Coupon circulation scheme was not a sale because goods passed through canvassing, not a money consideration contract.

Transactions under a coupon-based circulation scheme were held not to be sales because property in goods did not pass under a contract supported by money consideration paid solely by the recipient. The article was obtained only after further circulation of coupons and payments by other participants, so the arrangement was in substance a canvassing scheme rather than a completed sale under the Sale of Goods Act. On that basis, the transactions were not liable to tax as sales under the Tamil Nadu General Sales Tax Act, and the related assessment and penalty orders were set aside.

---

---

Issues: Whether the transactions under the scheme constituted sales liable to tax under section 3(1) of the Tamil Nadu General Sales Tax Act, 1959, and whether the penalty levied under section 12(3) could stand.

Analysis: A sale requires an agreement for transfer of property in goods for money consideration. Under the scheme, the participant paid only a small initial amount, but the article was obtained only after further circulation of coupons and payments by other participants, so the article was not transferred for money paid solely by the recipient under a contract of sale. The consideration was not confined to money and the transaction was in substance a scheme of circulation and canvassing rather than a completed sale within the meaning of section 4 of the Sale of Goods Act.

Conclusion: The transactions were not sales and were not liable to tax under section 3(1) of the Tamil Nadu General Sales Tax Act, 1959; the assessment and penalty orders were set aside in favour of the assessee.

Ratio Decidendi: A transaction is not a sale unless property in goods passes under a contract supported by money consideration; where the recipient obtains goods only through a circulation scheme requiring further canvassing and payments by third parties, the transaction is not taxable as a sale.

---