TMI Blog1985 (3) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned provisions read as a whole clearly show that the severance of standing trees or bamboos has to be under the contract of sale and before the purchase thereof has been completed and not before sale of such trees or bamboos. The subject-matter of the impugned provisions is goods and the tax that is levied thereunder is on a completed purchase of goods. When under section 3-B of the Orissa Sales Tax Act, 1947 any goods are declared to be liable to tax on the turnover of purchases, such goods automatically cease to be liable to sales tax by reason of the proviso to that section. The word "supersession" in the notifications dated December 29, 1977 is used in the same sense as the words "repeal and replacement" and, therefore, does not have the effect of wiping out the tax liability under the previous notifications. The timber contracts are not works contracts but are agreements to sell standing timber. Under the timber contracts the property in the trees which were the subject-matter of the contracts passed to the respondent-firm, Messrs. M.M. Khara, only in the trees which were felled, that is, in timber, after all the conditions of the contract had been complied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith them), for the respondents. Anil B. Diwan, (Senior Advocate, with him), for the appellants. -------------------------------------------------- The judgment of the Court was delivered by MADON, J. -These two appeals by special leave granted by this Court are against the judgment and order of the Orissa High Court allowing 209 writ petitions under article 226 of the Constitution of India filed before it. Genesis of the appeals.-On May 23, 1977 the Government of Orissa in the Finance Department issued two notifications under the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947). We will hereinafter for the sake of brevity refer to this Act as "the Orissa Act". These notifications were Notification S.R.O. No. 372/77 and Notification S.R.O. No. 373/77. Notification S.R.O. No. 372/77 was made in exercise of the powers conferred by section 3-13 of the Orissa Act and Notification S.R.O. No. 373/77 was made in exercise of the powers conferred by the first proviso to sub-section (1) of section 5 of the Orissa Act. We will refer to these notifications in detail in the course of this judgment but for the present suffice it to say that Notification S.R.O. No. 372 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As many as 209 writ petitions under article 226 of the Constitution of India were filed in the High Court of Orissa challenging the validity of the aforesaid two notifications dated May 23, 1977 and the said entries Nos. 2 and 17 in each of the said two notifications dated December 29, 1977 (hereinafter collectively referred to as "the impugned provisions"). The petitioners before the High Court fell into two categories. The first category consisted of those who had entered into agreements with the State of Orissa for the purpose of felling, cutting, obtaining and removing bamboos from forest areas "for the purpose of converting the bamboo into paper pulp or for purposes connected with the manufacture of paper or in any connection incidental therewith". This agreement will be hereinafter referred to as "the bamboo contract". The other group consisted of those who had entered into agreements for the purchase of standing trees. We will hereinafter refer to this agreement as "the timber contract". All the bamboo contracts before the High Court were in the same terms except with respect to the contract area, the period of the agreement and the amount of royalty payable; and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After the said two notifications dated May 23, 1977 were issued, the Sales Tax Officer, Dhenkanal Circle, Angul, Ward A (the third appellant in Civil Appeal No. 219 of 1982), issued to the manager of the respondent-company's mill at P.O. Choudwar a notice dated August 18, 1977 under rules 22 and 28(2) of the Orissa Sales Tax Rules, 1947 stating that though the respondent-company's gross turnover during the year immediately preceding June 1, 1977 had exceeded Rs. 25,000, it had without sufficient cause failed to apply for registration as a dealer under section 9 of the Orissa Act and calling upon him to submit within one month a return in form IV of the forms appended to the said Rules, showing the particulars of "turnover for the quarter ending 76-77 6/77". By the said notice the said manager was required to attend in person or by agent at the Sales Tax Office at Angul on October 30, 1977 and to produce or cause to be produced the accounts and documents specified in the said notice and to show cause why in addition to the amount of tax that might be assessed a penalty not exceeding one and half times that amount should not be imposed under section 12(5) of the Orissa Act, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the said notifications dated December 29, 1977 were expressed to be made in supersession of all earlier notifications on the subject, the liability, if any, under the said notifications dated May 23, 1977 was wiped out. The said writ petitions prayed for quashing the impugned provisions and for a writ of mandamus against the respondents to the said petitions, namely, the State of Orissa, the Commissioner of Sales Tax, Orissa, and the said Sales Tax Officer, restraining them from giving any effect or taking any further steps or proceedings against the respondent-company on the basis of the impugned provisions or the said notice. In addition to the said two writ petitions filed by the respondent-company and the said Kanak Ghosh, three other writ petitions were also filed by other parties who had entered into bamboo contracts with the State of Orissa in which similar contentions were raised and reliefs claimed. The record is not clear whether any assessment order was made against the respondent-company in pursuance of the said notice or whether further proceedings in pursuance of the said notice were stayed by the High Court by an interim order. As mentioned earlier, by the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was for the period October 1, 1977 to December 31, 1978 and the fifth was for the period October 28, 1977 to July 31, 1979. After the said notifications dated May 23, 1977 were issued, the respondent- firm along with its said partner Mangalji Mulji Khara filed a writ petition in the Orissa High Court, being O.J.C. No. 1048 of 1977, against the State of Orissa, Commissioner of Commercial Taxes, Orissa, Sales Tax Officer, Sambalpur Circle, Divisional Forest Officer, Rairkhol Division, and Divisional Forest Officer, Deogarh Division. Two main grounds were taken in the said writ petition, namely, (1) the levy of a purchase tax on standing timber agreed to be severed was beyond the legislative competence of the State Legislature and (2) the said notifications imposed a tax both at the point of sale and point of purchase and were, therefore, invalid and ultra vires the Orissa Act. It was also contended that the power conferred upon the State Government under section 3-B of the Orissa Act to declare any goods or class of goods to be liable to tax on the turnover of purchase as also the power conferred upon the State Government to specify the rate of tax subject to the conditions that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , J., while Ray, C.J., delivered a short, concurring judgment. Das, J., rejected the contention that the effect of the word "supersession" used in the notifications dated December 29, 1977 was to wipe out the liability under the earlier notifications dated May 23, 1977. He held that the notifications dated May 23, 1977 remained in force until the notifications dated December 29, 1977 came into operation. So far as the other points raised before the High Court were concerned, Das, J., summarised the conclusions reached by the Court in paragraphs 19 and 20 of his judgment as follows: "19. For the reasons stated above, we hold as follows: (1) That the bamboos and trees agreed to be severed are nothing but bamboos and timber after those are felled. When admittedly timber and bamboos are liable for taxation at the sale point, taxation of those goods at the purchase point amounts to double taxation and, as such, the notifications are ultra vires the provisions of the Act. (2) The impugned notifications amount to taxation on agreements of sale, but not on sale and purchase of goods; and (3) In the case of bamboo exploitation contracts, the impugned notifications amount also to imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of India Act, 1935 prior to its amendment by the Indian Independence Act, 1947. Under section 100(3) of the Government of India Act, 1935 the Legislature of a Province alone had the power to make laws for a Province or any part thereof in in respect of any of the matters enumerated in List II in the Seventh Schedule to that Act, namely, the Provincial Legislative List. Entry 48 in the Provincial Legislative List provided for "Taxes on the sale of goods and on advertisements", Thus, under the Government of India Act, 1935 sales tax was an exclusively Provincial subject and the legislative competence of the Orissa Provincial Legislature to enact the Orissa Act was derived from section 100(3) of the Government of India Act, 1935 read with entry 48 in the Provincial Legislative List. Under the Constitution of India as originally enacted, the legislative topic "Taxes on the sale or purchase of newspapers and on advertisements published therein" was exclusively a Union subject in respect of which under article 245(1) read with article 246(1) Parliament alone could make laws for the whole or any part of the territory of India, this topic being the subject-matter of entry 92 in List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g place in the Province of Orissa. By the Orissa Sales Tax (Amendment) Act, 1958 (Orissa Act No. 28 of 1958) a purchase tax was for the first time introduced in the State of Orissa with effect from December 1, 1958. The tax under the Orissa Act is levied not on goods but on sales and purchases of goods or rather on the turnover of sales and turnover of purchases of goods of a dealer. Under section 4(2) of the Orissa Act, a dealer becomes liable to pay tax on sales and purchases with effect from the month immediately following a period not exceeding twelve months during which his gross turnover exceeded the limit specified in that sub-section which during the relevant period was Rs. 25,000. Under section 4(3) a dealer who has become liable to pay tax under the Orissa Act continues to be so liable until the expiry of three consecutive years during each of which his gross turnover has failed to exceed the prescribed limit and such further period after the date of the said expiry as may be prescribed by the Orissa Sales Tax Rules and his liability to pay tax ceases only on the expiry of the further period so prescribed. A special liability is created by section 4-A on a casual deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Orissa Sales Tax (Amendment) Act, 1979 (Orissa Act No. 24 of 1979). In the Straw