VEERASWAMI, C.J.

These petitions filed by the National Chamber of Commerce, Madras, impugned the validity of assessments of sales tax on transactions involving import by it of art silk, dyes and chemicals and distribution thereof to its members who held actual user's licence. The petitioner has registered itself as a dealer and would appear to have even collected sales tax from its members to whom distribution was made of the imported stuff. The department assessed the transactions not only on the basis of those facts but also on the view that the explanation to the definition of "dealer" would apply, that is to say, a society or an association which, whether or not in the course of business, buys, sells, supplies or distributes goods from or to its members for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of the Act. Reliance was also apparently placed on explanation (1) to the definition of "sale". According to the explanation the transfer of the property involved by supply or distribution of goods by a society shall be deemed to be a sale for the purposes of the Act.

There is no dispute that the National Chamber of Commerce has been registered under the Societies Registration Act, 1860. If it imported goods from abroad and transferred the property therein to its constituent members for consideration, it might be said that there was a sale chargeable to tax. But, the facts, which we shall presently notice, do not seem to admit of the view that there was any such process amounting to a sale of goods. A letter of the Director of Handlooms dated 13th April, 1966, addressed to the Secretary, National Chamber of Commerce, shows the background for the import of dyes and chemicals. The first paragraph in the letter is this :

"It has been proposed to grant a licence for Rs. 9, 03, 000.55 in favour of the Director of Handlooms, Madras, against the surrender of dyes incentives by the exporters of Bleeding Madras for the exports during July-December 1964 period. As per (1st batch) the revised distribution scheme Rs. 6, 02, 000.55 has been set apart for distribution to the actual users through the registered associations and Tamil Nadu Handloom Weavers Co-operative Society." *

The letter goes on to say that it had been decided to distribute the available dyes and chemicals according to the proven consumption as certified by the Textile Control Officers concerned. Then comes the following :

"The proven consumption of dyes and chemicals and other canned items as certified by the Textile Control Officer in respect of the members of your association is Rs. 4, 23, 200 and six per cent. thereof works out to Rs. 25, 302. The distribution should be made to your members in the above ratio.

You are requested to intimate the Tamil Nadu Handloom Weavers Co-operative Society Limited, Madras-8, the details of dyes and chemicals required by the members of your association within the entitlement indicated above under advice to this office." *

Provision also has been made in this letter as to how the allotment was made, subject to certain conditions, one of which is that the petitioner should not sell or otherwise dispose of the dyes and chemicals which is allotted to the petitioner except to its members for their bona fide consumption and that such distribution to its members should only be made in the presence of the Textile Control Officer or his representative. The petitioner was also required to obtain acknowledgment of the members as a token of having received their shares. That clearly brings out the scheme of the distribution which obviously can involve no transfer of property. The petitioner was evidently acting as a kind of agent or trustee for its members. It certainly had no property in the goods it imported, for the import was only in respect of the import entitlement of the members of the petitioner. Further, when once the goods were i