BHOPAL SUGAR INDUSTRIES LTD. MADHYA PRADESH AND ANOTHER versus D. B. DUBE, SALES TAX OFFICER, BHOPAL REGION, BHOPAL AND ANOTHER

Citation: [1964] 1 S.C.R. 481 · Decided: 21-12-1962 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Case Allowed
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Judgment (excerpt)

1 S.C.R. 
SUPREME COURT REPORTS 
BHOPAL SUGAR INDUSTRIES LTD. 
~IADHYA PRADESH, AND ANOTHER 
v. 
4tU 
D. B. DUBE, SALES TAX OFFICER, 
BHOPAL REGION, BHOPAL AND ANOTHER 
(B. P. SINHA, c. ]., P. B. GAJENDIU.GADKAR, 
K N. W ANCHOO, K. C. DAS GUPTA and 
J C. SHAH,. JJ.) 
Sal~· Tax-Oon8umption by Beller-Tax on aak of good.s-
Le~islrufre competence-Government of India Act, 1935 (26 and 
:!I; Geo. 5, Oh. 42), Sch. 7, Entry 54, List II-Madhya Pradesh 
Sales of Mo!or Spirit and Lubricant• Taxation Act, 1957 (M. P. 
4 of 1%8), 88. 2 (l), 3. 
The first petitioner, a company, manufacturc1 sugar and 
also sells motor spirit, high speed diese 1 oii and lu.bricants and 
maintains a petroleum pump in the State of Madhya Pradesh. 
_In the assessment proceedings in respect of sales of rr.iotor 
spirit and diesel oil, the petitioner was sought to be assessed 
in respect of petroleum and oil consumed by the petitioner for 
its own motor vchichs out of the stock held/by it. The 
petitioner challenged that part of the assessment on the ground1 
that the definition of "retail sale" by s. 2 (1) of the Act which 
seeks to render consumption by the owner of motor spirit 
. liable to be taxed by virtue of s. 3 of the Ac:t is beyond the 
legislative competence of the State and that the unconstitu· 
tional levy infringes the fundamental rights of the petitioner 
under Art. 19(l)(f) and(~) of the Constitution of India. 
Held, that a sale for the purpose of entry "Tax on the sale 
of goods" requires the concurrence of four clements (1) partico 
competent to contract; (2) mutual assent; (3) a thing, the 
absolute or general property in which is transferred from the 
seller to the buyer; ond (4) a prfr.c in money paid or promised; 
and tha.t the transaction which does not conform to the tradi-
tional concept of sale cannot be regarded as one within the 
co1npetence of the State Legislature to tax. 
The State of Madra/ v. Gannon Dunkerky & Oo. 
(Madras) Ltd., [1959) S. C. -R. 379, referred to. 
Ifft 
D11...b.t, 21. 
1961 
BJi.fial s.,., 
'°""'";,, Lli. 
., 
DttN, Sa/11 7 a 
Offi«• 
.u.~. J. 
482 SUPREl\fE COURT R[PORTS [1964] VOL. 
Htld, further, that b'· s. 2(1) the normal concept of sale 
is sought to be rr.Iarged by bringing in the comumption by the 
owner of the goods in which he 
deal~ v.·hich "'all not a ccaale1 
within the meaning of Entry 54, List II, Sch. 7 of the Govern-
rrent of Jndia Act, 1935, and therefore, the order of the Salct 
1'ax OHicr.r which \\'as fr>11nded on an ultra vim proviaion 
~·Cl.! it~ctf unconstitutional and could not be sustained. 
Omr.1xAL Jc;msnrrnox : Pelition :\o. Soi of 
19111. 
Petition under Art. 32 of the Constitution of 
lr.dia for the cnforcem~nt of Fundamental Rights. 
S. T. Deaai, J. B. Dadacha11ji, 0. C. l/ atliur 
and l!uvinder Narain, for the petitioners. 
B. Sen, K. L. Hiithi and /. Y. Shroff, for the 
r~spondrnts. 
I 962. December 21. 
The .Judgment of the 
Court \1 a,- delivered by 
SHAil, ].-Bhopal Sug~r Industries Ltd. (the 
first petitioner) is a public limited Company incor-
porated under the lndiau Companies Act, l!ll:I, and 
the second peti~ioner is :i. shareholder and a Director 
of the Cc>inpany. 
The Company is a manufacturer 
of sugar and owns a fleet of motor trucks and othrr 
motor vehiclrs. The Company also carries on the 
busin!'Ss 0f sdling motor spirit, J.igh speed diesel oil, 
and l1Jbriraut~ and maintains a ·petroleum pump at 
Schore j,, the State 0f Madhya Pradesh. Between 
April I, l!l:)g, and March 31, 1960, the Company 
used~ for its motor vehicles 8908 g2.llons of petroleum, 
40719 gallons of high speed diesel oil and lubricants 
of th~ value of Rs. 2,45:!.47 nP. The first respondent 
who is the assessing authority under the Madhya 
Pradesh 
Sales of Motor Spirit. and Lubricants 
Taxation !\ct, 4 of 19.51\. assessed the Company to 
pay sales ta :t in respect of motor-spirit aod lubricants 
' 
l S.C.R. SUPREME COURT REPORTS 
483 
used by the Company out of the stock held by it for 
its own vehicles, because in his view such consump· 
tion amounted to sales within the meaning of the Act. 
By this petition under Art. 32 of the Constitu-
tion it is claimed that the definition of 'retail sale' in 
s. 2 ( l) of the Act which seeks to render consumption 
by the owner of motor-spirit liable to tax under the 
Act by virtue of s. 3 is beyond the competence of the 
State Legislature and hence void and the order of the 
first respondent seeking to impose liability upon the 
Company for pay
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