Products' case [1978] 42 STC 302; (1977) 1 CWR 455 the petitioner company had entered into two agreements with the State of Orissa. From the facts set out in the judgment of the High Court in that case it would appear that these two agreements were similar to the bamboo agreement before us. The Divisional Forest Officer, Balliguda Division, called upon the petitioner company to reimburse to him the amount of sales tax to which he had been assessed, stating that he was a registered dealer and had been assessed to tax on the sale of all standing trees including bamboos. The petitioner company thereupon filed two writ petitions in the Orissa High Court challenging this demand. The contention that the transactions covered by the said two agreements were not sales of goods and, therefore, not exigible to sales tax does not appear to have been raised in those writ petitions. The High Court held that the State of Orissa and not the Divisional Forest Officer could be the dealer qua the transactions covered by the said agreements in case they were exigible to sales tax and that the liability under the Ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The substituted defininion of "dealer", omitting the portion thereof not relevant for our purpose, reads as follows: "(c) 'dealer' means any person who carries on the business of purchasing, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes- (i)...............a company,..........firm or association which carries on such business;............... Explanation I and every local branch of a firm registered outside the State or of a company the principal office or headquarters whereof is outside the State, shall be deemed to be a dealer for the purposes of this Act. Explanation II. -The Central Government or a State Government or any of their employees acting in official capacity on behalf of such Government, who, whether or not in the course of business, purchases, sells, supplies or distributes goods, directly or otherwise for cash or for deferred payment or for commission, remuneration or for other valuable consideration, shall, except in relation to any sale, supply or distribution of surplus, unserviceable or old stores or materials or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation when such cost is separately charged; (h) 'sale price' means the amount payable to a dealer as consideration for the sale or supply of any goods, less any sum allowed as cash discount according to ordinary trade practice, but including any sum charged for anything done by the dealer in respect of the goods at the time of, or before delivery thereof." As the liability of a dealer to pay tax under the Orissa Act depends upon his gross turnover exceeding the limit prescribed by section 4(2), it is necessary to see the definition of the expression "gross turnover". "Gross turnover" is defined by clause (dd) of section 2 as follows: "(dd) 'gross turnover' means the total of 'turnover of sales' and 'turnover of purchases'." The expression "turnover of sales" and "turnover of purchases" are defined in clauses (i) and (j) of section 2 as follows: "(i) 'turnover of sales' means the aggregate of the amounts of sale prices and tax, if any, received and receivable by a dealer in respect of sale or supply of goods other than those declared under section 3-B effected or made during a given period; (j) 'turnover of purchases' means the aggregate of the amounts of purchase price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax.- The State Government may, from time to time by notification, declare any goods or class of goods to be liable to tax on turnover of purchases: Provided that no tax shall be payable on the sales of such goods or class of goods declared under this section." This section was inserted in the Orissa Act with effect from December 1, 1958 by the Orissa Sales Tax (Amendment) Act, 1958. As the tax under the Orissa Act is intended to be a single point levy, section 8 confers upon the State Government the power to prescribe points at which goods may be taxed or exempted. Section 8 provides as follows: "8. Power of the State Government to prescribe points at which goods may be taxed or exempted. -Notwithstanding anything to the contrary, in this Act, the State Government may prescribe the points in the series of sales or purchases by successive dealers at which any goods or classes or descriptions of goods may be taxed or exempted from taxation and in doing so may direct that sales to or purchases by a person other than a registered dealer shall be exempted from taxation: Provided that the same goods shall not be taxed at more than one point in the same series of sales or pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 16, the following new serial and entry shall be inserted under appropriate heading, namely: Serial No. Description of goods (1) (2) 2-A Bamboos agreed to be severed. 16-A Standing trees agreed to be severed." "Notification S.R.O. No. 373/77 dated the 23rd May, 1977. [1977] 40 STC Statutes 20. In exercise of the powers conferred by the first proviso to sub-section (1) of section 5 of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947), the State Government do hereby direct that the following amendment shall be made in the notification of the Government of Orissa, Finance Department No. 20212-CTA- 14/76-F., dated the 23rd April, 1976, and that the said amendment shall take effect from the first day of June, 1977. AMENDMENT In the schedule to the said notification, after serial numbers 2 and 16, the following new serial and entry shall be inserted under appropriate heading, namely: Serial No. Description of goods Rate of tax (1) (2) (3) 2-A Bamboos agreed to be severed. Ten per cent 16-A Standing tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 67181-C.T.A. 135177-F. dated the 29th December, 1977. S.R.O. No. 901/77.-In exercise of the powers conferred by sub-section (1) of section 5 of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947), as amended by the Orissa Sales Tax (Amendment) Ordinance, 1977 (Orissa Ordinance No. 10 of 1977), and in supersession of all previous notifications in this regard, the State Government do hereby direct that with effect from the first day of January, 1978, the tax payable by a dealer under the said Act on account of the purchase of the goods specified in column (2) of the schedule given below, shall be at the rate specified against each in column (3) thereof: SCHEDULE Serial No. Description of goods Rate of tax (1) (2) (3) 2. Bamboos agreed to be severed Ten per cent 17. Standing trees agreed to be severed Ten per cent The relevant portions of the notification specifying the rates of sales tax read as follows: Notification No. 67184-C. T. A.-135/77-F dated the 29th December, 1977. S.R.O. No. 902/77.- In exercise of the powers conferred by sub-section (1) of section 5 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a law imposing a tax on the sale or purchase of goods (other than newspapers) is to be found in articles 245(1) and 246(3) of the Constitution of India read with entry 54 of the Constitution of India. Thus, entry 54 in the State List in the Constitution of India is, with certain modifications, the successor entry to entry 48 in the Provincial Legislative List in the Government of India Act, 1935. While entry 48 spoke of "taxes on the sale of goods", entry 54 speaks of "taxes on the sale or purchase of goods". The addition of the word "purchase" permits the State Legislature to levy a purchase tax and does not confine its taxing power merely to levying a sales tax. Sale and purchase are merely two ways of looking at the same transaction. Looked at from the point of view of the seller a transaction is a sale, while looked at from the point of view of the buyer the same transaction is a purchase. Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935 came up for interpretation by this Court in Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash [1954] 5 STC 193, 197 (SC); [1955] 1 SCR 243, 247. This Court held in that case that there having existed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement between the parties for the sale of the very goods in which eventually property passes." In that case the definition of the term "sale" in the Madras General Sales Tax Act, 1939 was enlarged by an amendment so as to include "a transfer of property in goods involved in the execution of a works contract" and the definition of "turnover" was expanded to include within it the amount payable for carrying out a works contract less such portion as may be prescribed. A new definition of "works contract" inserted in the said Act by the said amendments included within its meaning inter alia the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property. The Court held these amendments to be void and beyond the legislative competence of the Madras Provincial Legislature on the ground that in the case of a building contract, which was one and indivisible, the agreement between the parties was that the contractor should construct the building according to the specifications contained in the agreement and in consideration therefor receive payment as provided therein, and that in such an agreement there was neither a contract to sell th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction of sale of the same goods. As any attempt on the part of the State to impose by legislation sales tax or purchase tax in respect of what would not be a sale or a sale of goods or goods under the Sale of Goods Act, 1930 is unconstitutional, any attempt by it to do so in the exercise of its power of making subordinate legislation, either by way of a rule or notification, would be equally unconstitutional; and so would such an act on the part of the authorities under a Sales Tax Act purporting to be done in the exercise of powers conferred by that Act or any rule made or notification issued thereunder. Similarly, where any rule or notification travels beyond the ambit of the parent Act, it would be ultra vires the Act. Equally, sales tax authorities purporting to act under an Act or under any rule made or notification issued thereunder cannot travel beyond the scope of such Act, rule or notification. Thus, the sales tax authorities under the Orissa Act cannot assess to sales tax or purchase tax a transaction which is not a sale or purchase of goods or assess to sales tax any goods or class of goods which are liable to purchase tax or assess to tax, whether sales tax or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale or under the contract of sale. The Transfer of Property Act, 1882 (Act IV of 1882) does not give any definition of the term "movable property", but clause (36) of section 3 of the General Clauses Act, 1897 (Act X of 1897), clause (27) of the Orissa General Clauses Act, 1937 (Orissa Act I of 1937) and clause (9) of section 2 of the Registration Act, 1908 (Act XVI of 1908) do. Clause (36) of section 3 of the General Clauses Act provides as follows: "(36) 'movable property' shall mean property of every description, except immovable property. " The definition in the Orissa General Clauses Act is in identical terms. The definition in the Registration Act is as follows: "(9) 'movable property' includes