. Industries Ltd.) 6. Industires Ltd.) 7. Research Foundation v. Union of India and Others). (1989) 3 SCC 488 – Para 65, 66 (Ujar Prints and Others v.

ii) Payment: Any member of the petitioner may become a member of this scheme. ‘upon payment ‘of an annual subscription fee (Rs.2,000/- for the first year, and decreasing by Rs.100/- every year, and stabilising at Rs.1,500/-). This membership is for one unit of PPS membership. iii) Benefit: If any member of the scheme faces legal action (for acts done/omitted in the course of his profession), the petitioner engages and pays an advocate to provide legal services to the member concerned. Further, if the litigation results in damages being ordered to be paid by a member of the scheme, the petitioner pays such damages up to a maximum of Rs.10 lakhs for a single case and Rs.20 lakhs for multiple cases in one year. iv) A member may also opt for enhanced protection under this scheme, upon payment of membership fee of Rs.10,000/- p.a. The maximum compensation then payable to such a member of the scheme would be an additional Rs.1 crore. W.A.Nos.1659 & 1487/24 & 468/25 :: 10 :: Hospital Protection Scheme i) Object: The object of the scheme is to protect hospitals, clinics, dispensaries (run by member-doctors/where member-doctors work) from litigation and from harassment by the media for any act of alleged negligence or carelessness or deficiency of service on the part of the doctors/staff. Besides providing legal aid to the member institutions of the scheme, the scheme also aims to undertake social services activities as mentioned in the Professional Protection Scheme above. ii) Payment: Membership fee ranges from Rs.5,000/- to Rs.75,000/- per year depending upon the bed strength of the member institution. iii) Benefit: The maximum compensation paid by the scheme is Rs.10.00 lakhs for a single case and Rs.20.00 lakhs for multiple cases in a year. As with the PPS Scheme above, the petitioner would also engage advocates to act on behalf of member institutions and pay the related legal fees to such advocates. Kerala Health Scheme i) Object: The object of the Scheme is to provide financial assistance to members of the scheme and his/her spouse, parents and children in the event of any person being diagnosed with specified diseases. ii) Payment: The admission fees range from Rs.800/- to Rs.6,000/- depending upon the age of the doctor. All beneficiary members are additionally required to pay an annual membership subscription of Rs.100/- and Advance Finance Assistance Contribution ranging from Rs.2400/- to Rs.7500/- p.a. iii) diseases, compensation ranging from Rs.5,000/- to Rs.5 lakhs is paid. Benefit: Upon diagnosis/hospitalisation for specified Pension Scheme i) life members of the petitioner. Object: The object of this scheme is to provide pension to ii) Payment: Admission fee is Rs.3,000/- to Rs.5,000/-. Every member of the scheme shall also pay an annual membership fee of Rs.500/-. Further, the minimum annual contribution to be made by every member of the scheme is Rs.12,000/-. iii) Benefit: The pension is paid when a member of the scheme requests payment after she or he attains 60 years. 30% of the pension corpus of a member may be paid to the member at the time of starting the pension payment, if so requested by the member. The pension is then paid for the rest of the life of the member from the remaining 70% corpus amount of the member. Upon the death of a member, his nominee may similarly take a lump-sum payment from 30% of the corpus. Full maturity amount is paid to the nominee if pension for spouse is not opted for. If death occurs before the age off 60, the scheme provides for stated pay-outs. W.A.Nos.1659 & 1487/24 & 468/25 :: 11 :: Mutual Benefit Scheme i) Object: The object of the scheme is to provide financial support, encourage the habit of thrift amongst the members, encourage financial planning amongst the members, etc. ii) There were Schemes A, B and C wherein the monthly payment to be made by the member of such schemes was Rs.5,000/-, Rs.10,000/- and Rs.25,000/- respectively. The monthly instalment is payable by the 20th of every English calendar month, upon default of which interest @) 2% per month is payable. Each of the above 3 schemes runs for 20 months. iii) Beginning from ‘the second month “beneficiary amount" was payable by the scheme and increases every month. The member to whom the beneficiary amount for each month was payable was decided by lots among the members who request to be such beneficiaries. Defaulters were not included in the monthly lot. In the event of consecutive default of monthly instalments, the member would be removed from the scheme and the amount already paid would be vested with the funds of the scheme. The Managing Committee decided what amount was to be deducted as services charges and the balance amount was disbursed to members at the end of the scheme. Patient Care Scheme i) Object: The object of the scheme is to institute a corpus fund to provide assistance to deserving patients who seek care in modern medicine, to establish information/assistance centre for patients seeking medical services, to create a network of health care facilities across Kerala to assist poor patients and patients in emergency situation, etc. Payment: Any member of the petitioner may join as a ii) member of the scheme for a period of 3 years on payment of a membership fee of Rs.1,000/-. Members of the scheme are entitled to participate in the general body of this scheme and are eligible to cast their votes. iii) Benefit: The criteria and expenditure of the patient care fund is decided by the managing committee of the scheme from time to time. The payment to deserving patients are made from the corpus of this fund/scheme.”

