Transfer of cloth to members for consideration was treated as a sale and attracted sales tax under the taxing law.

Property in cloth transferred by a syndicate to its members for cash and on agreed terms was treated as a contract of sale, not a mere distribution of assets in specie. The court applied the Sale of Goods Act concept of sale under the U.P. Sales Tax Act, noting that transfer for valuable consideration, a fixed price, profit element, and cash-payment terms with penal interest showed offer and acceptance. Because the syndicate and its members were separate entities and the legal form of the arrangement reflected a sale, the cloth was held liable to sales tax.

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Issues: Whether cloth transferred by the syndicate to its members on payment constituted a sale within the meaning of the U.P. Sales Tax Act.

Analysis: Sale under the taxing law required a transfer of property in goods for cash or other valuable consideration, and the transfer had to answer the character of a sale under section 4 of the Sale of Goods Act, 1930. The transaction here involved payment in cash, a resolution by the members to take the cloth at a fixed price, charging of profit, and a cash-payment arrangement with penal interest for default. These features showed an offer and acceptance sufficient to constitute a contract of sale. The syndicate and its members were separate entities, and the legal form adopted for the transfer could not be ignored merely because the distribution arose after decontrol.

Conclusion: The cloth supplied to the members on payment was a sale and was liable to sales tax; the answer was against the assessee.

Ratio Decidendi: Where property in goods is transferred by one distinct entity to another for valuable consideration under an arrangement showing offer, acceptance, and sale-like terms, the transaction is a contract of sale and not a mere distribution of assets in specie.

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