standing timber, growing crops and grass, fruit upon and juice in trees, and property of every other description, except immovable property." The Transfer of Property Act does not give any exhaustive definition of "immovable property". The only definition given therein is in section 3 which states: "'immovable property' does not include standing timber, growing crops, or grass." This is strictly speaking not a definition of the term "immovable property " for it does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be a distinction because the Transfer of Property Act draws one in the definitions of immovable property' and 'attached to the earth'; and it seems to me that the distinction must lie in the difference between a tree and timber. It is to be noted that the exclusion is only of 'standing timber' and not of 'timber trees'. Timber is well enough known to be- 'wood suitable for building houses, bridges, ships, etc., whether on the tree or cut and seasoned. '(Webster's Collegiate Dictionary). Therefore, 'standing timber' must be a tree that is in a state fit for these purposes and, further a tree that is meant to be converted into timber so shortly that it can already be looked upon as timber for all practical purposes even though it is still standing. If not, it is still a tree because, unlike timber, it will continue to draw sustenance from the soil. Now, of course, a tree will continue to draw sustenance from the soil so long as it continues to stand and live; and that physical fact of life cannot be altered by giving it another name and calling it 'standing timber'. But the amount of nourishment it takes, if it is felled at a reasonably early date, is so negligible that it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs attached to or forming part of the land which were agreed to be severed before sale or under the contract of sale. The formalities required for a contract for the sale of goods of the value of 10 and upwards by section 17 of the Statute of Frauds were re-enacted in section 4 of the Sale of Goods Act, 1893. This section was repealed by the Law Reform (Enforcement of Contracts) Act, 1954. The definition of "goods" in section 61(1) of the new Sale of Goods Act, 1979, is the same as in the earlier Sale of Goods Act. Thus, the position now in English law is that crops and other produce whether fructus naturales or fructus industriales (except in the case of a sale without severance to a landlord, incoming tenant or purchaser of the land) will always be "goods" for the purposes of a contract of sale since the agreement between the parties must be that they shall be severed either "before sale" or "under the contract of sale" (see Benjamin's Sale of Goods, Second Edition, para 91, p. 63). As pointed out in Mahadeo v. State of Bombay [1955] Supp 2 SCR 339, 349 the distinction which prevailed in English law between fructus naturales and fructus industriales does not exist in Indian la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be severed and bamboos agreed to be severed shall be liable to tax on the turnover of purchases. The tax that is levied under section 3-B is not on goods declared under that section but on the turnover of purchases of such goods. If one reads the notifications issued under sections 3-B and 5(1) as a whole, it is clear that the taxable event is not an agreement to sever standing trees or bamboos but the purchase of bamboos or standing trees agreed to be severed. Does the absence of the words "before sale or under the contract of sale" make any difference to this position? The answer in our opinion must be in the negative. The very use of the word "agreed" in the description of goods shows that there is to be an agreement between the buyer and that seller and under this agreement standing trees must be agreed to be severed and so also bamboos. According to the definition of "goods" such severance may be either before sale or under the contract of sale. At first blush, therefore, it would appear that the goods which form the subject-matter of the impugned provisions are either bamboos and standing trees agreed to be severed before sale or bamboos and standing trees agreed to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here under a contract of sale the property it the goods is transferred from the seller to the buyer the contract is called a sale'; and secondly, 'an agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred'. It is therefore possible for a sale within the statutory meaning to come about in one of two ways: either by a contract which itself operates to transfer the goods from the ownership of the seller to that of the buyer, the property passing when the contract is made; or by a contract which is initially only an agreement to sell, but is later performed or executed by the transfer of the property. In either case it is clear that the sale involves not only a contract, but also a conveyance of the property in the goods, and so it may confer on the buyer the right to bring a claim in tort for wrongful interference with the goods as well as rights in contract." The test, therefore, is the transfer of the property in the goods from the seller to the buyer. In order to determine whether for the impugned provisions to apply standing trees or bamboos are to be severed before sale or under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made. (2) Delivery to the carrier. -Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract." We are not concerned with section 24 which provides when property in the goods passes to the buyer where goods are delivered to the buyer on approval or "on sale or return" or other similar terms. The terms "deliverable state" and "specific goods" are defined in clauses (3) and (14) of section 2 of the Sale of Goods Act as follows: "(3) goods are said to be in a 'deliverable state' when they are in such state that the buyer would under the contract be bound to take delivery of them; (14) 'specific goods' means goods identified and agreed upon at the time a contract of sale is made." Under the Orissa Act also "sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erance of the standing trees or bamboos must not be before sale but under the contract of sale, that is, after the sale thereof is completed. The absence in the impugned provisions of the words "before sale or under the contract of sale" thus makes no difference. The subject-matter of the impugned provisions is goods and the tax that is levied thereunder is on the completed purchase of goods. The fallacy underlying the reasoning of the High Court is that it has confused the question of the interpretation of the impugned provisions with the interpretation of timber contracts and the bamboo contract. On the interpretation it placed upon the timber contracts it came to the conclusion that the property in the standing trees passed only after severance and after complying with the conditions of that contract and, therefore, the impugned provisions purported to levy a purchase tax on an agreement to sell. In the case of bamboos agreed to be severed, the High Court on an interpretation of the bamboo contract held that it was a grant of a profit a prendre and from that it further held that the impugned provisions were bad in law because they amounted to a levy of purchase tax on a profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so to section 3-B and the proviso to section 8. Under the proviso to section 3-B, no tax is to be payable on the sales of goods or class of goods declared under that section to be liable to tax on the turnover of purchases. Under the proviso to section 8, the same goods are not to be taxed at more than one point in the same series of sales or purchases by successive dealers. According to the High Court, under the Orissa Act all goods are liable to sales tax unless exempted from tax by the State Government under section 6, and therefore, if particular goods are liable to sales tax, no purchase tax is leviable in respect of the same goods unless the State Government issues three notifications, namely, (1) a notification under section 3-B declaring the goods to be taxable at the purchase point, (2) a notification under section 5 prescribing the rate of purchase tax, and (3) a notification deleting the goods from the list of goods taxable at the sale point. The High Court has illustrated this by setting out what was done when fish was made liable to purchase tax instead of sales tax. We find that the High Court has misunderstood the scheme of taxation under the Orissa Act. As the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation was issued, the rate of purchase tax would be the one which was mentioned in section 5(1). After January 1, 1978 the scheme of taxation is that no rate of tax is specified in the Orissa Act but under section 5(1) the State Government is given the power to notify from time to time the rate of tax, whether sales tax or purchase tax, by issuing notifications. The notifications issued under section 5(1) fixing the rate of sales tax, namely, Notification No. 67184-C.T.A.-135/77-F dated December 29, 1977 does not contain any entry in respect of bamboos or timber or in respect of bamboos agreed to be severed or standing trees agreed to be severed. If they were liable to sales tax, they would fall under the residuary entry No. 101 and be liable to sales tax at the rate of seven per cent. If, however, any goods falling under the residuary entry or any other entry in that notification are declared under section 3-B to be liable to tax on the turnover of purchases, the residuary entry or that particular entry would automatically cease to operate in respect of those goods by reason of the proviso to section 3-B without there being any necessity to delete that particular entry or to am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded with effect from January 1, 1978 provides that "the tax shall be levied..........at such rate, not exceeding thirteen per cent..........as the State Government may, from time to time by notification, specify ". Thus, the power of the State Government to issue notifications under these two sections is to be exercised by it "from time to time" and, therefore, the State Government can under section 5(1) issue a notification and repeal and replace it by another notification enhancing or lowering the rate of tax and similar it can issue a notification under section 3-B declaring particular goods or class of goods to be liable to tax on the turnover of purchases and subsequently by another notification repeal that notification with the result that the particular goods or class of goods will from the date of such repeal be again liable to pay tax on the turnover of sales. In the notifications dated December 29, 1977 the word "supersession" is used in the same sense as the word "repeal" or rather the words "repeal and replacement". The Shorter Oxford English Dictionary, Third Edition, at page 2084, defines the word "supersession" as meaning "the action of superseding or condition of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso or to fix from time to time a lower rate of tax on account of the sale or purchase of any goods or class of goods specified in such notification. Thus, if no notification was issued by the State Government enhancing or lowering the rate of tax, the tax, whether sales tax or purchase tax, payable by a dealer would be at the rate specified in sub-section (1) of section 5 which at the relevant time was six per cent. In pursuance of the power conferred by the said proviso, the State Government had from time to time issued notifications enhancing and in some cases lowering the rate of tax payable on account of either sale or purchase of goods. The new section 5(1) did not specify any rate of tax but what was done was to confer upon the State Government the power by notification to specify from time to time the rate of tax subject to a maximum of thirteen per cent. Therefore, with effect from January 1, 1978 unless a notification was issued specifying the rate of tax, no dealer would be liable to pay any tax under the Orissa Act. It was for this reason that Notification No. 67184-C.T.A.