4. The writ petitioner bona fide believed that it was not liable to pay GST on services rendered by it to its members under the aforesaid Schemes since it was well settled through a line of precedents that the principle of mutuality would insulate services rendered by a Club/Association to its members from the levy of GST on supply of W.A.Nos.1659 & 1487/24 & 468/25 :: 12 :: services. The underlying basis for the non-taxability of such services was the concept that when a Club/Association provides services to its members, there is no separate recipient of the services provided by the Club/Association and that the services were effectively provided by the members of the Club/Association to themselves. The said basis of non- taxability was, however, removed by an amendment of the provisions of Section 2(17)(e) and Section 7(1)(aa) read with the Explanation thereto of the Central Goods and Services Tax Act, 2017 [CGST Act] and the Kerala Goods and Services Tax Act, 2017 [KGST Act] that introduced deeming provisions making the supply of services by a Club/Association to its members a taxable supply for the purposes of the levy of tax. The amendment that was introduced through the Finance Act, 2021 was also made retroactive with effect from 01.07.2017, thereby adding to the financial woes of the petitioner.

5. In the writ petition preferred by the petitioner, the petitioner sought the following reliefs:

1. declare that the provisions of Section 2(17)(e) and Section 7(1) (aa) and the Explanation thereto, of the Central Goods and Services Tax Act, 2017 and the provisions of Section 2(17)(e) and Section 7(1)(aa) and the Explanation thereto, of the Kerala Goods and Services Tax Act, 2017 are unconstitutional and void being ultra vires the provisions of Article 246A read with Article 366(12A), and violative of Articles 14, 19(1)(g), 265 and 300A, of the Constitution of India;

2. in the alternative; issue a declaration that the phrase “shall be deemed to have been inserted with effect from the 1st day of July 2017”, in S.108 of the Finance Act, 2021 is unconstitutional and void being violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India;

3. issue a writ in nature of a writ of prohibition restraining the respondents, their men and agents from provisionally attaching the properties of the petitioner under Section 83 or any other provision of the CGST or KGST Acts, 2017; W.A.Nos.1659 & 1487/24 & 468/25 :: 13 ::

4. The petitioner also prays that this Honourable Court may be pleased to dispense with the translation of the documents produced in the vernacular language; issue such other writ, direction or order as this Hon'ble Court 5. may deem fit and proper in the facts and circumstances of the case, and thus render justice. The findings of the Single Judge:

6. The learned Single Judge, who heard the matter, found that insofar as the amendment to the CGST/SGST Act through Finance Act, 2021 had the effect of removing the basis of the immunity that was hitherto granted to the petitioner on the principle of mutuality, and there was no merit in the contentions of the petitioner as regards manifest arbitrariness of the statutory provisions, the declaration sought for in the writ petition could not be granted. The learned Judge, however, found that the retroactive operation given to the amendment could not be legally sustained on the principles of fairness and set aside the retroactivity envisaged for the amendment. It is therefore that the writ petitioner is before us impugning that portion of the judgment of the learned Single Judge that dismissed its writ petition, while the Union and the State are before us impugning the latter portion of the judgment that set aside the retroactive operation of the amendment. The submissions of the learned counsel:

7. We have heard Sri. Arvind P. Datar, the learned senior counsel, duly assisted by Sri. P.R.Renganath, the learned counsel for the appellant in W.A.No.1659 of 2024, Sri. AR. L. Sundaresan, the learned W.A.Nos.1659 & 1487/24 & 468/25 :: 14 :: Additional Solicitor General in W.A.No.1487 of 2024 and Sri.Mohammed Rafiq, the learned Special Government Pleader (Taxes) for the appellant in W.A.No.468 of 2025.

8. The submissions of Sri. Arvind P. Datar, the learned senior counsel, duly assisted by Sri. P.R.Renganath, the learned counsel for the appellant in W.A.No.1659 of 2024, on the unconstitutionality of levy of GST on activities/transactions between a Club and its members are as follows: A. On the aspect of mutuality, the learned senior counsel would submit as follows: ● Identity between club and members: It is long established common law that there is identity between a club/association and its members, under the principle of mutuality. Consequently, there can be no sale/service by a club to its members. This position in law was recognised even in the 19th century in Graff v. Evans – [(1882) 8 QBD 373]. ● Principle applies even to incorporated clubs: That clubs/associations have long acted upon the faith of this position in law, and that this principle applies even to incorporated clubs, was recognised in Trebanong Working Men's Club and Institute Ltd. v. Macdonald – [(1940) 1 All ER 454]. ● Principle applies even to tax law: Even in taxation laws, the position of a members' club, though incorporated, has been recognised to be quite different i.e., that the members' club was only structurally a company and that it did not carry on trade or business so as to attract the Corporation Profits Tax [Inland Revenue Commissioners v. Westleigh Estates Co. Ltd – 1924 (1) KB 390]. W.A.Nos.1659 & 1487/24 & 468/25 :: 15 :: ● Principle well recognised in India: This position has all along been recognised, and applied, in India by various High Courts, as has been acknowledged even by the Supreme Court. In the manner of stating a well-settled position in law in respect of which no detailed analysis was required, the Supreme Court recognised that in the case of a club the services were to the members themselves, that it was a self-serving institution (even where guests are admitted), that a club was identified with its members, and that it could not be said that a club had an existence apart from the members [Secretary, Madras Gymkhana Club Employees Union v. The Management of the Gymkhana Club - [1967 SCC OnLine SC 51], paras 30-32 : AIR 1968 SC 554]]. ● Incorporation irrelevant: It has been clarified by the Supreme Court that services provided by a club for members have to be treated as activities of a self-serving institution, even if the club is incorporated as a