ORDER

The appellant, Cosmopolitan Club, is incorporated under section 26 of the Companies Act, 1913. The said club is in appeal against the judgment and order dated December 5, 2001 ([2002] 127 STC 475 (Mad)), of a Division Bench of the Madras High Court, whereby it was held that the appellant was liable to pay sales tax under the Tamil Nadu General Sales Tax Act, 1959, on the supplies of food and drinks to its members.

The main contention on behalf of the appellant is that when a members' club supplies food or drinks to its members, there is no sale because a members' club only acts as the agent of the member. Reliance is placed in this behalf upon the judgments of this court in Secretary, Madras Gymkhana Club Employees Union v. Management of the Gymkhana Club [1969] 1 SCR 742 and Joint Commercial Taxes Officer, Harbour Division - II, Madras v. Young Men's Indian Association [1970] 1 SCC 462 ([1970] 26 STC 241 (SC)). In the former case it was held that a club belongs to the members for the time being on its list of members. Thus, members can deal with the club as they like. A club is identified with its members at a given point of time, so that it cannot be said that a club has an existence apart from its members. Even more relevant to the issue is the decision in the case of Young Men's Indian Association [1970] 1 SCC 4622 which dealt with the very question, namely, "whether the supply of various preparations by each club to its members involves a transaction of sale ?" It was held, based upon the definition of "sale" in the Sale of Goods Act, 1930, that there was no sale exigible to tax "... if there is no transfer of property from one to another ... If the dub, even though a distinct legal entity, is only acting as an agent for its members in the matter of supply of various preparations to them, no sale would be involved as the element of transfer would be completely absent."

In this case the show-cause notice was issued to the club on March 10, 1993 in which it was, inter alia, alleged that after the amendment by Act 28 of 1984 by insertion of a new clause (v) to section 2(n) of the said 1959 Act, supply of goods by any unincorporated association or body of a persons to a member thereof for cash, deferred payment or other valuable consideration, shall also be deemed to be sale.

To complete the chronology of events, it may be further stated that the said show-cause notice was challenged in 1993 by the club by filing a writ petition in the High Court which came to be later transferred to the Tribunal. The Tribunal dismissed the matter on the merits. That decision of the Tribunal has been confirmed by the impugned judgment. Suffice it to state that in this case there was no determination by the fact-finding authorities regarding the relationship between the club and its members in the matter of supply of food and drinks; that is to say, was the club acting as an agent of the members or did the property in food and drinks pass from the club to the members ?

At this stage it may be mentioned that after the judgment of the High Court dismissing the writ petition, the assessment order was passed against which the club has preferred an appeal before the first appellate authority which has also dismissed this appeal and as of today the matter, being T.A. No. 17 of 2000, is pending before the Tribunal.

In the circumstances, we think it appropriate that the matter should go back to the Tribunal, who will decide, on the facts, as to the exact relationship between the parties in the matter of supply by the club of food and drinks to its members. In other words, the principle of mutuality and agency among other circumstances shall be gone into by the Tribunal before which the said appeal is pending.

At this stage it may be noted that the Department is also relying upon clause (vi) inserted in section 2(n) of the 1959 Act. All these amendments have been brought on the statute book in view of the 46th Amendment of the Constitution. We gr