Report No. 61

1D.4. Supply by club to members not 'sale'.-

Then, there are clubs. In a case1 decided by the Supreme Court on appeal from Madras, the Cosmopolitan club, Madras, the Youngmen's Indian Association, Madras and the Lawley Institute, Ootacamund, filed writ petitions under Article 226 of the Constitution, challenging the levy of sales tax under Madras General Sales Tax Act, 1959, on snacks, beverages and other articles supplied to their members or guests. The High Court held that the club was not a 'dealer' within the meaning of section 2(g), read with Explanation I, of the Madras Act and that there was no 'sale' within the meaning of section 2(h), read with Explanation I, of the Act. On appeal to the Supreme Court it was held that a member's club cannot be made subject to the provisions of the Sales Tax Act concerning sales, because the members are joint owners of all the club property. The supply of at tides to a member at a fixed price by the Club cannot be regarded as a "sale".

1. v. Young Men's Indian Association, (1970) 1 SCO 462. (on appeal form AIR 1964 Red 63).