K.L. Pandey, J.
1. This is a petition under Articles 226 and 227 of the Constitution to call up and quash by certiorari--
(i) a communication dated 2nd September, 1968, sent by the Divisional Forest Officer, North Shahdol Division (respondent 3) requiring the petitioner to pay as sales tax Rs. 24,455.30 in respect of extractions made by it from the forests of the aforesaid division of bamboos during the years 1962-63 to 1966-67 and of salai wood during the years 1962-63 to 1967-68;
(ii) another communication dated 9th September, 1968, sent by the same officer to the Additional Tahsildar, Sohagpur (respondent 5) asking him to recover the amount as arrears of land revenue; and
(iii) a notice of demand dated 19th September, 1968, sent by the respondent 5 for that amount.
The petitioner has also prayed for a writ of prohibition or any other suitable writ or order directing the respondents to desist from demanding or recovering any sales tax in respect of extraction of bamboos and salai wood from the forests of the division.
2. The broad facts of the case are not in dispute and may be shortly stated. By an instrument of lease dated 4th August, 1956, the President of the Union, acting on behalf of the quondam Part C State of Vindhya Pradesh, authorised the petitioner to extract from certain forests bamboos and salai wood on terms and conditions therein stated, including payment of royalty at certain rates on the bamboos and salai wood so extracted. Consequent upon the formation of the new State of Madhya Pradesh in accordance with the provisions of the States Reorganisation Act, 1956, all rights and liabilities relating to this transaction devolved upon the new State of Madhya Pradesh. When the lease was granted, the C.P. and Berar Sales Tax Act, 1947, was in force in the State of Vindhya Pradesh and the definition of 'goods' in Section 2(g) of that Act, as modified and in force in that State, excluded from the purview of the Act forest contracts that gave a mere right to collect timber, wood or forest produce. Subsequently, the Madhya Pradesh General Sales Tax Act, 1958, was enacted, and it came into force in the whole of the new State of Madhya Pradesh from 1st April, 1959. The exclusion of forest contracts from the ambit of the 1947 Act was not re-enacted in the new Act. Further, 'dealer' as defined in the new Act includes the Central Government or a State Government or any of its departments. The forest department of the State Government was, however, exempted from payment of sales tax for the period 1st April, 1959, to 2nd November, 1962. So, it became thereafter liable to pay the tax and it got itself registered as a dealer with effect from 3rd November, 1962. The Divisional Forest Officer claimed to be entitled as a dealer to recover the sales tax for two reasons. In the first place, the transaction was in substance one of sale of goods taxable under the new Act. Secondly, this was a new imposition made subsequent to the creation of the lease on 4th August, 1956, when, as indicated earlier, the transaction was not taxable. In such a situation, so it was claimed, the provisions of Section 64A of the Sale of Goods Act, as inserted by Act 33 of 1963, entitled the Divisional Forest Officer to recover the sales tax subsequently imposed on such transactions.
3. The petitioner has challenged the right of the respondents to recover sales tax on bamboos and salai wood extracted by it mainly on the following grounds:
(i) The transaction is not a sale of goods and no sales tax is payable in respect of bamboos and salai wood extracted thereunder by the petitioner.
(ii) No sales tax is payable under the terms of the lease deed dated 4th August, 1956, and, therefore, such tax cannot be recovered.
(iii) Neither the State Government nor the forest department of that Government is or could be a dealer and for this reason also no sales tax is payable or recoverable.
(iv) The sales tax, even if payable, is not recoverable as arrears of land revenue, particularly when the revenue recovery certificate was issued by the Divisional Forest Officer.
