Members' club supplies are not sales without legal transfer of property, leaving them outside sales tax liability.

Members' clubs are not liable to sales tax on refreshments and other supplies to members unless the transaction involves a legal transfer of property in goods for consideration. The governing test under entry 54 of List II is the existence of a sale within the meaning of the Sale of Goods Act, 1930; where the club merely acts as an agent or conduit for members, no sale arises. On the facts described, the clubs rendered amenities through common management and common funds rather than trading as sellers to outsiders, so the deeming provisions in the sales tax law did not create taxability. The supplies were therefore not exigible to sales tax and the clubs were not dealers for those supplies.

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Issues: Whether refreshments, beverages and other articles supplied by members' clubs to their members constituted a sale attracting sales tax, and whether such clubs were dealers within the meaning of the sales tax law.

Analysis: Liability under entry 54 of List II depends on there being a sale within the meaning of the Sale of Goods Act, 1930, because the State can tax only a transfer of property for consideration. The clubs in question were found to be members' clubs or associations functioning for the members, with the supplies made through the club machinery for the members' benefit and without transfer of property from the club to the members in the legal sense. Where the club merely acts as an agent or conduit for the members, the necessary element of sale is absent, and the deeming provisions in the sales tax law do not operate to create taxability in the absence of such transfer. On the facts found, the clubs were not trading as sellers to outsiders but were rendering amenities to members through the common fund and common management.

Conclusion: The supplies were not sales, the clubs were not dealers in respect of those supplies, and the assessments to sales tax were unsustainable.

Final Conclusion: The appeals failed and the club supplies to members were held not to be exigible to sales tax.

Ratio Decidendi: For sales tax under entry 54 of List II, a members' club is taxable only if there is a legal transfer of property in goods to members for consideration; where the club merely acts as the members' agent and no such transfer occurs, the transaction is not a sale.

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