Honble PAL, J.–By an order dated 13.10.1999 in Sunrise Associates vs. Government of NCT of Delhi and others (2000) 1 SCC 420, the decisions of this Court in H. Anraj vs. Government of Tamil Nadu (1986) 1 SCC 414 as well as Vikas Sales Tax Corporation & Anr. vs. Commissioner of Commercial Taxes and Anr. (1996) 3 SCC 433 (is so far as it affirmed the decision in the H. Anraj) have been referred to this Bench for reconsideration.

(2). The question in H. Anraj was whether sales tax can be levied by States on the sale of lottery tickets. A Bench of two Judge held that a lottery involved (i) the right to participate in the lottery draw, and (ii) the right to win the prize, depending on chance. The learned Judges were of the opinion that while the second right was a chose in action and therefore not `goods for the purposes of the levy of Sales Tax, the first was a transfer of a beneficial interest in movable goods and was a sale within the meaning of Article 366 (29-A(a) of the Constitution and consequently subject to sales tax.

(3). The immediate cause for the present reference was a decision of the High Court of Delhi dated 17.07.1988 in Haryana State Lotteries vs. Govt. of NCT 1998 (46) DRJ 397 disposing of a series of writ petitions which construed H. Anraj and held that lottery tickets were goods and are liable to sales tax under Delhi Sales Tax Act, 1975. Several of the writ petitioners before the Delhi High Court have challenged the decision of the Delhi High Court before this Court. In the appeal preferred by Sunrise Associates, the order of reference was made on the prima facie view that there was no goods reason to split a lottery into two separate rights and, therefore, the judgment in H. Anraj required reconsideration. Since in the case of Vikas Sales Corporation vs. Commissioner of Commercial Taxes (supra), a bench of three-Judges had agreed with the decision of H. Anraj, it was necessary that the appeal should be heard by a Constitution Bench.

(4). The relevant provisions of law which formed the background in the context of which the decision of H. Anraj was given are considered by us prior to assessing the correctness of the decision. Entry 54 of List II of the Seventh Schedule read with Article 246(3) of the Constitution gives the States power to make laws with respect to ``taxes on the sale or purchase of goods other than newspapers subject to the provisions of Entry 92(A) of List 1. The meaning of the expression `sale of goods was considered by a Constitution Bench in the The State of Madras vs. Gannon Dunkerley & Co. Ltd., 1958 SCR 379. The question arose in connection with assessment of sales tax under the Madras General Sales Tax Act, 1939 for the year 1949-50 on the value of material used by the respondent-assessee for the execution of a works contract. The Constitution, although it defines `goods under Article 366(12) as `including all materials, commodities and articles, contains no definition of the expression `sale of goods. The Court held that the expression `sale of goods in the entry cannot be construed in its popular sense and it must be interpreted in its legal sense. After considering various authorities as well as the provisions of the Sales of Goods Act, 1930, the Court held that the expression `sale of goods is what it means in the Sale of Goods Act, 1930. A contract for the sale of goods, according to Section 4(1) of the Sale of Goods Act, 1930 ``is a contract whereby the seller agrees to transfer the property in goods to the buyer for a price.

(5). This classical concept of sale was held to apply to the entry in the legislative list in that there had to be three essential components to constitute a transaction of sale before tax could be imposed - namely, (i) an agreement to transfer title (ii) supported by consideration, and (iii) an actual transfer of title in the goods. In the absence of any one of these elements it was held that there was no sale. Therefore, a contract under which a contractor agr

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