limited company under the Companies Act, and that it was “clear that the Club cannot be treated as a separate legal entity of the nature of a limited company carrying on business” [Cricket Club of India Ltd v. Bombay Labour Union - [AIR 1969 SC 276, para 14]. ● No transfer between a club and its members: It is based on this principle – that there could be no sale or transfer between a club and its members – that the Supreme Court stuck down levy of sales tax on supply of food/beverages made by a club to its members, in JCTO, Madras v. The Young Men's Indian Association (Regd.) - [(1970) 1 SCC 462]. ● 46 th Amendment attempts to bring clubs to tax: In an attempt to legitimise levy of sales tax on a club/association, the Constitution 46th Amendment (1981) had sought to define “tax on sale or purchase of goods” as including a tax on the supply of goods by an unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. ● Mutuality survives 46 Even the 46th Amendment did not do away with the basis of the th Amendment: principle that the club/association and its members are one and the same, W.A.Nos.1659 & 1487/24 & 468/25 :: 16 :: further, even on its terms, the 46th Amendment extended only to supply of goods (and not to provision of services). ● The Supreme Court in State of West Bengal & Ors. v. Calcutta Club Ltd. - [2019 (29) GSTL 545 (SC)] emphatically held that the principle of mutuality continued even after the 46th Amendment. The said decision also recognises that the law has always been that the principle of mutuality extends even to incorporated clubs and not just to unincorporated clubs and that the 61st Law Commission Report which preceded the 46th amendment had not appreciated this. ● No service between club/association and its members: Calcutta Club (para 76) also recognised that the position in law was that there could be no service between a club and its members, confirming the decision in Ranchi Club v. Chief Commr. of Central Excise & Service Tax - [2012 SCC OnLine 306 : (2012) 51 VST 369]. Ranchi Club had laid down that the basic feature common in sale and services was that both required the existence of two parties, that since the issue whether there were two persons or two legal entities in the activities of the members' club had been already considered and decided by the Supreme Court [in Young Men's Indian Association], it had to be held that in view of mutuality and in view of activities of the club, if the club provided any service to its members, it was not a service by one to another as the foundational facts of existence of two legal entities in such transaction was missing. ● Legal position at the time of the constitutional amendment: Thus, the position of law prevailing at the time of the Constitution 101 st Amendment – empowering the Parliament and the State legislatures to levy a goods and services tax under Article 246A – was that there was identity between a club/association and its members. The name of the club/association was but a tool used to compendiously refer to the members. Therefore, Article 246A and 366(12A) have been enacted only on the understanding that this was the law. W.A.Nos.1659 & 1487/24 & 468/25 :: 17 :: B. On the aspect of GST being on “supply”, the learned senior counsel would submit as follows: ● The Constitution 101st Amendment defined goods and services tax as a “tax on supply of goods or services or both”, per Article 366(12A). ● The plain meaning of “supply of goods or services” is supply by one person to another. In other words, it is evident that “supply”, by its very nature, requires two persons. There can be no supply to oneself. ● Thus, the scope of the legislative power granted by the Constitution to levy GST is that such a tax can be levied only where there is supply of goods/service by one person to another. ● While so, by the Finance Act, 2021, Parliament introduced Section 7(1)(aa) retrospectively w.e.f. the date of commencement of the GST regime (01-Jul-17) thereby inserting a legal fiction and artificially deeming a club/association and its members to be two separate persons. Further, the taxable event was also artificially enlarged to include “activities or transactions” between a club/association and its members. ● It is in this context that the ratio laid down in State of Madras v. Gannon Dunkerley & Co. - [AIR 1958 SC 560], and a long line of cases, becomes relevant. While the constitutional power was to levy only a “tax on sale or purchase of goods”, the State legislatures sought to expand this power by inserting an artificial definition in the sales tax legislations to the effect that “sale” would include a “works contract”. This was struck down in Gannon Dunkerly ibid on the ground that the accepted meaning of a term in a constitutional phrase could not be statutorily expanded. ● What a constitutional provision is aimed at is to be construed based on the state of the law then in force. To expand the scope of such a provision by a statute would be to overreach the Constitution. In short, a phrase in the Constitution granting legislative power should be construed according to “known legal connotations” [see para 43 of BSNL, cited in para 16 of Calcutta Club]. W.A.Nos.1659 & 1487/24 & 468/25 :: 18 :: ● When similar situations arose – in fact six different situations – where various States legislatures attempted to broaden the tax net by statutorily expanding the definition of “sale”, the Supreme Court struck down each such amendment as being beyond the meaning of the word “sale” in the legislative entry in the Constitution (entry 54 of List II - “tax on sale or purchase of goods”) were then added to the Constitution through six sub-clauses [(a) to (f)] of a newly inserted Article 366(29A) of the Constitution. [New India Sugar Mills Ltd v. CST - [(1963) 14 STC 316]; State of Madras v. Gannon Dunkerley & Co. - [AIR 1958 SC 560]; K.L. Johar and Co. v. CTO - [AIR 1965 SC 1082]; A.V. Meiyappan v. CCT - [(1967) 20 STC 115 (Mad.)]; CTO v. Young Men's India Assn. (Regd) – [(1970) 1 SCC 462] & Northern India Caterers (India) Ltd v. Lt. Governor of Delhi - [(1980) 2 SCC 167]]. C. On the aspect of Enlarging scope of “supply” by amending Section 7 of CGST Act without amending the Constitution – impermissible and unconstitutional, the learned senior counsel would submit as follows: ● The Supreme Court has recognised the well-established concept of mutuality, and that a club/association is a self-serving institution, and that there could be no “sale”/”service” between a club and its members, and has further held [Calcutta Club] that even the 