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2014 (12) TMI 998 - HC - VAT and Sales TaxWhether there is a "sale" under the contract - purchase value of bamboo cut bundles - Section 22(1) of Andhra Pradesh General Sales Tax Act, 1957 - Relevant clauses of the agreement between the Government of Andhra Pradesh and the respondent- company for grant of long term leases of forest land for making bamboo available, for the consumption of the respondent, at their paper mills - Held that:- Whether the subject transactions concern 'goods' or 'moveable property' or 'immovable property' - Are the bamboos delivered to the respondent-company, from the departmentally extracted coupes, exigible to tax under the APGST Act – Held that:- While several of the terms and conditions of the agreement are common, both to the bomboo industrial cuts delivered from the departmentally worked coupes and the bomboo extracted, from the allotted coupes, by the company themselves, additional terms and conditions, with regards the supply of departmentally extracted bamboos, were specified in the annexure to the agreement - These conditions related mainly to the mode of delivery, the sale price and the mode of payment - In addition, 7% of the sale price was payable by the respondent-company to compensate the Government for loss of moisture in the bamboos (condition No.6) - In view of Condition 7(ii) of the Annexure to the Agreement, the terms and conditions, as applicable for the bamboo extracted by the respondent-company, were applicable to the bamboo industrial cuts delivered to the respondent-company from the departmentally worked coupes regarding payment of the selling price for the departmentally extracted bamboo industrial cuts - Extraction and supervision charges were also payable by the respondent-company. The "bamboos" were not removable even after they were cut unless they were weighed and permits were granted. Severance of bamboo, even in the departmentally extracted coupes, was not under the contract of sale, but was prior thereto - The bamboos, liable to be cut each year, were not in a "deliverable state" on the date of the agreement - The various clauses in the contract show that there is no "sale", on the contract date, of bamboos as the goods were not in a deliverable state - As the bamboo cannot be cut or removed except as provided therein, the contract is not an agreement to sell bamboos standing in the contract areas, with an accessory licence to enter upon such areas for the purpose of felling and removing the bamboos - Nor is it only in respect of a particular felling season - It embraces not only bamboos which are in existence on the date of the contract, but also bamboos which are to grow and come into existence thereafter. Is the subject contract a grant of a profit a prendre – Held that:- The subject contract is not, and cannot be, a contract of sale of goods - It confers upon the respondent Company a benefit to arise out of land, namely, the right over the bamboos which grow from the soil coupled with several ancillary rights and is thus a grant of a profit a prendre - It is equally not possible to view it as a composite contract one - an agreement relating to standing bamboos agreed to be severed and the other - an agreement relating to bamboos to come into existence in the future - The terms of the Contract make it clear that it is one, integral and indivisible contract which is not capable of being severed - The terms and conditions of the contract confers upon the respondent-company a benefit to arise out of land, and it would thus be an interest in immovable property - It is a grant by the government of an interest in land - The grant of such right, not being for the beneficial enjoyment of any land of the respondent- company, would not be an easement - As the respondent-company was entitled, under the agreement, to take away the bamboos grown even in the departmentally extracted coupes, the agreement, in its entirety (including the part relating to the departmentally extracted bamboos), is a grant of a profit a prendre and is not a sale or purchase of goods exigible to tax under the APGST Act - Being a profit a prendre, or a benefit to arise out of land, any attempt on the part of the State government to tax the amounts, payable under the subject Contract, would not only be ultra vires the APGST Act but also unconstitutional as being beyond the State's taxing power under Entry 54 in List II of the Seventh Schedule to the Constitution of India. Applicability of decision of Supreme Court in the case of Titaghur Paper Mills Co. Ltd [1985 (3) TMI 226 - SUPREME COURT OF INDIA] after the amendment - Held that:- the ratio is applicable to the present case as the relevant parts of the definition of goods continued to remain a part thereof even after its amendment - Decided against the revenue.
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