TaxTMI 
TaxTMI 
1962 (12) TMI 31
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Judgment of the Court was delivered by SHAH, J.-This is an appeal against the judgment of the Madhya Pradesh High Court dismissing a petition filed by the Bhopal Sugar Industries Ltd., hereinafter called "the company " for a writ under Article 226 of the Constitution quashing the order of the Sales Tax Officer dated May 1, 1960, which imposed liability upon the company for payment of sales tax under the Madhya Bharat Sales of Motor Spirit Taxation Act, 20 of 1953, in respect of motor spirit and lubricants used for its own vehicles. The company carries on the business of manufacturing sugar, and maintains for the purpose of that business a fleet of motor trucks and other motor vehicles. The company is also registered under the Act ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs) could be exercised only under Entry 54 of List II of Schedule VII to the Constitution. Therefore the attempted levy of tax was illegal and without authority of law, and infringed the company's fundamental right to carry on business and to hold and acquire property as guaranteed by Article 19(1)(f) and (g) of the Constitution. At the hearing of the petition the High Court did not consider the grounds set up in support of the petition, but called upon the company to produce a copy of its agreement with Caltex (India) Ltd., under which the supply of motor spirits and lubricants was obtained by the company, and proceeded to adjudicate the claim for relief in the light of the covenants of the agreement. The High Court dismissed the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and lubricants used by it for its own vehicles were of its ownership, and appropriation by a retail dealer of the stock-in-trade owned by him for his own use does not constitute sale within the meaning of the Act. The Sales Tax Officer submitted that the consumption of motor spirits and lubricants by the company amounted to sale, because there was transfer of property, "from one establishment of the retail dealer to another". On the pleadings, two questions arose for determination: (a) Whether the appropriation of goods amounted to transfer of property by the retail dealer to another person; and (b) Whether such transfer amounted in law to sale. The Legislature has set up an elaborate and self-contained machinery for inve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etermine the exigibility to tax of transactions the nature of which is admitted, but the High Court normally does not proceed to ascertain the nature of a transaction which is alleged to be taxable. The High Court leaves it to the taxpayer to obtain an adjudication from the taxing authorities in the first instance. In the present case the company invoked the jurisdiction of the High Court on question of fact as well as on the constitutionality of the taxing statute and breach of fundamental rights. The High Court instead of determining the constitutional questions, on which alone the petition could normally be entertained, proceeded to investigate the correctness of an assumption made by the company, and thereby decided the case which was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able by a competent enactment it would not be open to the High Court exercising power under Article 226 of the Constitution to consider whether the taxing authority was justified in taxing the transaction. Levy of a tax lawfully imposed under the statute within the competence of the Legislature cannot be deemed to infringe the fundamental rights guaranteed by Article 19(1)(f) and (g), and whether the tax is properly levied in respect of a transaction is for the taxing authority to determine and not for the High Court. The levy and collection of sales tax on motor spirits and lubricants consumed by the company cannot therefore be regarded as illegal unless it is found that the goods were of the ownership of the company, and for reaso....