46th Amendment did not do away with mutuality. Thus, this was the position in law at the time of the 101st Amendment. ● In this legal landscape, a power given to tax “supply of goods and services” can only be construed as applying to sale/service by one person to another, and not to sale/service to oneself (which is the case with respect to clubs/associations, since the club/association and its members are one and the same). After all, the very fact that the CGST amendment [Explanation to Section 7(1)(aa)] states that “notwithstanding any law in force” reaffirms that law in force was mutuality. Further, in this regard, W.A.Nos.1659 & 1487/24 & 468/25 :: 19 :: the “such as” in Section 7(1) is telling. It reveals the extent of the scope of the phrase “supply” as originally understood. It is trite that any new item, anything left unsaid (if at all) should be considered in line with the character/principle underlying the enumerated cases. It would be seen that all enumerated cases contemplate the involvement of two parties. ● Only the Constitution can expand what the Constitution has given: If this legislative power granted by the Constitution is to be expanded beyond the known legal connotations, it can be done only by a constitutional amendment doing away with the long-established and well-recognised concept of mutuality i.e., by a constitutional amendment which invests the Parliament and State legislature with the power to levy GST on self-sale/self-services between a club and its members. A statutory amendment, howsoever creatively worded, and ingeniously couched as a clarification, would not suffice. ● Why a validating statute will not suffice: If judgments [e.g. YMIA, Ranchi Club, Calcutta Club] merely state a position of statutory law, it could be undone by a validating statute. But where the judgments recognise a long-standing principle of law, which has a bearing on the extent of a power bestowed by the Constitution to legislatures, then, that power can be enlarged only by a constitutional amendment and not by the legislatures through a statutory amendment. ● What could be done only by constitutional amendment earlier cannot be done by statutory amendment now: a) Indeed, the very fact that a constitutional amendment was required [46th Amendment] and that statutory definitions did not suffice [struck down in Young Men's Indian Association] its testimony that Section 71(1)(aa) is insufficient for its intended purpose. b) In fact, the 61st Law Commission expressly recognised that expanding the concept of “sale” for the purpose of legislative power of the States, could “be achieved only by amending the Constitution”. W.A.Nos.1659 & 1487/24 & 468/25 :: 20 :: c) In other words, it would not suffice for statutes to state that club/associations would be deemed to be doing business, or that they and their members were deemed to be two different persons. ● In any case, 46 th Amendment does not cover services: Even assuming, but not for a moment admitting, that the 46th Amendment has done away with mutuality and would stand in aid of the impugned statutory provisions, it has done so only with respect to goods. Thus, as regards services, the position would continue to be governed by the known legal connotations of mutuality. Consequently, there could be no levy of GST on “service” by a club/association to its members. ● “ Supply of goods and services ” cannot cover all activities/transactions: Moreover, Article 246A speaks only of “supply of goods and services”. Section 7(1)(aa) though expands it to mean “activities or transactions”. If indeed, supply naturally meant activities or transactions there would have been no need for such an artificial definition. This artificiality in itself betrays its reach beyond the scope of the constitutional phrase, and is self-defeating. ● In fine, the effect of judgments may be nullified by legislative act removing the basis of the judgment. However, where a judgment recognises a position of law – especially a well-entrenched position in vogue for ages – which position in turn is determinative of the scope of power conferred on a legislature by a constitutional provision, then any amendment to that position of law can be made only by a constitutional amendment and not by a statute by the legislature. D. On the aspect of retrospectivity, the learned senior counsel would submit as follows: ● Retrospective cannot be unreasonable/confiscatory: It has been recognised that legislatures have the power to pass retrospective laws. However, such laws cannot be unreasonable or arbitrary. Where the retrospective law is confiscatory, it would unreasonable and thereby unconstitutional [Jayam & Co. v. Asst Commr - (2016) 15 SCC 125]. W.A.Nos.1659 & 1487/24 & 468/25 :: 21 :: ● New levy by overturning long-established position: In the instant case, given, inter alia, the ratio in Calcutta Club, there could have been no levy of GST on clubs and associations prior to the insertion of Section 7(1)(aa) and Explanation thereto. The said insertions thus created a new levy. This is done by overturning a long-held position of law i.e., the mutuality of clubs and association. Jayam & Co. cited above [see para 19 of the SCC report], held that a new provision inserted for determining input tax credit could not be retrospective. ● Substantial unforeseen prejudice: The new levy is made effective from the year 2017. Consequently, SCN no.58/2024-25 (GST) dt. 02-Aug-24 has been issued by the DRI (the 1st appellant herein) seeking to demand a huge sum of money from the appellant association for transactions done over the last 6 years. The appellant could have had no notion about such a levy and consequently no amounts were collected from the members towards the tax. The demands proposed in the said SCN are for GST on the admission fee, annual subscription fee, renewal fees, fraternity contribution, etc, and are as follows: a) Rs.45.32 crores towards GST under Section 74(1), alleging suppression; b) c) of the CGST Act, 2017; interest from 01-Jul-17 onwards; penalty under Section 122(1) read with Section 74(1) d) personal penalty on three past Secretaries (i.e., Secretaries during the period from 2017-2023) of the respondent under Section 122(3). The above SCN is in addition to an earlier SCN no.17/2023-24 dt. 18- Aug-23 seeking to demand Rs.2.71 crores, plus interest and penalty thereon on the membership fees. A heavy, unforeseen burden is thus cast on the appellant. The appellant would also not be in a position to collect the same from its members. The appellant’s vested right to its funds thus stands