4. On the question whether the transaction is or is not in essence and effect a sale of goods, several cases decided by the Supreme Court in the context of the abolition of proprietary rights were cited before us. The first of these cases is Firm Chhotabhai Jethabhai Patel and Co. and Ors. v. The State of Madhya Pradesh A.I.R. 1953 S.C. 108. In that case, the contracts gave the right to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac and to cut and carry away teak and timber and other species of trees and bamboos. It was observed that the rights were in respect of growing crops, and were, therefore, excluded from the definition of 'immovable property' as defined in the Transfer of Property Act. It was also observed that the rights did not amount to encumbrances within the meaning of the M.P. Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950. It was further held that the contracts were in essence and effect licences granted to cut, gather and carry away forest produce without creating any interest in land. This case was distinguished in Ananda Behera and Anr. v. State of Orissa and Anr. A.I.R. 1956 S.C. 17, where it was held that the grant in respect of fishery rights implied a licence to enter on the land coupled with a grant to catch and carry away the fish and amounted to a profits a prendre, which was immovable property. In Smt. Shantabai v. State of Bombay and Ors. A.I.R. 1958 S.C. 532, the-right given related to bamboos, fuel wood and teak. Their Lordships accepted the view taken in Ananda Behera's case, A.I.R. 1956 S.C. 17, and observed :
If the document is construed as conveying to her any part or share in the proprietary right of the grantor, then, not being registered under the Indian Registration Act, the document does not affect the immovable property or give her any right to any share or interest in the immovable property. Assuming that she had acquired a share or interest in the proprietary right in spite of the document not having been registered, even then that right has vested in the State under Section 3 of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, and she may in that case only claim compensation if any is payable to her under the Act. If the document is construed as purely a licence granted to her to enter upon the land, then that licence must be taken to have become extinguished as soon as the grantor's proprietary rights in the land vested in the State under Section 3 of the Act. If the document is construed as a licence coupled with a grant, then the right acquired by her would be either in the nature of some profits a prendre which, being an interest in land, is immovable property or a purely personal right under a contract. If the document is construed as having given her a profits a prendre which is an interest in land, then also the document will not affect the immovable property and will not operate to transmit to the petitioner any such profits a prendre which is in the nature of immovable property, as the document has not been registered under the Indian Registration Act, as has been held in Ananda Behera v. The State of Orissa A.I.R. 1956 S.C. 17. If it is a purely personal right, then such right will have no higher efficacy than a right acquired under a contract. If, therefore, the document is construed as a matter of contract, then assuming but without deciding that a contract is a property within Article 19(1)(f) or 31(1) of the Constitution, she cannot complain, for the State has not acquired or taken possession of her contract in any way. The State is not a party to the contract and claims no benefit under it. The petitioner is still the owner and is still in possession of that contract, regarded as her property, and she can hold it or dispose of it as she likes and if she can find a purchaser. The petitioner is free to sue the grantor upon that contract and recover damages by way of compensation. The State is not a party to the contract and is not bound by the contract and accordingly acknowledges no liability under the contract which being purely personal does not run with the land. If the petitioner maintains that, by some process not quite apparent, the State is also bound by that contract, even then she, as the owner of that contract, can only seek to enforce the contract in the ordinary way and sue the State if she be so advised, as to which we say nothing, and claim whatever damages or compensation she may be entitled to for the alleged breach of it. This aspect of the matter does not appear to have been brought to the notice of this Court when it decided the case of Chhotabhai Jethabhai Patel and Co. v. The State of Madhya Pradesh A.I.R. 1953 S.C. 108, and had it been so done, we have no doubt that case would not have been decided in the way it was done.
This question again came up for consideration in Mahadeo v. State of Bombay A.I.R. 1959 S.C. 735, and their Lordships observed :.But what was the nature of those rights of the petitioners It is plain, that if they were merely contractual rights, then as pointed out in the two later decisions, in Ananda Behera v. The State of Orissa A.I.R. 1956 S.C. 17 and Shantabai's case, A.I.R. 1958 S.C.532, 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 petitioner 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, A.I.R. 1953 S.C. 108, as a precedent.
Construing the agreements, their Lordships stated :
From this, it is quite clear that forests and trees belonged to the proprietors, and they were items of proprietary rights. The first of the two questions posed by us, therefore, admits of none but an affirmative answer.
If then the forest and the trees belonged to the proprietors as items in their 'proprietary rights', it is quite clear that these items of proprietary rights have been transferred to the petitioners. The answer to the second question is also in the affirmative. Being a 'proprietary right', it vests in the State under Sections 3 and 4 of the Act. The decision in Chhotabhai's case, A.I.R. 1953 S.C. 108 treated these rights as bare licences, and it was apparently given per in curiam, and cannot therefore be followed.
Even assuming that the documents in question do not amount to grant of any proprietary right by the proprietors to the petitioners, the latter can have only the benefit of their respective contracts or licences. In either case, the State has not, by the Act, acquired or taken possession of such contracts or licences and consequently, there has been no infringement of the petitioners' fundamental right which alone can support a petition under Article 32 of the Constitution.
