Promotion Scheme

The company showed good profit, but when the sales tax authorities charged tax on the sale, it argued that there was no sale, according to the definition of that word in the Sale of Goods Act. The Madras high court agreed with it. Therefore, the government appealed to the SC.

The apex court ruled that though there was no formal contract for sale and purchase of the article in any specific form, such a contract could be spelt out from the correspondence and interaction between the parties.

In the present case, an implied contract is spelt out when the company offers the coupon and the article of the choice is ultimately sent to the customer for the payment of price which is accepted by the customer.

We find that all the attributes, characteristics and requirements of a sale are present in the transaction, the judgment said. This conclusion is further strengthened by the fact that the company earned profit by the sale of goods to the customers who joined the scheme.