RAMASWAMI, J.

The transaction which is sought to be taxed as sale in this case took place in the following manner. The assessee introduced a scheme, the details of which as found in the printed pamphlet, reads as follows :

"Please get a coupon of our company from your friend or from the company by paying rupees five. Please mark your address and any one article you require and send it back to the company.

After receiving your coupon we will register it and send three coupons by V.P.L. for Rs. 15 plus V.P.L. charges. Now you have to give the coupons to three persons for Rs. 5 each and take the money for yourself and ask them to fill up the coupons with their names and full addresses and send it to us. We will send to each of your three parties three coupons each for Rs. 15 plus postal charges by V.P.L. As soon as the parties concerned clear the V.P.Ls., you will receive from us the article that you have mentioned in your coupon." *

Clauses 5 and 6 of the terms and conditions of the scheme read as follows :

"5. Any person sending M.O. or bank draft for Rs. 45 along with coupon duly filled up will receive the article that is mentioned in the coupon together with three sets of (9) coupons.

6. Coupons should be returned duly filled within three months of their receipt. Coupons received after three months will not be attended to."

The pamphlet further states that the member, who subscribes to the scheme can get any one of the following articles for Rs. 5.

Eversilver articles

(1) Tiffin carrier 1

(2) Kothu chatti 1

(3) Sambar vali 1

(4) Kuja 1

(5) Meals plates 3

(6) Davara tumbler 4

(7) Plain tumblers 8(8) Anna koodai 1

(9) Adukku set (containing four) 1

(10) Cup and saucer 5

(11) Idilithattu (with moodi) 1

(12) Kudam 1

(13) Kuthuvilakku 1

(14) Terylene shirt (sizes 28"to 40") 1

(15) Suit-case (with locker) 1

(16) Shirting cloth (best quality) 4

(17) Nylex saree 1

(18) Terrycotton saree (jacket pieces) 4

(19) Electric iron 1

(20) Timepiece 1

The coupon referred to in the scheme is a printed order form, which is as follows :

"ORDER

FORM

No. 17435 D. Regd No.

SRI SRINIVASA SALES CIRCULATION (Regd.) No. 11, Gandhi Street, Villivakkam, Madras-49.

From

Dear Sirs,

As mentioned in your list of articles No ....... I request you to kindly send me ......... Please send your coupons by V.P.L. for the amount of Rs. 16.00 sent by me.

Place : Yours faithfully,

Date : Signature

Canvasser's signature." *

On payment of a sum of Rs. 5, a coupon is given to the individual, let us say A. He fills up the coupon giving his address and mentioning the number and name of the article in the blank spaces and sends it back to the company. On receipt of this coupon order form, as stated in the coupon itself, three order forms are sent to A by V.P.L. for Rs. 16. When that V.P.L. is cleared by A, he receives a further letter from the company, which reads as follows :

"We are glad to note that you have cleared the V.P.L. No. by paying Rs. 16 and thank you very much for the same.

You please sell three order forms to three members and take that money. Fill the three forms addressing correctly of three members (IN BLOCK LETTERS) and send them to us by registered post. We will send to each among three members containing three order forms in each V.P.Ls. for Rs. 16. If all of them clear the V.P.Ls., paying Rs. 16 each, we will send you the required article item No. by registered post." *

A gives these three coupons to B, C and D, collects Rs. 5 from each of them and appropriate the amount to himself. B, C and D in turn either forward the coupons themselves to the company or through A filling the blanks stating the number of the article and the name and the description of the article, which they require. On receipt of these three coupon forms from B, C and D, the company sends three sets of three coupons each to B, C and D again under V.P.L. for Rs. 16 and informs A also of that fact in the printed form, which is as follows :

"We have received your three original order forms and the letter dated .