- 135/77-F dated December 29, 1977 was issued specifying the rates of sales tax with effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase tax of the transactions in question. This plea was not raised at any stage before the High Court but has been raised for the first time in the petitions for special leave to appeal, and that too only with respect to the bamboo contract though during the course of hearing before us it was raised with respect to the timber contracts also. Before the High Court the matter proceeded on the basis that the question of validity of the impugned provisions and of the exigibility to purchase tax of the transactions covered by the bamboo contract and the timber contracts were inextricably linked together as if the impugned provisions were issued only in order to levy a purchase tax on the transactions covered by these contracts. The appellant can, therefore, hardly raise such a plea for the first time before this Court. It is true that normally it is for the assessing authorities to ascertain the facts and to interpret the documents in question, if there be any, and to decide whether a particular transaction is exigible to tax. Here, however, the facts are not in dispute and the determination of this question involves only an interpretation of the documents. The major part of the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sized logs were different commercial commodities and that sales tax could, therefore, be levied on both. According to the High Court they were the same commodity and, therefore, they could not be made liable to sales tax at two points in the same series of sales. The High Court did not decide the question whether the timber contracts were works contracts. This point was, however, urged before us on behalf of the respondent firm. We will deal with this point separately but for the present suffice it to say that according to us none of the timber contracts is a works contract. On behalf of the appellant State it was submitted that the timber contracts read with the sale notice advertising the auction in respect of the standing trees showed that the standing trees which were the subject-matter of the timber contracts were goods identified and agreed upon at the time when the contract of sale was made and were thus specific goods and that, therefore, there was an unconditional contract for the sale of specific goods in a deliverable state and the property in the said trees passed to the forest contractor, namely, the respondent firm, when the contract was made, and the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the auction and their act of bidding was to be deemed as sufficient proof of their having inspected the coupes and satisfied themselves about the correctness of the quality and quantity of the produce and the area of the contract. Condition 9 provided that no extension of time for working any coupe beyond the contract period as published in the Sale Notice and declared in the auction hall would be allowed except under very exceptional circumstances. Under condition 14, the prescriptions contained in the working plan, working schedule and their amendments or the executive instructions of the higher authority and local rules were to be binding on the contractors as regards felling of trees in coupes. Under condition 21, the purchaser was to pay the sales tax as per the Orissa Act over and above the bid amount. In the event of his delay in payment or non-payment of sales tax, the same was to be adjusted from the earnest money deposit or the security deposit, as the case may be, and the purchaser was bound to replenish the same forthwith. Condition 22 provided that the contractor was to pay sales tax on the amount of each instalment as per the Sales Tax Rules along with the instalment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... starting work, as the case may be, as required by rule 12 of the Forest Contract Rules. Under condition 18, an agreement was to be executed by the competent authority on behalf of the Government and a copy thereof was to be delivered to the contractor as soon as may be. On its bids being accepted the respondent firm entered into five timber contracts in the forms prescribed in the Schedule to the Forest Contract Rules. The main heading of each of these timber contracts is "Forest Contract-Agreement Form" and the long heading states that it is "An agreement for the sale and purchase of forest produce". Under clause 1, the forest produce "sold and purchased under" the timber contract was to be as specified in Schedule I thereof and the forest area in which it wag situated was indicated in Schedule V thereof and was to be referred to as the contract area. Schedule I in each of the timber contracts mentioned that the forest produce "sold and purchased under" the timber contract consisted of a certain number of sound and unsound trees marked and numbered serially on the blazes, one at the base of the tress and the other aboubt 4 from the ground level, with the hammer mark of facsimil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular coupe within one and a half months from the date of issue of the ratification order and to get the respondent firm's property hammer mark registered in the office of the Divisional Forest Officer on payment of the appropriate registration fee. Each of these letters required the respondent firm not to commence work in the contract area before the payment of the first instalment and before furnishing the Coupe Declaration Certificate or intimating in writing that it intended to commence work from a particular date, as the case may be, as required under rule 12 of the Forest Contract Rules. By the said letters, the respondent firm was also required to submit monthly returns of removal of forest produce from the contract area to the concerned Range Officer. A copy of each of these letters was forwarded to the concerned Range Officer with a direction that he should give delivery of the coupe to the respondent firm within one and a half months from the date of the ratification order and allow the respondent firm to commence work in the contract area after it had furnished the Coupe Declaration Certificate and made payment of the first instalment. As the Orissa Forest Contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under a forest contract". Under rule 6, a forest contract is to carry with it an accessory licence entitling the forest contractor and his servants and agents to go upon the land specified in the contract and to do all acts necessary for the proper extraction of the forest produce purchased under the contract. Under rule 7 where a period is specified in the forest contract for the extraction of the forest produce purchased under the contract, time is deemed to be of the essence of such contract and upon the completion of the specified period the contractor's right under the contract is to cease and any forest produce not removed across the boundaries of the contract area is to become the absolute property of the Government. The Conservator of Forests or the Divisional Forest Officer, as the case may be, is, however, given the right, for special reasons, to grant an extension of time on such terms as may be decided for a total period (inclusive of the original contract period) not exceeding the period for which he is empowered to sanction contracts on payment of a monthly extension fee of one per cent of the amount of the contract. Under rule 9, the Divisional Forest Officer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be obtained on payment from the Range Officer. Further, the Divisional Forest Officer or the Range Officer, as the case may be, has the power to withdraw a permit book, if in his opinion, such permit book has been misused for unlawful gain. In the event of such withdrawal the forest contractor is not entitled to any compensation for any loss that might be sustained by him for any stoppage of his work in or extraction from the contract area. Under rule 14, the method employed by the forest contractor for extraction of forest produce along forest roads is to be subject to the approval of the Divisional Forest Officer and the forest contractor is not to cart any produce over forest roads between such periods as the Divisional Forest Officer might appoint without the previous permission in writing of the Divisional Forest Officer. Further, the Divisional Forest Officer is given the discretion to close forest roads for extraction of forest produce on any rainy days and for three days thereafter during the rest of the year. He may also close roads temporarily for urgent or special repairs should this in his opinion become necessary. Further, the forest contractor is prohibited from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes have the right to mark any piece of timber with the Government hammer mark before it is removed from the stump-side beyond the limits of such checking station as the Divisional Forest Officer may appoint in writing. Under rule 34, if the forest contractor makes default in the payment of the consideration for his contract or any instalment thereof or does not pay the compensation assessed under any of the Forest Contract Rules, the contract is liable to be terminated by the authority competent to do so. The termination is to be notified to the forest contractor and the contract is deemed to have been terminated unless the contractor pays within one month from the date of receipt of the notice of termination all arrears due to the Government together with interest assessable under rule 42 and renewal fee not exceeding one per cent of the arrears due and if he fails to do so, all his rights under the contract including all accessory licences are to cease and all the forest produce remaining within the contract area or at the depots and bearing the contractor's registered property or trade mark and the Government hammer mark are to become the absolute property of the Government. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be at the absolute disposal of the forest contractor. Bearing in mind the terms and conditions of the timber contracts-not only those expressly set out therein but also those incorporated therein by reference, namely, the terms of the Sale Notice, the Special Conditions of Contract, the General Conditions of Contract and the various statutory provisions-we have now to determine whether the property in the trees which were the subject- matter of the timber contracts passed to the respondent-firm while the trees were still standing or after they were severed. In the first case the impugned provisions would apply and the amounts payable under the timber contracts would become exigible to purchase tax, while in the second case the impugned provisions would not apply and no purchase tax would be payable. The above conspectus of these terms and conditions shows that the heading of the Sale Notice, namely, "Sale Notice of Timber" as also the use of the words "timber and other forest products..........will be sold by public auction" are not determinative of the matter. Though clause 1 of the timber contracts speaks of "the forest produce sold and purchased", the other terms and conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount required to make up the excess of the value of the felled trees removed over the amount of the instalments already paid by it and under rule 9-A it was further open to the Divisional Forest Officer or the concerned Range Officer to stop further work if there was a default in payment of any instalment or in payment of any two instalments and the contract could also be terminated under rule 33 for such default. Further work or removal could not be stopped or the contract terminated if the property in the trees had passed to the respondent firm because in such event the only remedy open to the seller would be to sue for the balance of the price. It is also pertinent that under rule 33 the contract could also be terminated and the respondent-firm would forfeit its right to all further trees to be severed by it if it committed a breach of any of the other conditions of the contract. The mode of felling the trees was also not of the choice of the respondent-firm but was one prescribed by rule 20. Even after felling the trees the respondent-firm was not entitled to remove the felled trees by any route which it liked but only by routes which were prescribed and that too only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Forest Officers. The property passed to the respondent-firm only in the trees which were felled, that is, in timber, after all the conditions of the contract had been complied with and after such timber was examined and checked and removed from the contract area. The impugned provisions, therefore, did not apply to the transactions covered by the timber contracts. It will be useful in the context of the conclusion which we have reached to refer to the decision of this Court in Badri Prasad v. State of Madhya Pradesh [1969] 2 SCR 380. The question in that case was whether there was a contract of sale of standing timber and whether under the contract the property had passed to the appellant or whether the property had passed after the trees had been felled and hence the right of the appellant's transferor had vested in the State Government before the trees were felled by reason of the provisions of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (M.P. Act No. 1 of 1951). The Court held that under the terms of the contract the trees had to be felled before they became the property of the appellant. The Court observed (at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, express no opinion on either of these questions. It was, however, submitted on behalf of the respondent firm that assuming these challenges fail, it would be called upon to reimburse the Divisional Forest Officer. According to the respondent firm, the Divisional Forest Officer would not be entitled to do so because it had made sized and dressed logs from the timber which it had purchased under the timber contracts and had sold such logs and paid sales tax on these sales and, therefore, to tax the sales of timber to them would be to levy the tax at an earlier point in the same series of sales which is not permissible by reason of the prohibition contained in the proviso to section 8. According to them, timber and sized or dressed logs are one and the same commercial commodity. This contention was upheld by the High Court. Though the High Court had so decided in order to consider whether the same transaction could be taxed both at the sale-point as also at the purchase-point, it none the less becomes necessary for us to determine this question in order to prevent needless litigation in the future. Though under section 8 the State Government has the power to prescribe the points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it more acceptable to the customer by improving its quality would not render the oil a commodity other than groundnut oil. Similarly, in the State of Gujarat v. Sakarwala Bros. [1967] 19 STC 24 (SC) this Court held that "patasa", "harda" and "alchidana" were sugar in different forms and fell within the definition of "sugar" in entry 47 of Schedule A to the Bombay Sales Tax Act, 1959. A decision more relevant to our purpose than the two Calcutta decisions is a decision of a Division Bench of the Madhya Pradesh High Court in Mohanlal Vishram v. Commissioner of Sales Tax, Madhya Pradesh [1969] 24 STC 101. In that case the Madhya Pradesh High Court held that by felling standing timber trees, cutting them and converting some of them into "ballis", a dealer did not alter their character as timber or used them for manufacture of other goods within the meaning of section 8(1) of the Madhya Pradesh Sales Tax Act, 1958. Another decision equally relevant for our purpose is that of a Division Bench of the Andhra Pradesh High Court in G. Ramaswamy v. State of Andhra Pradesh [1973] 32 STC 309 in which the question was very much the same as the one which we have to decide. The assessees in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for all kinds of standard cut sizes for building purposes. The Division Bench also looked at Indian Airlines Quotation No. 406 of April 26, 1972 in which the words used were "timber teak-wood" setting out the particular sizes thereafter. The Division Bench also referred to the other documentary evidence produced in that case and held that the documents and affidavits before it clearly made out that even the cut sizes of timber were commonly known as timber in commercial field and that, therefore, both in the popular sense and in the commercial sense, the word "timber" had the same meaning. The Division Bench also laid emphasis on the interpretation given to the term "timber" by the Sales Tax Administration. For all these reasons the Division Bench held that merely because planks, rafters, cut sizes, etc., were sawn or cut from logs of wood, they did not alter their character and still continued to be raw materials which by themselves and in the same form could not be directly put to use for construction purposes and the logs of wood purchased by the assessees were merely cut or sawn to sizes for the sake of convenience and to make them acceptable to the customers and that by reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not the dictionary meaning, but how those entries are understood in common parlance, specially in commercial circles." Applying this principle, the Court held that although rice was produced out of paddy, paddy did not continue to be paddy after dehusking and that when paddy was dehusked and rice produced, there was a change in the identity of the goods and, therefore, rice and paddy were two different things in ordinary parlance. A careful reading of the judgment in that case shows that there was no evidence before the Court to show how "paddy" and "rice" were understood in commercial circles or what these words meant in commercial or trade parlance and that what the Court did was to refer to various authorities dealing not with rice or paddy but with other goods and the meaning in ordinary parlance of the words "paddy" and "rice" in order to ascertain the meaning of these words in the sense stated by it above. So far as the case before us is concerned, there is no material on the record to show what the words "timber" and "logs" mean in commercial or trade parlance nor do the pleadings of the parties filed in the Orissa High Court throw any light on the matter. The averment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax and hence could not call upon forest contractors to reimburse him in respect thereof. In view of this background, it would be relevant for our purpose to look at the statutory definition of the term "timber" given in the Orissa Forest Act, 1972. That term is defined in clause (n) of section 2 of that Act, which reads as follows: "(n) 'timber' includes trees fallen or felled and all wood cut-up or sawn." Prior to the enactment of the Orissa Forest Act, 1972 there were two Forest Acts in force in the State of Orissa, namely, the Madras Forest Act, 1882 (Madras Act V of 1882) and the Indian Forest Act, 1927 (Act XVI of 1927). The Madras Forest Act applied to the districts of Koraput and Ganjam and part of Phulbani District, namely, Baliguda and G Udayagiri Taluks. The Indian Forest Act applied to the rest of the State. Both these Acts were repealed in their application to the State of Orissa by the Orissa Forest Act but as prior to the enactment of the Orissa Forest Act, these were the two Acts which provided for the protection and management of forests in the State of Orissa, we may also refer to the definition of the word "timber" given in those Acts. Section 2 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing material generally; wood used for the building of houses, ships, etc., or for the use of the carpenter, joiner or other artisan". This definition also states that the word is "applied to the wood of growing trees capable of being used for structural purposes; hence collectively to the trees themselves". Amongst the meanings given in the Concise Oxford Dictionary, Sixth Edition, are "wood prepared for building, carpentry, etc.; trees suitable for this; woods, forests, piece of wood, beam". One of the meanings of the word "timber" given in Webster's Third New International Dictionary is "wood used for or suitable for building (as a house or boat) or for carpentry or joinery". A "log" according to the Shorter Oxford English Dictionary means "a bulky mass of wood; now usually an unhewn portion of a felled tree, or a length cut off for firewood" and according to the Concise Oxford Dictionary it means "unhewn piece of felled tree, or similar rough mass of wood especially cut for firewood." Thus, logs will be nothing more than wood cut up or sawn and would be timber. A question which remains is whether beams, rafters and planks would also be logs or timber. The Shorter Oxford Engl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of the word "timber" in the relevant statutes. The observation of the Orissa High Court in the case of Krupasindhu Sahu Sons v. State of Orissa [1975] 35 STC 270 that timber in common parlance in Orissa takes within its ambit only long and big sized logs of wood ordinarily used in house construction as beams and pillars but not when timber is converted into planks, rafters and other wood products like tables and chairs cannot, therefore, be said to be correct so far as planks, and rafters are concerned. In our opinion, planks and rafters would also be timber. The result is that sales of dressed or sized logs by the respondent firm having already been assessed to sales tax, the sales to the first respondent firm of timber by the State Government from which logs were made by the respondent firm cannot be made liable to sales tax as it would amount to levying tax at two points in the same series of sales by successive dealers assuming without decinding that the retrospectively substituted definition of "dealer" in clause (c) of section 2 of the Orissa Sales Tax Act, 1947 is valid. Yet another aspect of this question now arises for our consideration. During the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six per cent. This question, of course, would not arise for any period on or after January 1, 1978 on which date the substituted sub-section (1) of section 5 came into force, as under the notification issued under the substituted sub- section (1), no separate rate of tax is specified either for timber or logs or any of the other goods which we have been considering above and all of them would fall for the purpose of payment of sales tax under the residuary entry No. 101 of the Notification No. 67184-C.T.A. 135/77-F dated December 29, 1977 and would be liable to sales tax at the rate of seven per cent and there would thus be no under-assessment or escapement of assessment. Bamboo contract.