This decision was followed in State of Madhya Pradesh v. Yakinuddin A.I.R. 1962 S.C. 1916, Anwar Khan Mehboob Co. v. State of Madhya Pradesh and Ors. A.I.R. 1966 S.C. 1637, Mulamchand v. State of Madhya Pradesh A.I.R. 1968 S.C. 1218 and Badri Prasad v. State of Madhya Pradesh and Anr. A.I.R. 1970 S.C. 706. In the last-mentioned case, their Lordships observed:
There is no force in the contention of the learned Counsel that under the contract the plaintiff had become owner of trees as goods. It is true that trees which are agreed to be severed before sale or under the contract of sale are 'goods' for the purposes of the Sale of Goods Act. But before they cease to be 'proprietary' right or interest in proprietary rights within the meaning of Sections 3 and 4(a) of the Act they must be felled under the contract. It will be noticed that under Clause 1 of the contract the plaintiff was entitled to cut teak trees of more than 12 inches girth. It had to be ascertained which trees fell within that description. Till this was ascertained, they were not 'ascertained goods' within Section 19 of the Sale of Goods Act. Clause 5 of the contract contemplated that stumps of trees, after cutting, had to be 3 inches high. In other words, the contract was not to sell the whole of the trees. In these circumstances property in the cut timber would only pass to the plaintiff under the contract at the earliest when trees are felled. But before that happened the trees had vested in the State.
5. In the case before us, there is no question of binding character of any lease created before devolution of proprietary rights in the land from the lessor to another authority which subsequently sought to repudiate the lease. Therefore, the considerations which were material in the context of abolition of proprietary rights that affected leases created earlier by the intermediaries are not relevant. Further, apart from the fact that the lease in this case is a registered instrument, we have to consider the stage when bamboos and salai wood have already been felled and appropriated. As pointed out by the Supreme Court in Badri Prasad's case, A.I.R. 1970 S.C. 706, if it be shown that there was an agreement that the trees would be severed before sale or under the contract of sale, the trees would be goods for the purposes of the Sale of Goods Act, 1930, and the property in the trees would pass when the trees are felled. Clause 2(b) of the lease deed gives to the petitioner 'full and exclusive liberty and power during the term...to enter upon the leased area and to fell, cut and extract bamboos and salai wood and to remove, store and utilize the same'. Under Clause 2(g) of the deed, the consideration for the grant is not a fixed sum paid once for all but the petitioner is required to make periodical payments varying with, and related to, the quantities of bamboos and salai wood extracted at the fixed rate of Rs. 6 per ton of air dry bamboos and Rs. 2 per ton of air dry salai wood. Further, as provided by Clause 2(c) of the deed, extraction of bamboos and salai wood had to be made in accordance with the rules and regulations prescribed by the forest department. Those rules are the Forest Contract Rules governing sale of forest produce and a summary of those rules was, as appearing from the memorandum, annexure R-I dated 30th May, 1957, duly supplied to the petitioner. According to those rules, the petitioner could fell and extract only bamboos and salai wood. Moreover, bamboos could be extracted only in accordance with the special rules applying to them. The bamboo forests were to be divided into felling series. Each one of these was to be further Sub-divided into 4 annual coupes and the petitioner could work in any given year only one coupe marked by forest department for the purpose. Similarly, each one of the felling series of salai wood forests was to be divided into 20 annual coupes and the petitioner could work, in any given year, only one of these coupes. Thus, every year it could operate only on the exploitable bamboos and salai wood ear-marked and allotted for the purpose by the forest department, for which, as already indicated, it had to make annual payments in four instalments, calculated at an agreed rate per ton of the material extracted. It is, however, argued on the authority of Ramkrishna Deo v. Collector of Sales Tax  6 S.T.C. 674, that in such a case, the royalty payable is not sale price but rent or compensation which the petitioner, as occupier, pays periodically for the benefits granted to him. That was the opinion of one of the learned Judges constituting the Division Bench with which the other Judge did not agree and the case was not decided on that basis. It is true that the term of lease is a long one spreading over many years but, as shown, in effect it operated every year only on two coupes, one of bamboos and another of salai wood, ear-marked and allotted by the forest department for the purpose of extraction of ripe material. For all these reasons, we are of the view that the transaction in this case was one of sale of goods.
6. Another argument against the demand for sales tax is that the petitioner is not required to pay any such tax under the terms of the lease deed dated 4th August, 1956. This contention is no doubt well-founded, so far as the terms of the lease deed are concerned but the petitioner's liability for sales tax arises in this way. Under the Central Provinces and Berar Sales Tax Act, 1947, as in force in Vindhya Pradesh on 4th August, 1956, forest contracts giving a right to collect timber, wood or forest produce were excluded from the definition of goods as enacted in Section 2(d) of that Act which reads as follows:
2. (d) 'goods' means all kinds of movable property other than actionable claims, stocks, shares or securities and include--
(i) all materials, articles, commodities to be utilised in the construction, fitting out, improvement or repair of immovable property, and
(ii) things for the time being attached to the earth but intended to be and subsequently severed therefrom as a direct result of the agreement of sale;
but does not include a forest contract under which a mere right to collect timber, wood or forest produce is given to the contractor.