affected. Indeed, the appellant’s activities are liable to be gravely affected. The retroactive levy thus also violates Article 19(1). In this regard, it may be noted that it has been held that a statute whose retrospective operation covers a comparatively short period may yet, given the nature of the restriction imposed by it, be of such a character W.A.Nos.1659 & 1487/24 & 468/25 :: 22 :: as to introduce a serious infirmity in the retrospective operation [Rai Ramakrishna v. State of Bihar - 1963 SCC OnLine SC 31 : AIR 1963 SC 1667 (para 17)]. Indeed, in Jayam & Co. cited above, an amendment stretching back to just three-and-a half years was struck down. ● a) Undoing of settled law passed off as a clarification: Though the amendment seeks to overturn a well-settled position in law, it is unfortunately couched in the language of clarification (i.e., “it is hereby clarified that”) in a vain attempt to pass muster in the event of a constitutional challenge. b) While so, the mere legislative assertion that an amendment is a clarification is not conclusive, and whether a change is clarificatory or whether it is a substantive change (and therefore not retrospective) is a matter of statutory interpretation and therefore for the courts to adjudicate [Union of India v. Martin Lottery Agencies Ltd (2009) 12 SCC 209, para 52]. c) Further, the very fact that Section 7(1)(aa) itself states employs “deemed” twice amply demonstrates that the pre-amendment position was different from the post-amendment position, and that the use of “it is clarified” is but a vain smokescreen. d) Even assuming the two phrases are equally balanced, the interpretation in favour of the assessee is to be adopted. ● No interest: No GST was payable prior to the Finance Act, 2021 amendment, which was notified on 01-Jan-22. The impugned amendments were inserted by Section 108 of Finance Act, 2021. Under Section 1(2) of Finance Act, 2021, the Government was empowered to specify the date of commencement of any provision thereof. In exercise of the said power under Section (2), the Government issued notf. no.39/2021 dt. 21-Dec-21 specifying 01-Jan-22 as the date on which the aforesaid Section 108 comes into force. However, the said Section 108 itself states that the insertion of Section 7(1)(aa) in CGST ACT 2017 shall be deemed to have been made with effect from 01-Jul-17. Thus, W.A.Nos.1659 & 1487/24 & 468/25 :: 23 :: prior to 01-Jan-22 (or in any case 21-Dec-21) it could not have been known that GST ought to be paid by clubs/associations. Interest is merely compensation for belated payment of what ought to have been paid earlier. But, the question of payment earlier did not arise i.e., it was impossible to know, or to pay, earlier. It is trite that the law does not expect the impossible [lex non cognit ad impossibilia]. Thus, there can be no levy of interest for any period prior to 01-Jan-22. [see Star India (P) Ltd v. CCE - [(2005) 7 SCC 203], para 8] ● No penalty: There can be no retrospective imposition of penalty or confiscation of goods [JK Spinning & Wvg. Mills Ltd. v. UOI - [1988 SCR (1) 700]]. ● Retrospectivity falls foul of govt-constituted committee report #1 – manifestly arbitrary/unreasonable: Pursuant to the Vodafone saga, the Standing Committee on Finance presented its report on Current Economic Situation and Policy Options to Parliament on August 30,

2012. The Committee inter alia found that the investment climate in the country had suffered a serious setback and investors confidence had been hit mainly because of the concerns over the impact of retrospective tax laws and new General Anti Avoidance Rules (GAAR). The Government then constituted an Expert Committee headed by Dr. Parthasarathi Shome on GAAR on July 13, 2012. After examining the matter in some detail, the relevant conclusion of the Committee was summarised as below: The Committee concluded that retrospective application of tax law should occur in exceptional or rarest of rare cases, and with particular objectives: first, to correct apparent mistakes/anomalies in the statute; second, to apply to matters that are genuinely clarificatory in nature, i.e. to remove technical defects, particularly in procedure, which have vitiated the substantive law; or, third, to “protect” the tax base from highly abusive tax planning schemes that have the main purpose of avoiding tax, without economic substance, but not to “expand” the tax base. Moreover, retrospective application of a tax law should occur only after exhaustive and transparent consultations with stakeholders who would be affected. [Indeed, reflecting the challenges behind just and correct application of retrospective application, there is a constitutional or statutory protection against it in several countries. Countries such as Brazil, Greece, Mexico, Mozambique, Paraguay, Peru, Venezuela, Romania, Russia, Slovenia and Sweden have prohibited retrospective taxation.] [Emphasis added] W.A.Nos.1659 & 1487/24 & 468/25 :: 24 :: ● Retrospectivity falls foul of govt-constituted committee report #2 – manifestly arbitrary / unreasonable: In 2013, the World Bank published a report downgrading India in the index of investment friendliness-from its position of 131 in 2011, India was moved to 134. India's position remained below countries like Uganda, Ethiopia, Yemen etc. while its smaller neighbours like Sri Lanka fared better. To address this fall in confidence, the government appointed a committee headed by another eminent Indian Mr. Damodaran. The remit of this committee was generally to examine issues which contributed to this decline, the committee squarely addressed the question of retrospective taxation and had the following to say: It has often been said that death and taxes are equally undesirable aspects of human life. Yet, it can be said in favour of death that it is never retrospective. Retrospective taxation has the undesirable effect of creating major uncertainties in the business environment and constituting a significant disincentive for persons wishing to do business in India. While the legal powers of a Government extend to giving retrospective effect to taxation proposals, it might not pass the test of certainty and continuity. This is a major area where improvements should be attempted sooner rather than later …. [Emphasis added] ● Not “small repairs” or “play in the joints” or “greater leeway”: It cannot be contended that the impugned amendment makes only “small repairs” or that the legislature is entitled to “play in the joints” or to “greater leeway in tax legislation”, at least in the present