TMI Blog2014 (12) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... e of delivery, the sale price and the mode of payment - In addition, 7% of the sale price was payable by the respondent-company to compensate the Government for loss of moisture in the bamboos (condition No.6) - In view of Condition 7(ii) of the Annexure to the Agreement, the terms and conditions, as applicable for the bamboo extracted by the respondent-company, were applicable to the bamboo industrial cuts delivered to the respondent-company from the departmentally worked coupes regarding payment of the selling price for the departmentally extracted bamboo industrial cuts - Extraction and supervision charges were also payable by the respondent-company. The "bamboos" were not removable even after they were cut unless they were weighed and permits were granted. Severance of bamboo, even in the departmentally extracted coupes, was not under the contract of sale, but was prior thereto - The bamboos, liable to be cut each year, were not in a "deliverable state" on the date of the agreement - The various clauses in the contract show that there is no "sale", on the contract date, of bamboos as the goods were not in a deliverable state - As the bamboo cannot be cut or removed except as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant parts of the definition of goods continued to remain a part thereof even after its amendment - Decided against the revenue. - T.R.C.Nos.13, 17, 18, 23 of 2007 & 76 of 2008 - - - Dated:- 20-11-2014 - Ramesh Ranganathan And M. Satyanarayana Murthy, JJ For the Petitioner : Sri M V J K Kumar For the Respondent : Sri M Govind Reddy, Ld Special Standing Counsel ORDER (Per Honble Sri Justice Ramesh Ranganathan) These Tax Revision Cases are preferred, under Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957, (hereinafter called the Act), against the order of the Sales Tax Appellate Tribunal (STAT for short) in T.A.No.75 of 2004 and batch dated 29.01.2007. The respondent, in these Tax Revision Cases, manufactures paper and paper boards, and is a company registered under the Companies Act. They established an industrial unit, at Sarapaka village, Khammam District - a schedule area, for manufacture of paper and paperboards. They commenced commercial production from 01.10.1979. Agreements were entered into, from time to time, between the Government of Andhra Pradesh and the respondent- company for grant of long term leases of forest land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty was handed over to the lessee by the lessor after payment of certain charges; the relevant clauses of the agreement showed that the respondent was required to undertake silviculture operations in the leased land; on the date of the agreement, the goods were un-ascertained goods; there was no transfer of property unless and until the goods were ascertained; the agreement was conditional, and the goods were not in a deliverable state, on the date of the agreement; the Division Bench of the High Court of A.P, in Andhra Pradesh Paper Mills Ltd.(1989) 73 STC 26, had held that if, on the date of the contract, the goods were to be treated as unascertained goods, no property in them would get transferred unless and until the goods were ascertained; if the goods were to be treated as specific or ascertained goods, passing of property depended on the intention of the parties to be gathered from the agreement; where the goods are unascertained, the further requirement is that they must be in a deliverable state; the property passes when the goods are unconditionally appropriated to the contract; the bamboos were not removable even after they were cut unless they were weighed, the royalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be construed as a whole in order to ascertain the true meaning of its several clauses, and the words of each clause must be so interpreted as to bring them into harmony with the other provisions of the instrument, if that interpretation does no violence to the meaning of which they are naturally susceptible. The best construction of deeds is to make one part of the deed expound the other, and to make all the parts agree. Effect must, as far as possible, be given to every word and every clause. Just as a document cannot be interpreted by picking 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 the consequences which flow from it. The nomenclature and description given to a contract is not determinative of the real nature of the document or of the transactions thereunder. It must be determined from all the terms and clauses of the document and all the rights and results flowing therefrom, and not by picking and choosing certain clauses and the ultimate effect or result. The real nature of a document and the transaction thereunder have to be determined, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising from its permission to the Company to transport the bamboos extracted in any lease year, until the 31st day of March of the succeeding lease year. Sub-clause 5(b) stipulated that, if bamboos were extracted and supplied by the Department, the Mills would be liable to pay, to the Department, extraction and other charges upto the point of delivery as may be incurred by the department besides selling price; and the terms and conditions for supply of the departmentally extracted bamboos and industrial cuts was as indicated in the Annexure to the agreement. Under sub-clause (7), the lessee was required to be intimated the coupes, to be worked out by them, situated in any or all of the Divisions