Under the M.P. General Sales Tax Act, 1958, this was replaced by the following definition given in Section 2(g) of that Act:
2. (g) 'goods' means all kinds of movable property other than actionable claims, newspapers, stocks, shares, securities or Government stamps and includes all materials, articles and commodities, whether or not to be used in the construction, fitting out, improvement or repair of movable or immovable property; and also includes all growing crops, grass, trees, plants and things attached to, or forming part of, the land which are agreed to be severed before sale or under the contract of sale.
Therefore, from the date that Act came into force, the sale of standing timber, which was agreed to be severed before sale, or under the contract of sale, became taxable. In a similar situation, when the Bombay Sales Tax Act, 1959, was amended with retrospective effect so as to include in the definition standing timber agreed to be severed before or under the contract of sale, the Supreme Court observed in State of Maharashtra v. Champalal Kishanlal Mohta (1970) 1 S.C.C 611 at p. 613, as follows :
Standing timber may ordinarily not be regarded as 'goods' but by the inclusive definition given in Section 2(7) of the Sale of Goods Act, things which are attached to the land may be the subject-matter of contract of sale provided that under the terms of the contract they are to be severed before sale or under the contract of sale.
However, under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958, such sales were exempted from sales tax for the period 1st April, 1959, to 2nd November, 1962. Thereafter, the sales became taxable. Even so, ordinarily, sales tax could not be recovered apart from the sale price but Section 64A of the Sale of Goods Act, 1930, introduced by an amendment made in 1963, brought about a change in regard to recovery of such dues. This will be clear from the section itself which is reproduced:
64A. (1) Unless a different intention, appears from the terms of the contract, in the event of any tax of the nature described in Sub-section (2) being imposed, increased, decreased or remitted in respect of any goods after the making of any contract for the sale or purchase of such goods without stipulation as to the payment of tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of such goods tax-paid where tax was chargeable at that time,--
(a) if such imposition or increase so takes effect that the tax or increased tax, as the case may be, or any part of such tax is paid or is payable, the seller may add so much to the contract price as will be equivalent to the amount paid or payable in respect of such tax or increase of tax, and he shall be entitled to be paid and to sue for and recover such addition; and
(b) if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may be, is paid or is payable, the buyer may deduct so much from the contract price as will be equivalent to the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such deduction.
(2) The provisions of Sub-section (1) apply to the following taxes, namely :--
(a) any duty of customs or excise on goods;
(b) any tax on the sale or purchase of goods.
It would thus appear that in this case the demand for sales tax, if payable, could be justified on the basis of the provisions of Section 64A ibid.
7. The third ground is that neither the State Government nor the forest department could be regarded as a dealer as defined in Section 2(d) of the M.P. General Sales Tax Act, 1958. Omitting parts not material for this case, that definition reads :
(d) 'Dealer' means any person who carries on the business of buying, 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) the Central or a State Government or any of their departments, a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business.