case. Clearly, it is not “small repairs”, “play in the joints”, etc. when the well- established law of mutuality is sought to be abolished, or when a Supreme Court judgment is sought to be reversed, or when a liability of enormous proportions is sought to be imposed. ● Department’s arguments invalid: The above being so, the Department’s arguments for back dating are dealt with below: a) Existence of Section 7(1)(a) and Section 2(17)(e) of no matter: The Department contends that Section 7(1)(a) and Section 2(17)(e) existed effective 01-Jul-17 and that by itself made supplies of goods/services by clubs/associations to its members taxable effective 01-Jul-17 irrespective of the newly introduced Section 7(1)(aa) notified on 01-Jan-22. The argument is manifestly incorrect since a plain reading of the Section 7(1)(a) & Section 2(17)(e) on the one hand, and of the new Section 7(1)(aa) and Explanation on the other, would make it clear that the W.A.Nos.1659 & 1487/24 & 468/25 :: 25 :: latter are plainly wider in scope. It is the latter which seek to nullify the long- established principle of mutuality. Verily this scenario was considered Calcutta Club where Article 366(29A)(f) akin to Section 7(1)(a) and Section 2(17)(e) was held insufficient to nullify mutuality. It is recognising this that Parliament itself has sought introduce an expansive 7(1)(aa) and Explanation. [Incidentally, in this context, it may be mentioned that it is submission of the respondent herein (IMA KSB) that such a specific provision as Section 7(1)(aa) & Explanation ought to have been brought in through a constitutional amendment. This has been argued in detail in W.A. 1659 of 2024.] b) No demand raised earlier: The contention that the levy was always in existence from 01-Jul-14, even when Section 7(1)(aa) was absent, is also incorrect. Till 2022, no demand was raised as the Department was fully aware that these transactions are not taxable. The amendment is attempted to apply GST to medical associations for the first time through Section 7(1)(aa) and the Explanation thereto. Further, the present appeal involves welfare schemes for doctors where neither supply of goods nor supply of services is made. c) Other assessee’s cannot/do not determine constitutionality/statutory meaning: The Department contends that most clubs/associations in the country had taken registration and started paying GST even before the insertion of Section 7(1)(aa) without any doubt as to the liability to pay GST even going by Section 7(1)(a). Such an argument needs to be stated only to be rejected. The action of assessees cannot determine the interpretation of taxation provisions. Indeed such a dare is dangerous even for the broader interests of the Revenue, for, if this proposition were to be accepted, it would, simply put, mean that henceforth all batch tax litigations ipso facto ought to be ruled in favour of the assessees. d) Income Tax PAN in the name of the respondent does not nullify mutuality: The contention of the Department that the respondent and its members have all along been different persons since the respondent association had obtained an income-tax PAN is bewildering. The reference to income-tax is – thankfully for IMA KSB – self-defeating for the Revenue. Indeed, income tax law has always recognised mutuality and continues to do so till date. PAN is obtained by clubs/associations only because there is non-mutual income such as interest on deposits, consideration paid by non- members, etc. W.A.Nos.1659 & 1487/24 & 468/25 :: 26 :: ● In fine, looked at from the point of view of law or economics, the retrospective amendment unsettling well-established law, is unreasonable and arbitrary. It militates starkly against fairness in taxation and the rule of law. This is all the more when, as in the present case, the provision is retroactive. It is also disproportionate inasmuch as, whatever be the merits of the amendment, the retroactivity is uncalled for, without any determining principle, and capricious. What is more, passing off what earlier required a constitutional amendment (46th Amendment) in the language of a clarification through a statutory amendment is a colourable exercise.

9. The submissions of Sri. AR. L. Sundaresan, the learned Additional Solicitor General in W.A.No.1487 of 2024, briefly stated, are as follows: ● The thrust of the argument of the appellant is that IMA is an incorporated association and its members are considered to be one and the same and hence there is no question of supply of goods or supply of services by IMA to its members and law in this regard has been settled by Hon’ble Supreme Court in State of West Bengal and Others v. Calcutta Club Ltd. reported in (2019) 19 SCC 107 wherein the Hon’ble Supreme Court has held that the doctrine of mutuality survives even after amendment to the Constitution under 46th amendment by which Article 366(29A) was introduced. ● The respondents respectfully submit that the said argument deserves to be rejected for the following reasons:- a) The judgment in Calcutta Club case cannot come to the aid of the appellant as it was on the interpretation on the WB Sales Tax Act and imposition of service tax which are traceable to entry 54 of List 2 and entry 97 of List 1 which in turn are traceable Article 246 of Constitution of India. W.A.Nos.1659 & 1487/24 & 468/25 :: 27 :: b) The source of power for enacting the Central Goods and Services Tax Act and Kerala Goods and Services Tax Act is from Article 246A and Article 366(12A). As extracted above in Articles 246 and 254, Parliament and Legislature of every State shall have power to make laws with respect to Goods and Services Tax. Article 366(12A) provides that Goods and Services Tax means tax on any supply of goods or services or both, except taxes on supply of alcoholic liquor for human consumption. c) As such nothing in Articles 246 or 254 or any judgment interpreting a law under the said Articles and referable to List 1 entry 97 and entry 54 of List 2 would be applicable, as Article 246A is an enabling provision notwithstanding Articles 246 and 254 of the Constitution. d) Neither in Article 246A nor 366(12A) there are any limitations imposed on the Parliament or State Legislature with regard to imposition of such tax. e) When there are no limitations or restrictions imposed by the Constitution, no such limitations or restrictions can be read into such power. f) When no limitation or restriction with regard to the term supply or person has been provided for in the Constitution, the field is wide open for the Parliament and the Legislature to