P.V. Dixit, C.J.
1. By this application under Articles 226 and 227 of the Constitution, the petitioner-firm challenges the validity of the orders of the Assistant Sales Tax Officer, Dhar, assessing it to sales tax for the periods from 1st April, 1959, to 31st March, 1960, and from 1st April, 1960, to 31st March, 1961. The orders of the Assistant Sales Tax Officer were upheld in appeals by the Additional Appellate Assistant Commissioner of Sales Tax, and in revision by the Additional Commissioner of Sales Tax. The applicant seeks a writ of certiorari for quashing these orders of the Additional Appellate Assistant Commissioner of Sales Tax and the Additional Commissioner of Sales Tax, also.
2. The petitioner-firm took two forest contracts for the extraction and collection of gum from trees growing in certain forest areas in the District of Dhar. The Assistant Sales Tax Officer included in the taxable turnover for the aforesaid two periods the amount that the petitioner had paid as consideration to the State for the two contracts. He rejected the contention of the petitioner that under the two contracts there was sale of gum by the State Government to it, and as sales tax on gum was payable at the first point, the tax, if any, was payable by the State Government inasmuch as 'dealer', as defined in the Madhya Pradesh General Sales Tax Act, 1958, (hereinafter referred to as the Act), included the State Government. The applicant also relied on a notification issued by the State Government on 1st June, 1963, under Section 12 of the Act by which the State Government exempted from sales tax sales of forest produce effected by the Forest Department of the Government during the period from 1st April, 1959, to 2nd November, 1962, and contended that inasmuch as forest produce was exempted during the material period from any sales tax, no sales tax could be recovered from it. This contention was also negatived by the Assistant Sales Tax Officer.
3. The Additional Commissioner of Sales Tax upheld the orders of assessment made by the Assistant Sales Tax Officer taking the view that under the forest contracts there was a sale of gum by the Forest Department to the petitioner ; that sales tax was payable on sales of gum on the point of first sale under entry 1 of Part VI of Schedule II to the Act; and that the Forest Department was not liable to pay any sales tax on sales of gum under the notification issued on 1st June, 1963, and, therefore, the petitioner was liable to pay sales tax. The Additional Commissioner of Sales Tax observed that under the definition of 'taxable turnover' given in Section 2(r) of the Act, the consideration paid by the petitioner to the Forest Department for purchasing gum could not be deducted as under that definition only the 'sale price of goods on which tax is payable at the first point, and which has been subjected to tax in accordance with the provisions of the Act' can be deducted.
4. In our judgment, the, approach of the Sales Tax Authorities to the question was altogether erroneous. These authorities thought that what was sold under the contracts was gum. But this is not so. The contracts entered into by the petitioner and the State no doubt stated that they were for sale and purchase of forest produce. But having regard to the fact that the contracts gave to the petitioner a right to collect not only that gum which was collected or exuded from the trees at the time of the contracts, but also that which might be secreted in future, and regard being had also to the other conditions of the contract, including that the 'occurrence of the forest produce, its quantity and quality are not guaranteed', it is clear that the contracts were in essence and in effect licences granted to the petitioner to enter on the forest lands coupled with a grant to collect gum existing on trees at the time of the contracts as well as gum that might be secreted in future during the period of the contracts. There was thus no sale by the State Forest Department to the petitioner of gum as movable property but only the sale of the right to appropriate gum from' trees that was existing at the, time of the contracts and that might secrete in -future during the period of the contracts. This right to take away gum from the trees, being an interest in immovable property, cannot be regarded as coming within the definition of 'goods' given in Section 2(g) of the Act; if this right is not 'goods', then no sales tax can be levied on the sale of this right by the Forest Department to the petitioner. In Parmanand v. Birkhu 5 N.L.R. 21, a right to rare lac has been held to amount to interest in immovable property. So also in Ananda Behera v. State of Orissa A.I.R. 1956 S.C. 17, it has been held by the Supreme Court that a right to enter upon land and to carry away fish from a lake is a right to profits a prendre and that it amounts to immovable property as a benefit arising from the land. If a right to rare lac is an interest in immovable property and a right of fishing is also an interest in immovable property, then a fortiori a right to collect and appropriate gum from gum-bearing trees is an interest in immovable property.
5. If, as we think, there was, under the contracts concluded between the petitioner-firm and the State, no sale of gum as such but only the sale of an interest in immovable property, namely, the right to collect and appropriate gum from trees, the petitioner cannot claim exemption from sales tax on the ground that on sales of gum sales tax being payable on the point of first sale and the first sale being by the State, the liability for payment of sales tax was of the State Government. The sales of gum extracted and appropriated by the petitioner to the purchasers were the first sales, and on those sale transactions the petitioner is clearly liable to pay sales tax on the basis of the sale price obtained by it for the gum sold by it. In this view of the matter, the Sales Tax Authorities were in error in assessing the petitioner to sales tax on the basis of the consideration it paid for the contracts obtained by it from the State Government for the right to collect and appropriate gum from the trees. The petitioner should have been assessed on the 'sale price' it obtained for the sale of gum to the various purchasers. The orders of the Sales Tax Authorities assessing the petitioner to sales tax on the basis of the consideration it paid for the contracts are, therefore, illegal.
6. For these reasons, this petition is allowed, and the orders of the Assistant Sales Tax Officer, Dhar, assessing the petitioner for the periods from 1st April, 1959, to 31st March, 1960, and from 1st April, 1960, to 31st March, 1961, are quashed. The orders in appeal of the Additional Appellate Assistant Commissioner of Sales Tax and the order of the Additional Commissioner of Sales Tax are all quashed. In the circumstances of the case, we leave the parties to bear their own costs of this petition. The outstanding amount of security deposit shall be refunded to the petitioner.