-We will now ascertain the nature of the bomboo contract. Unlike the timber contract, the bamboo contract is not in a prescribed statutory form but it appears from the judgment of the High Court that all the bamboo contracts before it contained identical terms and conditions except with respect to the contract area, the period of the contract and the amount of royalty. The parties to the bamboo contract were the Governor of the State of Orissa referred to in the said contract as "the Grantor" an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent-company is given an option to renew the bamboo contract for a further term of twelve years. Under clause V, the respondent-company was to perform all acts and duties and to refrain from doing any act forbidden by the Orissa Forest Act, 1972 and to give a sum of Rs. 58,190 as security for the due performance and observance by it of the terms of the bamboo contract, which sum was to be returned to it on the expiry of six months after the termination or expiry of the bamboo contract. The Grantor was to be entitled to forfeit the said deposit and to appropriate the whole or part thereof in the event of the respondent-company committing a breach of the terms of the bamboo contract such as would entitle the Grantor to terminate the bamboo contract. Clause VI provided that "this licence shall be subject to the Orissa Forest Contract Rules as modified from time to time" subject to the amendments thereto set out in the said clause which are not material for our purpose. Clause VIII stated that "the forest produce sold and purchased under this Agreement consists of all Salia and Daba bamboos subject to the cutting rules in the annual coupe of the felling series". Clauses IX to XIII ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... left the depot. Clause XVIII gave to the respondent company, subject to such restrictions as might be imposed from time to time by the Divisional Forest Officer, Bonai Division, the right during the continuance of the bamboo contract to use any lands, roads or streams outside the licensed areas which belonged to or were under the control of the Grantor for the purposes of having free ingress to or egress from the contract areas and also to such lands, roads or streams within the contract areas. Under clause XIX, the respondent-company was bound to meet the local demands of bamboos in which event the royalty on such bamboos was not to be paid by the respondent-company but was to be paid by the local people. Under clause XX, subject to obtaining prior written consent of the Grantor, the respondent-company was to be at liberty to make dams across streams, cut canals, make water courses, irrigation works, roads, bridges, buildings, tramways and any other work useful or necessary "for the purpose of the said business" in or upon the licensed areas and also with the like consent to widen or deepen existing streams, channels or waterways "for the purpose of the said business" and all tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such poles of unreserved species and creepers as might be necessary for construction of rafts on obtaining a permit in that behalf and on payment of royalty according to the schedule of rates. Under clause XXV, the Grantor, if so required by the respondent-company, was to lease to it a suitable site or sites to be selected by it out of such sites as were at the disposal of the Grantor within the licensed areas for the erection of store houses, sheds, depots, bungalows, staff offices, agencies and other building of a like nature bona fide required by it "for the purposes of the business connected with" the bamboo contract rent free for the term of such contract. Under clause XVI, in the event of the Grantor setting fire to the forest for silvicultural purposes, it was to give to the respondent-company as long a notice as possible of the commencement of such operations and it was the respondent-company which was to be responsible for safeguarding the forest produce which was the subject-matter of the bamboo contract. Under clause XXIX, the contract areas were to be worked on four years cutting cycle for Salia and twelve years cutting cycle for Daba and were to comprise the areas sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the timber contract is also made subject to the Forest Contract Rules and while dealing with the Timber Contract we have pointed out that by reason of the operation of those Rules property in the trees passed to the forest contractor after the trees were felled and taken to the depots at inspection points and there checked and examined and thereafter removed from the contract area. The same position would apply to the case of the bamboo contract assuming for the sake of argument that it is a contract of sale of goods. In this view of the matter, the impugned provisions would have no application and the amounts payable under the bamboo contract would not be exigible to purchase tax. By reason, however, of the substitution of the definition of the term "dealer" in clause (c) of section 2 of the Orissa Act with retrospective effect, it may be argued that if the bamboo contract was a contract of sale of goods, then on the sale taking place to the respondent-company, sales tax would become payable and the respondent-company would be bound to reimburse to the Forest Department the amount payable by it as sales tax. In order to avoid future legal controversy and particularly in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e naturae while they are upon the soil belongs to the owner of the soil, who may grant to others as a profit a prendre a right to come and take them by a grant of hunting, shooting, fowling and so forth." A profit a prendre is a servitude for it burdens the land or rather a person's ownership of land by separating from the rest certain portions or fragments of the right of ownership to be enjoyed by persons other than the owner of the thing itself (see Jowitt's Dictionary of English Law, Second Edition, Volume 2, page 1640, under the heading "Servitude"). "Servitude" is a wider term and includes both easements and profit a prendre (see Halsbury's Laws of England, Fourth Edition, Volume 14, paragraph 3, page 4). The distinction between a profit a prendre and an easement has been thus stated in Halsbury's Laws of England, Fourth Edition, paragraph 43 at pages 21 to 22: "The chief distinction between an easement and a profit a prendre is that whereas an easement only confers a right to utilise the servient tenement in a particular manner or to prevent the commission of some act on that tenement, a profit a prendre confers a right to take from the servient tenement some part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land have been summarised in "Mulla on the Transfer of Property Act, 1882", and it would be pertinent to reproduce the whole of that passage. That passage (at pages 16-17 of the Fifth Edition) is as follows: "A 'benefit to arise out of land' is an interest in land and therefore immoveable property. The first Indian Law Commissioners in their report of 1879 said that they had 'abstained from the almost impracticable task of defining the various kinds of interests in immoveable things which are considered immoveable property'. The Registration Act, however, expressly includes as immoveable property benefits to arise out of land, hereditary allowances, rights of way, lights, ferries and fisheries. The definition of immoveable property in the General Clauses Act applies to this Act. The following have been held to be immoveable property: a varashasan or annual allowance charged on land; a right to collect dues at a fair held on a plot of land; a hat or market; a right to possession and management of a saranjam; a malikana; a right to collect rent or jana; a life interest in the income of immoveable property; a right of way; a ferry; and a fishery; a lease of land." Having seen what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act areas with an option to the respondent-company to renew the contract for a further term of twelve years and it embraces not only bamboos which are in existence at the date of the contract but also bamboos which are to grow and come into existence thereafter. The payment of royalty under the bamboo contract has no relation to the actual quantity of bamboos cut and removed. Further, the respondent-company is bound to pay a minimum royalty and the amount of royalty to be paid by it is always to be in exceess of the royalty due on the bamboos cut in the contract areas. We may pause here to note what the Judicial Committee of the Privy Council had to say in the case of Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of Income-tax, Bihar and Orissa [1943] 11 ITR 513 (PC) about the payment of minimum royalty under a coal mining lease. The question in that case was whether the annual amounts payable by way of minimum royalty to the lessor were in his hands capital receipt or revenue receipt. The Judicial Committee held that it was an income flowing from the covenant in the lease. While discussing this question, the Judicial Committee said (at pages 522-3): "These a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taff offices, agencies and other buildings of a like nature. We have highlighted above only the important terms and conditions which go to show that the bamboo 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 to cut and remove bamboos which would 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 bamboo contract make it clear that it is one, intergral and indivisible contract which is not capable of being severed in the manner canvassed on behalf of the appellant. It is not a lease of the contract areas to the respondent-company for its terms clearly show that there