identify the person to be taxed and to define what would be supply and to define what would be referable to the term person. Accordingly Section 7 of the Act as it was rad with Section 2(17) and amendment 7(1)(aa) which defines supply and thereby providing that supply of goods and services by an Association to its member will be deemed to be supplies for the purposes of this Act is well within the power of the Parliament and the Legislature. g) The following judgments are relied for the proposition that no restrictions can be placed on the power of the Parliament or the State Legislature to impose a tax and make necessary provisions to achieve the end of maximisation of collection of tax: (i) Andhra Pradesh Para 21, 22, 30, 33, 34, 35, 36, 37, 42, 43 and 50. (2008) 2 SCC page 254 Karnataka Bank v. State of W.A.Nos.1659 & 1487/24 & 468/25 :: 28 :: (2012) 6 SCC 312 State of Madhya Pradesh v. Rakesh (2001) 3 SCC 654 Municipal Council Kota Rajasthan v. (ii) Kohli para 9, 15, 17, 20, 30. (iii) Delhi Cloth and General Mills Company Limited para 16, 18, 22 (iv) of Gujarat para 15, 22 to 26 (v) v. State of Gujarat para 54, 62 to 65. (2008) 5 SCC 449 Ramanalbailal Patel v. Government (2022) Vol. 15 SCC 364 Parmar Samantsinh Umedsinh ● TEST OF VIRES OF TAXATION LAW: (i) There is always a presumption in favour of Constitutionality of a law made by the Parliament or the State Legislature. (ii) No enactment can be struck down by saying that it is arbitrary or unreasonable or irrational but some Constitutional infirmity has to be found. (iii) The Court is not concerned within the wisdom or unwisdom, the justice or injustice of the law as Parliament and State Legislature are supposed to be alive to the needs of the people whom they represent and they are the best judge of the Community by whose suffrage they come into existence. (iv) Hardship is not relevant in pronouncing on the Constitutional validity of a fiscal stature or economic law, and (v) In the field of taxation, the legislature enjoys a greater latitude for classification. ● SETTLED PRINCIPLES in Challenge Constitutionality of any Law: (a) In a challenge to the vires of a Statute, there is always presumption in favour of the Constitutionality. (b) The Court while examining the constitutional validity of a statute is not concerned with the wisdom or un-wisdom of the Legislature and would not substitute its wisdom for that of the Legislature. Law enacted by the Legislature can be struck down by the courts only if: It lacks legislative competence. It offends any of the fundamental rights guaranteed (i) (ii) under Part III of the Constitution and; (iii) Later the third ground was also conceived by the Hon'ble Supreme Court, namely, that the law is so manifestly arbitrary and capricious. The present Section 7(1)(aa) does not come within anyone of the above vice to be declared as unconstitutional. W.A.Nos.1659 & 1487/24 & 468/25 :: 29 :: ● Without prejudice to the above submissions, if at all it is considered that the judgment in Calcutta Club case would be applicable even after Articles 246A and 366A introduced by the 101st amendment, it is always open to the Legislature to amend the law to remove the basis of the judgment. The judgment in Calcutta Club case was on the basis of the words used in Article 366(29A) and the relevant provisions of the Finance Act and the West Bengal Sales Tax Act which did not provide that an Association and its members can be considered as two different persons. The phrase used in Article 366A(29A) was only unincorporated association or body of persons. That basis is sought to be undone by introducing the amendment by way of Section 7(1)(aa) and the explanation thereto. It is settled law that the Legislature has the power to amend the law and thereby remove the basis of an earlier judgment. On that ground also the attack to Section 7(1)(aa) and the explanation thereto and Section 2(27)(e) deserves to be rejected. The respondents rely upon the judgment in (2020) 5 SCC 274 - Union of India and Others v. Exide Industries and another para 7, 15, 16, 21, 25 to 27, 47. ● While amending Section 7(1) by introduction of 7(1)(aa) amendment has been introduced to the word 'supply' but not to the word 'service'. However there is no flaw in the same since under Section 9 the taxable event is supply of goods or services or both. Since it is the supply of goods and services which is a taxable event, the definition of supply and amending the said definition of supply to include an association and its members as two different persons would be sufficient and there is no necessity to define service in such way that service by an association to its member would be a taxable service. There is no flaw in the amendment and the amendment as it is would serve the purpose and object to be achieved. ● Assuming for the purpose of argument without admitting there is a flaw in not having amended the definition of service, the respondent respectfully submits that while interpreting any law, the courts will have to harmoniously read the provision keeping in mind the objects that is sought to be achieved by the Legislation. If while W.A.Nos.1659 & 1487/24 & 468/25 :: 30 :: interpreting the provision of law, the Court comes to the conclusion that something is missing and ought to have been introduced for the purpose of giving life to the Section, the Courts would supply the words to give effect and life to the provision. Reliance is placed on the decisions in (1988) 2 SCC 513 – Hamidia Hardwar Stores v. Mohanlal Sowcar where words which were absent in Section 10 (3) (a) sub clause (iii) but were available in Section 10 (3) (a) (I) were read into Section 10 (3) (a) (iii) by the Court, for the purpose of giving life to the section and to ensure that the objection of the Act namely protection against unreasonable eviction of the tenant is achieved. Reliance is also placed on (1991) 2 SCC 87 - Surjit Singh Kalra v. Union of India and Anr. para 19. ● The respondent respectfully submits that the purport of the definition of the word 'supply' so as to include supply made by an association to its members should be read as referable both to goods as well as services as it was never the intention of the Legislature and could not have been the intention of the Legislature to treat supply of goods by the association to its members as taxable and supply of service by the association to its members as not taxable. If such an interpretation is given it would be absurd and defeat the object of taxation and hence such an interpretation ought not to be given and the Court should liberally interpret the provision in a harmonious way to give life to the Section. ● The appellant is a registered Society under the Travancore- Cochin Literary Scientific and Charitable Societies Registration ct,

