TMI Blog1990 (11) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... ied products and it started commercial production on May 1, 1977. According to the petitioners the S.S.I. unit happened to be established in the State of Himachal Pradesh as the State Government had by issuing various brochures offering several incentives encouraged the setting up of S.S.I. units by entrepreneurs within the State. An agreement was entered into between the company and the Governor of the State through the Secretary, Department of Forest Farming and Environmental Conservation on January 7, 1977, as per the terms of which the State Government had agreed to sell to the company "trees of green twist free chil" totalling up to 11,000 cubic metres standing volume annually for a period of 20 years in the first instance and for a fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority, viz., Chief Conservator of Forests or not. In case of his failure to do so, he will have to pay penalty as assessed by the Sales Tax Department. Further the buyer shall be liable to pay such levies/taxes as may become legally payable hereinafter under any Act, Rules or regulations." The Director of Industries, Himachal Pradesh, had from time to time issued certificates to the petitioner-company to the effect that the company is eligible to the grant of incentives as a small-scale industrial unit as announced by the Government of Himachal Pradesh through different notifications. Annexures P2/A and P2/B are two such certificates issued by the Director of Industries on July 8, 1981 and September 24, 1984, respectively. Annexure P6, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the registration certificate cannot help in any way to make tax-free sales to you....." It is not necessary for the purpose of this writ petition to refer to the further correspondence between the petitioner-company and the State Government and its officers. The prayer for exemption from sales tax was not acceded to and a demand was made by the Conservator of Forests, Bilaspur, for payment of a sum of Rs. 2,70,410.80 as the sales tax and surcharge due on the sale of timber to the petitioner from the forest divisions at Bilaspur, Mandi Karsog and Nachan. Annexure P14 is a copy of the demand. The Chief Conservator of Forests by annexure P15 letter informed the company that its S.S.I. unit is not entitled to exemption from sales tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which subject to sections 6, 7 and sub-section (2) of section 12 every dealer whose gross turnover exceeds the taxable quantum is liable to pay tax under the Act on all sales effected and purchases made. Section 6 of the Act provides for the rate of tax on the taxable turnover and as per the proviso to sub-section (1) the rate of tax in respect of item No. 34 in Schedule A is 25 paise in a rupee. Item 34 of Schedule A is "Timber not including converted timber". The definition of goods in section 2(e) would take in also timber, and timber is defined in clause (11) to include trees fallen or felled or agreed to be felled. Sub-section (3) of section 6 of the Act defines the expression "taxable turnover" and it exempts, inter alia, turnover r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sub-section (3) of section 6 quoted above, excludes from the concept of taxable turnover the turnover on sale to a registered dealer of goods specified in the certificate of registration for use by him in the manufacture of goods within the State and for sale of the manufactured goods also within the State. The quantity of timber sold to the petitioner-S.S.I. unit does not fall within the taxable turnover of the Forest Department if the goods sold are those specified in the certificate of registration of the S.S.I. unit as for use in the manufacture and sale of the manufactured goods within the State of Himachal Pradesh. Even though the certificate of registration of the S.S.I. unit as a dealer under the Sales Tax Act is not produced, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri D.V. Sehgal on the basis of notifications annexures P16 and P18 issued by the Government under sections 42 and 6 respectively of the Sales Tax Act. For the foregoing reasons, we hold that the quantity of the timber sold by the Forest Department of the State to the petitioner-S.S.I. unit for its use in the manufacture and sale of other goods within the State is not exigible to tax under the H.P. General Sales Tax Act and a writ of mandamus will issue directing the respondents to forbear from levying or collecting sales/purchase tax from the petitioner S.S.I. unit in respect of timber sold to it for the aforesaid purpose. The writ petition is allowed as indicated above. The parties will suffer their own costs. Writ petition allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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