The Karnataka High Court has granted interim protection to M/s The Koramangala Club in a writ petition concerning the levy of Goods and Services Tax on transactions between a club or association and its members.
The order was passed by Justice B.M. Shyam Prasad on 7 July 2026 in M/s The Koramangala Club v. Union of India and Others, W.P. No. 5858 of 2026 (T-RES).
Background of the Dispute
The petitioner approached the Karnataka High Court challenging the GST liability arising from transactions between the club and its members. During the hearing on interim relief, counsel for the petitioner relied upon the principle of mutuality and submitted that members of an association pool their resources to provide services to themselves.
It was argued that, because a club and its members are governed by the doctrine of mutuality, transactions between them should not be treated as taxable supplies for the purposes of GST.
The petitioner also referred to the Division Bench judgment of the Kerala High Court in Indian Medical Association v. Union of India, in which the Kerala High Court had held that the principle of mutuality applies to clubs and associations and that such entities could not be subjected to GST liability in respect of supplies to their members.
Supreme Court Proceedings Considered
The Karnataka High Court noted that the Union of India had challenged the Kerala High Court judgment before the Supreme Court.
The Court further observed that the Supreme Court had stayed the recovery proceedings and the liabilities arising from the orders that were challenged before the Kerala High Court.
Taking note of the protection granted by the Supreme Court in the connected controversy, the Karnataka High Court considered it appropriate to grant interim relief to the Koramangala Club.
Interim Relief Granted
The High Court granted the interim order as sought by the petitioner and directed that the protection would remain in force until further orders.
The Court also called upon the standing counsel for the Union of India and the Central authorities to accept notice. The Additional Government Advocate was directed to accept notice for the State respondent.
The writ petition was directed to be re-listed on 2 September 2026.
Significance of the Order
The order is significant for clubs, associations and similar member-based organisations facing GST demands on transactions with their members.
Although the Karnataka High Court has not finally decided the constitutional or statutory validity of the levy, the interim protection reflects the continuing judicial consideration of the doctrine of mutuality under the GST framework.
The principal issue remains whether a club or association and its members can be treated as distinct persons for the purpose of taxing supplies between them, particularly after the statutory amendments intended to deem such transactions as supplies.
The final determination of the controversy will depend upon the outcome of the proceedings pending before the Supreme Court and the subsequent adjudication of the writ petition by the Karnataka High Court.