is no demise by the State Government of any area to the respondent-company. The respondent-company has also no right to the exclusive possession of the contract areas but has only a right to enter upon the land to take a part of the produce t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttiar v. Santhanathan Chettiar [1897] ILR 20 Mad 58 (FB). The question in that case was whether a document which granted to the defendant a right to enjoy the produce of all the trees on the bank and bed of a tank as also the grass and the reeds and further to cut and remove the trees for a period exceeding four years required registration. The Court held that the document was not a lease because it did not transfer to the defendant exclusive possession of the tank but conferred upon him merely a right of access to the place for the reasonable enjoyment of what he was entitled to under the contract. The Court, however, came to the conclusion that the document required registration as it transferred an interest in immovable property, and that it was not a sale of mere standing timber but it was contemplated by the document, as shown by the fact that a comparatively long period of a little more than four years was granted to the defendant for cutting and removing the trees, that "the purchaser should derive a benefit from the further growth of the thing sold, from further vegetation and from the nutriment to be afforded by the land". The above words quoted in the judgment in that cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts. This Court held that the contracts appeared to be in essence and effect licences granted to the petitioners to cut, gather and carry away the produce in the shape of tendu leaves, lac, timber or wood and did not create any interest either in the land or in the trees or plants. In arriving at this conclusion the Court relied upon a decision of the Judicial Committee of the Privy Council in Mohanlal Hargovind of Jubbulpore v. Commissioner of Income- tax, C.P. and Berar, Nagpur [1949] 17 ITR 473 (PC); LR (1949) 76 IA 235; ILR (1949) Nag 892; AIR 1949 PC 311. In that case the assessees carried on business as manufacturers and vendors of bidis composed of tobacco contained or rolled in tendu leaves. The contracts entered into by the assessees were short term contracts under which in consideration of a sum payable by instalments the assessees were granted the exclusive right to collect and remove tendu leaves from specified areas. Some of the contracts also granted to the assessees a small ancillary right of cultivation. The Judicial Committee held that the amounts paid by the assessees under the said contracts constituted expenditure in order to secure raw materials for their busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch go to make the bamboo contract a benefit to arise out of land. These features were conspicuously absent in the contracts before the Court in Chhotabhai's case [1953] SCR 476. The decision next in point of time on this aspect of the case is Ananda Behera v. State of Orissa [1955] 2 SCR 919. The petitioners in that case had obtained oral licences for catching and appropriating fish from specified sections of the Chilka Lake from its proprietor, the Raja of Parikud, on payment of large sums of money prior to the enactment of the Orissa Estates Abolition Act, 1951 (Orissa Act I of 1952). Under the said Act, the estates of the Raja of Parikud vested in the State of Orissa and the State refused to recognise the rights of the petitioners and was seeking to re-auction the rights of fishery in the said lake. The petitioners, contending that the State had infringed or was about to infringe their fundamental rights under articles 19(1)(f) and 31(1) of the Constitution of India, filed petitions in this Court under article 32 of the Constitution. In their petition, the petitioners claimed that the transactions entered into by them were sales of future goods, namely, fish in the sections of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowing on trees and it is evident that there must be a fresh drop of leaves at periodic intervals. That would make it a growing crop and a growing crop is expressly exempted from the definition of 'immovable property' in the Transfer of Property Act. That case is distinguishable and does not apply here." The next decision which was cited and on which a considerable debate took place at the Bar was Shrimati Shantabai v. State of Bombay [1959] SCR 265. The facts in that case were that by an unregistered document the petitioner's husband had granted to her in consideration of a sum of Rs. 20,000 the right to take and appropriate all kinds of wood from certain forests in his Zamindari. On the coming into force of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 all proprietary rights in land vested in the State of Madhya Pradesh and the petitioner could no longer cut any wood. She thereupon applied to the Deputy Commissioner and obtained from him an order permitting her to work the forest and started cutting the trees. The Divisional Forest Officer took action against her and passed an order directing that the cut materials be forfeite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it been so done, we have no doubt that case would not have been decided in the way it was done." Unlike the majority of the Judges, Vivian Bose, J., in his separate judgment considered in detail the nature of the document in that case. Vivian Bose, J., pointed out the distinction between standing timber and a tree. We have earlier extracted those passages from the learned Judge's judgment. The learned Judge then pointed out that the duration of the grant was for a period of twelve years and that it was evident that trees which would be fit for cutting twelve years later would not be fit for felling immediately and, therefore, the document was not a mere sale of trees as wood. Vivian Bose, J., held that the transaction was not just a right to cut a tree but also to derive a profit from the soil itself, in the shape of the nourishment in the soil that went into the tree and made it to grow till it was of a size and age fit for felling as timber and if already of that size, in order to enable it to continue to live till the petitioner chose to fell it. The learned Judge, therefore, held that though such trees as can be regarded as standing timber at the date of the document, both be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners in addition to the tendu leaves other forest produce like timber, bamboos, etc., the soil for making bricks, and the right to build on and occupy land for the purpose of their business. In a number of cases, these rights were spread over many years. Some of the agreements were registered and the others unregistered. After the coming into force of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 the Government disclaimed the agreements and auctioned the rights afresh, acting under section 3 of the said Act. The petitioners thereupon filed petitions under article 32 of the Constitution of India challenging the legality of the action taken by the Government on the ground that it was an invasion of their fundamental rights. The main contention of the petitioners was that the agreements were in essence and effect licenses granted to them to cut, gather and carry away the produce in the shape of tendu leaves, or lac, or timber or wood, and did not grant to them any "interest in land" or "benefit to arise out of land" and the object of the agreements could, therefore, only be described as sale of goods as defined in the Indian Sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out in the two later decisions, in Ananda Behera v. State of Orissa [1955] 2 SCR 919, Shantabai's case [1959] SCR 265, the State has not acquired or taken possession of those rights but has only declined to be bound by the agreements to which they were not a party. If, on the other hand, the petitioners were mere licensees, then also, as pointed out in the second of the two cases cited, the licences came to an end on the extinction of the title of the licensors. In either case there was no question of the breach of any fundamental right of the petitioners which could support the petitions which were presented under article 32 of the Constitution. It is this aspect of the matter which was not brought to the notice of the Court, and the resulting omission to advert to it has seriously impaired, if not completely nullified, the effect and weight of the decision in Chhotabhai's case [1953] SCR 476 as a precedent." (Emphasis supplied Here italicised.) We may also usefully reproduce the following passages (at page 354) from the concluding portion of the judgment: "From this, it is quite clear that forests and trees belonged to the proprietors, and they were items of proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows (at page 21): "In view of these considerations, it must be held that these cases are equally governed by the decisions aforesaid of this Court, which have overruled the earliest decision in the case of Chhotabhai Jethabai Patel and Co. v. State of Madhya Pradesh [1953] SCR 476." In Board of Revenue v. A.M. Ansari [1976] 38 STC 577 (SC); [1976] 3 SCR 661 the respondents were the highest bidders at an auction of forest produce, namely, timber, fuel, bamboos, minor forest produce, bidi leaves, tanning barks, parks, mohwa, etc., held by the Forest Department of the Government of Andhra Pradesh. They were called upon to pay in terms of the conditions of sale stamp duty on the agreements to be executed by them as if these documents were leases of immovable property. The respondents thereupon filed petitions under article 226 of the Constitution in the High Court of Andhra Pradesh. In the said petitions, the State contended that under the agreements, the respondents had acquired an interest in immovable property. The High Court held in favour of the respondents. The State went in appeal to this Court. On a consideration of the terms of the agreements, this Court held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ansari's case [1976] 38 STC 577 (SC); [1976] 3 SCR 661 the Court seems to have assumed that Chhotabhai's case [1953] SCR 476 dealt with short term contracts while, as we have seen above, most of the contracts in Chhotabhai's case [1953] SCR 476 were of far greater duration extending even to fifteen years, nor was the Court's attention drawn to the case of State of Madhya Pradesh v. Yakinuddin [1963] 3 SCR 13. While the agreement in Ansari's case [1976] 38 STC 577 (SC); [1976] 3 SCR 661 was a mere right to enter upon the land and take away tendu leaves, etc., the right under the bamboo contract is of a wholly different nature. Further, the question whether the agreements were a grant of a profit a prendre or a benefit to arise out of land was not raised and, therefore, not considered in Ansari's case [1976] 38 STC 577 (SC); [1976] 3 SCR 661 and the only point which fell for decision by the Court was whether the agreements were licences or leases. In fact, another question which arose in that case was whether the respondents were liable to pay the amounts demanded from them as reimbursement of sales tax. Affirming the decision of the High