1955. It is an admitted position that in the event of termination of a member and even dissolution of the society, property of the association is not allowed to be distributed among the members, but is to be given to any other non-profitable organisation having the same objects in view of the provisions contained in the above said Act. It is legal entity which can sue and can be sued in its own name. Even in case of any dispute between the society and its members, the society is entitled to initiate proceedings against its members in the court of law. As such the concept of mutuality and that the association and the members are W.A.Nos.1659 & 1487/24 & 468/25 :: 31 :: one and the same would not arise. As there is no concept of mutuality, there is no locus for the IMA to challenge the impugned provisions on the ground of mutuality. ● IMA Kerala is engaged in diverse business ventures encompasing the provision of hotels, bar and guest houses, bio-medical waste treatment plant, construction of residential complexes, as well as the facilitation of health insurance for its members and their families. Some of the schemes floated by IMA, Kerala are as follows: ● IMA Kerala floated an entity named IMAGE, acronym for IMA Goes Ecofriendly, which has an annual turnover of around Rs.50 Crore per annum. This business venture collects bio-medical wastes from hospitals for treatment at their plant. The profits are periodically transferred to the accounts of IMA, Kerala. ● IMA Kerala actively manages a Professional equipment and employment protection scheme, wherein special rates for equipment procurement are negotiated on behalf of its members; Also this scheme supplies colour coded bags to various hospitals for the collection of waste by IMAGE, an entity floated by IMA Kerala. ● Indian Medical Association also undertakes brand endorsements of big Scorporates and accrues income out of it. Major brands like Pepsico, Asian Paints, Kent water purifier etc. are their clients. ● IMA Kochi runs a bar attached hotel by name 'IMA House' which provides rooms to public on payment. The property is advertised in e- commerce platforms also. ● The membership fee for IMA is collected by the local branch of IMA and the due shares are transferred to State and HQ as per the bylaw of the national body. Though state units of IMA are functioning independently with separate PAN and registration, an average member is investing for the services of the association due to the vast assets and income earned by the body through various business activities and thus the association cannot claim the benefits of mutuality of a membership association. ● The accounts of IMA Kerala including various schemes was audited by as many as seven different Chartered Accountants but they never informed the department about their activities except that of IMAGE which was functioning after obtaining another PAN. Only after the inspection proceedings by the department, the association started paying GST on various schemes floated by IMA. ● Retrospective effect a) In so far as Section 7(1)(aa) is concerned, it comes to effect from 01.07.2017. W.A.Nos.1659 & 1487/24 & 468/25 :: 32 :: Such retrospectivity is valid and the contention agaisnt the same deserves to be rejected for the following reasons:- (i) (ii) (iii) The Legislature has power to make laws prospectively and retrospectively. Clarificatory amendments are always retrospective in operation. The present amendment introducing Section 7(1)(aa) and the explanation are clarificatory. The liability was always there even under Section 7(1)(a). (b) So far as the arguments of the appellant that the amendments cannot given retrospective effect, the same is untenable and deserves to be rejected. It is settled law that the Parliament has got the authority to make laws prospectively and retrospectively. Only limitation can be that a vested right cannot be taken away by the retrospective enactment in the present case. The appellant relied upon the judgment in Jayam & Co. v. State of Tamil Nadu - [(2016) 15 SCC 125] wherein the entitlement of input tax was reduced to the extent tax collected at the time of sale of the goods if the goods are sold at a discount. It was contended that such a reduction of the entitlement of availing in the tax credit cannot be given retrospective effect. That was on the basis of the principle of law that a vested right cannot be taken away by retrospective amendment. That is when the assessee had the right to adjust the entire tax credit in full, by an amendment it cannot be retrospectively reduced and that a vested right was sough to be curtailed. The said ratio will not apply since there is no vested right of the appellant association which is being taken away. It is only the liability which was always on them is sought to be enforced by way of the amendment. (c) In the alternative, the respondents submit that after the (2019) 19 SCC page 107 judgment of the Hon'ble Supreme Court in State of West Bengal & Ors. v. Calcutta Club Ltd., a doubt arose with regard to the correct position and hence the amendment was made by the Parliament to remove any such doubt on the basis of the judgment in Calcutta Club was corrected and hence it was made with retrospective effect and the respondents are entitled to make it with retrospective effect. (d) Retrospectivity cannot be a ground of attack if it is within the power of Legislature and such retrospective law is not manifestly arbitrary and confiscatory in nature. W.A.Nos.1659 & 1487/24 & 468/25 :: 33 :: (e) In the present case, the entire community has understood the fact and purpose of Section 7(1)(a) and almost all the Associations/Clubs/Incorporated Bodies and un-Incorporated Bodies have been collecting and paying service tax for the supply of goods and services to their members. Hence, appellant cannot contend that they are taken by surprise or that the imposition was unforeseen and could not have been anticipated by them. Respondents rely upon the following judgments to justify the retrospective effect:- 1965 SCC Online SC 39 – Para 18 and 25 (Jawaharlal v. State (1985) 2 SCC 197 – Para 28 nd 29 (Lohia Machines Ltd. v.

1. of Rajasthan) 2. Union of India 3. Union of India) 4. 5. Industries Ltd.) 6. Industires Ltd.) 7. Research Foundation v. Union of India and Others). (1989) 3 SCC 488 – Para 65, 66 (Ujar Prints and Others v.