indicated in the Schedule; the Lessee was required to work in the leased areas in accordance with the prescriptions of the working plans in force, and any subsequent changes made from time to time; the Lessee was required to work only in one coupe in the year in each of the felling series prescribed in the working plan, and allotted under the agreement; each coupe was demarcated by natural boundaries such as roads and paths as indicated in the working plan; and the Lessee was required, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serving atleast 6 mature culms over one year old in each clump; (iii) felling of culms, permitted to be extracted, being maintained to be not below the second node from ground level, and in any case not higher than 30 cm. from the ground level; and (iv) removing the whole or a cut culm and its branches from every clump completely. Sub-clause 17(b) stipulated that the felling rules were subject to modification that may be made by the Forest Department in accordance with the silviculture requirements and working plan prescriptions. Sub-clause 17(c) of the agreement required the Lessee to convert all bamboos, as and when felled, into billets approximately two meters in length. Sub-clause 17(d) prohibited the lessee from engaging or employing labour or cartmen, already employed by the Forest Department, for any work under the agreement without obtaining the previous written permission of the Range Officer. Sub-clause (18) stipulated that the working season, of each of the annual coupe of the series, was from the 1st October of the year to the 30th September of the succeeding year; the Lessee should not cut any bamboo during the monsoon period i.e., 1st July to 30th September; and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and selling price was payable for all bamboos that had been cut. Sub-clause (23) required the lessee not to dispose of or sublet the lease, or any part thereof, without obtaining the previous permission in writing of the lessor. Sub-clause (24) enabled the lessee, with the previous permission of the Divisional Forest Officer, to construct roads, bridle-paths, store houses and depots etc., in the leased area for the economical exploitation of bamboos, on such specifications as may be prescribed by the Divisional Forest Officer. Sub-clause (25) stipulated that, on the expiry or on the termination of the lease, all structures and communications, within the leasehold areas, should be left undisturbed, and would become the property of the Government, and the Lessee would have no right to claim any compensation thereof. Sub-clause (26) stipulated that the bamboos, obtained by the Lessee from the coupes, should be utilized only for the manufacture of paper at their paper mills, and should not be used for any other purposes; the selling price fixed was to be applicable for the bamboos that were actually utilized for the purpose of manufacture of paper; and if the bamboos were used for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling price at the rate applicable to the lease year of extraction, and (b) penalty at the selling price applicable to the lease year in which the bamboo is transported; and (iii) a sum equivalent to 7 % of the selling price shall be payable by the mills, on the quantity of bamboo weighed, to compensate the Government, for the loss of moisture in bamboo, arising from its permission to the company to transport the bamboo extracted in any lease year until the 31st day of March of the succeeding lease year. Condition (4) stipulated that, to facilitate delivery and accounting of the bamboos to be supplied to the Company, the following procedure should be adopted. All the billeted bamboos were required to be tied, with double strand string at both ends, into bundles which was to consist of 20 pieces. No bamboo pieces should be less than 4 cms. in girth at the thin end. Each full bundle was to consist of 2 mt. long pieces, each half bundle should consist of 100 to 200 cms long pieces, and each 1/4th bundle should consist of less than 100 cms. pieces. Condition (5) required the company to maintain an accurate and proper account, from time to time, of the said produce taken delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any other form in pursuance of a contract or otherwise by one person to another in the course of trade or business for cash, or for deferred payment, or for any other valuable consideration, but did not include a mortgage, hypothecation or pledge of, or a charge on, goods. Explanation II(a) thereto stipulated that, notwithstanding anything contained in the Indian Sale of Goods Act, 1930, a sale or purchase of goods shall be deemed for the purpose of this Act to have taken place in the State, wherever the contract of sale or purchase might have been made, if the goods were within the State (i) in the case of specific or ascertained goods, at the time the contract of sale or purchase was made; and (ii) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party was prior or subsequent to such appropriation. Section 5(1) of the Act related to levy of tax on sales or purchases of goods and thereunder, save as otherwise provided in the Act, every dealer was required to pay a tax under the Act for each year on every rupee of his turnover of sales or purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or permanently fastened to anything attached to the earth. Things attached to the earth are immovable property. (Titaghur Paper Mills Co. Ltd.