Court on this point, the Court held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State of Vindhya Pradesh became part of the new State of Madhya Pradesh. At the date when the said agreement was entered into the C.P. and Berar Sales Tax Act, 1947 was in force in the State of Vindhya Pradesh and the definition of "goods" contained in clause (g) of section 2 of that Act as modified and in force in that State excluded from the purview of the said Act forest contracts that gave a right to collect timber or wood or forest produce. The C.P. and Berar Sales Tax Act was repealed by the Madhya Pradesh General Sales Tax Act, 1958 with effect from April 1, 1959 and the new Act did not contain any exclusion of forest contracts from the definitions of "goods". Further, the term "dealer" as defined in the 1958 Act included the Central Government and the State Government or any of its departments. The Forest Department of the State Government was, however, exempted from the payment of sales tax for the period April 1, 1959 to November 2, 1962. After the period of the said exemption expired, the Forest Department got itself registered as a dealer and the Divisional Forest Officer called upon the respondent to reimburse to him the amount which, according to him, he was liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were concerned that challenge was not available and the appeals must be decided on the basis that the amendment was valid and constitutional. The main point before this Court, therefore, was whether the said agreement was a lease as it was styled or a simple sale of standing timber coupled with a licence to enter and do certain things on another's land. The Court held that the label given to a document was not conclusive of its real nature and that under the said agreement, possession of the land was not given to the respondent as it would have been had the said agreement been a lease and that as the terms of the said agreement showed, it conferred in substance a right to cut and carry away timber of specified species and till the trees were cut, they remained the property of the owner, namely, the State, and that once the trees were severed, the property in them passed to the respondent. The Court further observed that the term used in the said agreement, namely, "royalty", was "a feudalistic euphemism for the 'price' of the timber". We are unable to agree with the interpretation placed by the Court on the document in the Orient Paper Mills' case [1977] 40 STC 603 (SC); [1977] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, warn ourselves against venturing into the general law of real property except for minimal illumination thrown by rulings cited. In a large sense, there are no absolutes in legal propositions and human problems and so, in the jural cosmos of relativity, our observations here may not be good currency beyond the factual-legal boundaries of sales tax situations under a specific statute." A little later the learned judge stated [at page 611 (STC), 157 (SCR)] as follows: "We may also observe that the question before us is not so much as to what nomenclature would aptly describe the deed but as to whether the deed results in sale of trees after they are cut. The answer to that question, as would appear from the above, has to be in the affirmative." The above rule enunciated by this Court in that case falls into two parts, namely, (1) a document should be so interpreted as to bring it within the ambit of a particular statute relevant for the purpose of the dispute before the Court, and (2) in order to do so, the Court can look at only such of the clauses of the document as also to just one or more of the consequences flowing from the document which would fit in with the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out only a few clauses ignoring the other relevant ones, in the same way the nature and meaning of a document cannot be determined by its end-result or one of the results or consequences which flow from it. If the second part of the above rule were correct, the result would be startling, There would be almost no agreement relating to immovable property which cannot be construed as a contract of sale of goods. Two instances would suffice to show this. If a man were to sell his building to another and the deed of sale were to provide that the building should be demolished and reconstructed and the price should be paid to the vendor partly in money and partly by giving him accomodation in the new building, according to this rule of interpretation adopted by the Court in the Orient Paper Mills' case [1977] 40 STC 603 (SC); [1977] 2 SCR 149 it would for the purpose of sales tax be a sale of goods because the old building when demolished would result in movable property, namely, debris, doors, windows, water pipes, drainage pipes, water tanks, etc., which would be sold by the purchaser as movables. Similarly, if a man were to give a lease of his orchard or field, the lessee would be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCR 149. Thus, in coming to the conclusion that the term "royalty" used in the document before it was merely "a feudalistic euphemism for the 'price' of the timber", the Court overlooked the fact that the amount of royalty payable by the respondent was consideration for all the rights conferred upon the respondent under the contract though it was to be calculated according to the quantity of the bamboos felled, and the Court also overlooked the fact that this was made further clear by the provision for payment of a minimum royalty. It is also true that an interpretation placed by the Court on a document is not binding upon it when another documents comes to be interpreted by it but that is so where the two documents are of different tenors and not where they have the same tenor. On the ground that they dealt with the general law of real property, the Court in the Orient Paper Mills' case [1977] 40 STC 603 (SC); [1977] 2 SCR 149 did not advert to the earlier decisions of this Court relating to documents with similar tenor even though those cases were referred to in the judgment of the Madhya Pradesh High Court under appeal before it. In view of this, the Orissa High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhya Pradesh [1953] SCR 476 is not good law and has been overruled by decisions of larger Benches of this Court. They equally show that the case of State of Madhya Pradesh v. Orient Paper Mills Ltd. [1977] 40 STC 603 (SC); [1977] 2 SCR 149 is also not good law and that this decision was given per incuriam and laid down principles of interpretation which are wrong in law and cannot be assented to. The discussion of the above authorities also confirm us in our opinion that the bamboo contract is not a contract of sale of goods but is a grant of a profit a prendre, that is, of a benefit to arise out of land and that it is not possible to bifurcate the bamboo contract into two: one for the sale of bamboos existing at the date of the contract and the other for the sale of future goods, that is, of bamboos to come into existence in the future. In order to ascertain the true nature and meaning of the bamboo contract, we have to examine the said contract as a whole with reference to all its terms and all the rights conferred by it and not with reference to only a few terms or with just one of the rights flowing therefrom. On a proper interpretation, the bamboo contract does not confer u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty therein passes only under the contract relating thereto to the other party for price." As pointed out above the timber contracts are agreements relating to movables while the bamboo contract is a grant of an interest in immovable property. The question, therefore, whether there is a works contract or a contract of sale of goods can arise only with respect to the timber contracts but the very meaning of a works contract would show that the timber contracts cannot be works contracts. The payee of the price, namely, the Government has not undertaken to do any work or labour. The work or labour under the timber contracts is to be done by the payer of the price, namely, the forest contractor, that is, the respondent firm. It is the respondent firm which has to enter upon the land and to fell the standing trees and to remove them. Assuming for the sake of argument that the bamboo contract were a contract relating to movables, the same position would apply to it. This contention of the respondents, is therefore, without any substance. Conclusions.-To summarize our conclusions: (1) The impugned provisions, namely, (1) Notification S.R.O. No. 372/77 dated May 23, 1977, (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with and after such timber was examined and checked and removed from the contract area. The impugned provisions, therefore, did not apply to the transactions covered by the timber contracts. (9) The dictionary meaning of a word cannot be looked at where that word has been statutorily defined or judicially interpreted but where there is no such definition or interpretation, the Court may take the aid of dictionaries to ascertain the meaning of a word in common parlance, bearing in mind that a word is used in different senses according to its context and a dictionary gives all the meanings of a word, and the Court has, therefore, to select the particular meaning which is relevant to the context in which it has to interpret that word. (10) Timber and sized or dressed logs are one and the same commercial commodity. Beams, rafters and planks would also be timber. (11) As the sales of dressed or sized logs by the respondent firm have already been assessed to sales tax, the sales to the first respondent firm of timber by the State Government from which logs were made by the respondent firm cannot be made liable to sales tax as it would amount to levying tax at two points in the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the High Court should be dismissed because in its writ petitions the respondent company had prayed for quashing the notice dated August 18, 1977 issued against it under rules 22 and 28(2) of the Orissa Sales Tax Rules, 1947 and the respondent firm in its writ petition had prayed for setting aside the assessment order dated November 28, 1978 for the period April 1, 1977 to March 31, 1978. On the findings given by us the said notice must be quashed. So far the said assessment order is concerned, as we have pointed out earlier, it is severable and does not require to be set aside in toto but only in so far as it imposed purchase tax on the amounts paid by the respondent firm under the timber contracts. Though the High Court did not give these consequential reliefs in view of its findings that the impugned provisions were invalid, it becomes necessary for us to do so in order to do complete justice between the parties as we are entitled to do under article 142 of the Constitution of India. In the result, we reverse the judgment of the High Court in so far as it holds (1) Notification S.R.O. No. 372/77 dated May 23, 1977 issued under section 3-B of the Orissa Sales Tax Act, 1947 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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