Club supplies to permanent members are not deemed sales where mutuality and lack of distinct parties exclude sales tax liability.

Supplies of food, drinks and refreshments by members' clubs to permanent members were held not to be deemed sales because the extended definition of sale still required a transaction between legally distinct persons and a real consideration. The tribunal applied the mutuality principle and agency relationship between the club and its permanent members, treating contributors and participators as the same group for these transactions. Payments by permanent members were therefore not consideration in the legal sense, so the club supplies fell outside the sales tax net under the West Bengal Sales Tax Act, 1994, and the impugned notices and orders were set aside.

---

---

Issues: Whether the supplies of food, drinks and refreshments made by members' clubs to their permanent members for payment constituted deemed sales under the expanded definition of sale and were exigible to sales tax.

Analysis: The extended definition of sale under the State Act and Article 366(29A) of the Constitution still required a supply for valuable consideration and a transaction between distinct persons. In the case of a members' club and its permanent members, the Court treated the relationship as one governed by mutuality and agency, with identity between contributors and participators. Payments made by permanent members were therefore not treated as consideration in the legal sense, since the supplier and recipient were not distinct for these transactions. The Court further held that the brief order of the Supreme Court in the earlier club matter did not lay down any binding ratio to the contrary.

Conclusion: Supplies by the petitioner-clubs to their permanent members were not deemed sales and were not liable to sales tax under the West Bengal Sales Tax Act, 1994.

Final Conclusion: The club-members' transactions with permanent members were held to fall outside the tax net, and the impugned notices and orders were set aside.

Ratio Decidendi: A supply by a members' club to its permanent members is not a deemed sale unless there is a legally distinct supplier and recipient and a real consideration; mutuality and identity of members exclude such transactions from sales tax.

---