(1985) 60 STC 213; Smt.Shantabai v. Stale of Bombay. Bamboos rooted in the earth, being things attached to the earth, are immovable property. However bamboos rooted in the earth, which are agreed to be severed before sale or under the contract of sale, are not only moveable property but are also goods. (Titaghur Paper Mills Co. Ltd.(1985) 60 STC 213). The words agreed to be severed before sale or under the contract of sale, in the definition of goods under Section 2(h) of the APGST Act, mean that there is an agreement between buyer and the seller; under the agreement, bamboos are agreed to be severed; and such severance may be either before sale or under the contract of sale. Under Section 4 of the Sale of Goods Act, 1930, where there is a transfer from the buyer to the seller, of property in the goods which are the subject-matter of the agreement to sell, the contract of sale is a sale, but when the transfer of property in the goods is to take place at a future time, or subject to some condition thereafter to be fulfilled, it is an agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re ascertained (Section 18 of the Sale of Goods Act). If the goods were to be treated as specific or ascertained goods, on the date of the agreement, the passing of the property depended on the intention of the parties to be gathered as stipulated in Sections 20 to 24 of the Sale of Goods Act. Under Section 20, in the case of specific goods, there must be an unconditional contract in respect of such goods in a deliverable state, whether the time of payment of the price or the time of delivery of the goods or both, are postponed. Again under Section 21, if the goods are to be treated as specific goods and, if the seller is bound to do something to the goods for the purpose of putting them in a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof. Section 22 also deals with specific goods in a deliverable state and, where the seller is bound to weigh, measure, test or to do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof. Treating the goods as unascertained on the contract date, the furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of the aforesaid provisions of the APGST Act is goods, and the tax that is levied thereunder is only on a completed sale or purchase of goods. The taxable event is not the agreement to sever bamboos, but the purchase of bamboos agreed to be severed. Under these provisions, the severance of bamboos must be under the contract of sale, and not before the sale of such bamboos. (Titaghur Paper Mills Co. Ltd.(1985) 60 STC 213). Whatever nomenclature is applied unless there is a sale of goods there cannot be a sale liable to tax under the Act. A sale can only be said to have taken place if the buyer is in a position to remove the goods without any let or hindrance . The agreement entitled the respondent-company to fell, collect, store and remove all the stocks of bamboos growing, or likely to grow, on the lands in the leased areas, and those bamboo specially reserved for felling and removal in accordance with the silvicultural requirements and prescriptions of the working plan (Clause V(1). Silviculture is the practice of controlling the establishment, growth, composition, health and quality of forests. It focuses on ensuring that the treatment of forest stands are used to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bamboo industrial cuts delivered to the respondent-company from the departmentally worked coupes regarding payment of the selling price for the departmentally extracted bamboo industrial cuts. Extraction and supervision charges were also payable by the respondent-company. While, in the departmentally extracted coupes, bamboos were felled and removed by the forest officials, in the other parts of the allotted coupes, these activities were undertaken by the respondent-company themselves. Except for the additional conditions, which were applicable specifically to departmentally extracted bamboos, all the other terms and conditions of the agreement were common, including those which required the respondent-company to maintain the coupes allotted to them in the forest areas in accordance with the prescriptions of the working plan in force, and to carry out Silviculture operations. While sixty thousand tonnes of bamboo was allocated each year, these bamboos were not in a ready and deliverable state when the contract was entered into. The bamboos were not removable even after they were cut unless they were weighed and permits were granted. Severance of bamboo, even in the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Indian Easement Act, 1882 as being a right which the owner or occupier of certain land possesses, as such for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done in, or upon, or in respect of, certain other land not his own . The distinction between a profit a prendre and an easement is that while 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 the soil of that tenement or minerals under it or some part of its natural produce existing upon it. What is taken must be capable of ownership, for otherwise the right amounts to a mere easement.(Titaghur Paper Mills Co. Ltd.(1985) 60 STC 213; Halsburys Laws of England, Fourth Edition, paragraph 43 of pages 21 and 22). A profit a prendre is a benefit arising out of land, an interest in the land, and, in view of Section 3(26) of the General Clauses Act, it is immovable property within the meaning of the Transfer of Property Act. (Titaghur Paper Mills Co. Ltd.(1985) 60 STC 213; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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