It is true that a State Government or any of its departments is eo nomine within the definition but, before it could be regarded as a dealer, it must carry on business as specified in the main clause of the definition. The question is whether when an owner of land such as the State Government merely sells, without more, the forest produce like bamboos and salai wood naturally growing on its lands, can it be said that it is carrying on business within the meaning of the definition There are several decided cases in support of the view that, in circumstances like those present in this case, the State Government or the forest department cannot, merely by selling the forest produce grown on their land, be regarded as carrying on any business of buying, selling, supplying or distributing goods: Raja Visheshwar v. The Province of Bihar  2 S.T.C. 129, Ramkrishna Deo v. The Collector of Sales Tax, Orissa  6 S.T.C. 674, Raja Bhairabendra Narayan Bhup v. Superintendent of Taxes, Dhubri, and Ors.  9 S.T.C. 60, Pithapuram Taluk Tobacco, Cigars and Soda Merchants' Union v. The State of A.P.  9 S.T.C. 723, Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co.  20 S.T.C. 520 (S.C.), A.M. Ansari and Ors. v. The Board of Revenue A.I.R. 1969 A.P. 399 and Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Midland Rubber and Produce Co., Ltd.  25 S.T.C. 57 (S.C.) In the case of Ramkrishna Deo v. The Collector of Sales Tax, Orissa  6 S.T.C. 674 the Maharaja of Jeypore had, as in this case, sold the sal trees from his forests for preparing sleepers. It was held that he was not a dealer within the meaning of the Orissa Act because he was not carrying on the business of selling or supplying the goods for the reason that the element of purchase, one of the necessary ingredients of the business was absent. In A.M. Ansari v. Board of Revenue A.I.R. 1969 A.P. 399, the State Government had sold beedi leaves, bamboos or timber and the question was raised whether it was carrying on business within the meaning of the definition in the Andhra Pradesh General Sales Tax Act, which was similar to the definition in the M.P. General Sales Tax Act, 1958. Several cases decided earlier were noticed and, relying upon them, it was held that sale by the State Government of its own goods was not a business and it was not a dealer in respect of such goods. In Deputy Commissioner v. Midland Rubber and Produce Co. Ltd.  25 S.T.C. 57 (S.C.), the Supreme Court pointed out that it was conceivable that a producer of crops might also engage in the business of selling or supplying and become a dealer but the burden of proving that the assessee was carrying on the business of selling or supplying was upon the sales tax authorities and they did not discharge it merely by referring to the frequency and volume of sales. Their Lordships went on to observe :
The material facts in the present case are almost similar to those in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co.  20 S.T.C. 520 (S.C.) In the present case also the only facts found are that the assessee was a public limited company which was engaged in the business of planting and growing rubber trees and converting the latex obtained from the trees into rubber sheets and regularly selling the rubber sheets thus produced by it. It was argued for the appellant that the company was registered as a 'dealer' as defined under Section 2(b) of the Act. But this fact in itself is not decisive on the question as to whether the turnover of inter-State sales of rubber is taxable under the Act. Otherwise the material facts in the present case are almost identical with those in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co.  20 S.T.C. 520 (S.C.) and for the reasons expressed in that case we hold that the sales tax department had not discharged the onus of proving that the assessee was carrying on the business and was therefore a dealer within the meaning of Section 2(b) of the Act.
In Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co.  20 S.T.C. 520 (S.C.), the Supreme Court had noticed their following earlier observations in State of Andhra Pradesh v. H. Abdul Bakshi and Brothers  15 S.T.C. 644 (S.C.), in regard to the characteristics of a business for taxing statutes:
The expression 'business' though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. By the use of the expression 'profit-motive' it is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity.
It follows, therefore, that in the facts and circumstances of this case, mere sale of bamboos and salai wood could not be regarded as carrying on the business of selling or supplying goods. Our attention was, however, drawn to M. Ramakrishniah v. State of Andhra A.I.R. 1957 A.P. 28, but that case is distinguishable on facts because there sales tax was held to be recoverable on account of a special provision, Section 8C of the Madras General Sales Tax Act, which read as follows :
Notwithstanding anything contained in this Act, the State Government shall, in respect of any sale of goods effected by them, be entitled to collect by way of tax any amount which a registered dealer effecting such sale would have been entitled to collect by way of tax under this Act.
There is no such provision in the Madhya Pradesh General Sales Tax Act, 1958, and, therefore, that case can be of no assistance to the respondents. In view of the cases just noticed, we are of opinion that in respect of mere sales of forest produce, neither the State Government nor the forest department is a dealer within the meaning of the definition in Section 2(d) of this Act.
8. The fourth ground argued before us is that the sales tax was not recoverable as an arrear of land revenue, particularly when the revenue recovery certificate was issued by the Divisional Forest Officer. In our opinion, this contention is untenable because, as we indicated earlier, the sales tax in this case is recoverable under Section 64A of the Sale of Goods Act, 1930, as part of the price of forest produce sold by the forest officers and Section 82 of the Indian Forest Act, 1927 entitles them to recover this sale price as an arrear of land revenue. But, in the view we have taken of the third ground, no sales tax was payable in respect of those sales and, therefore, neither Section 64A of the Sale of Goods Act, 1930, nor Section 82 of the Indian Forest Act, 1927, can be called in aid to sustain the steps taken for recovery of Rs. 24,455.30 as part of the sale price for bamboos extracted during the years 1962-63 to 1966r67 and salai wood extracted during the years 1962-63 to 1967-68.
9. The result is that this petition succeeds and is allowed. The communications dated 2nd September, 1968, and 9th September, 1968, and the notice of demand dated 19th September, 1968, are quashed and the respondents are directed to desist from recovering the aforesaid amount as sales tax from the petitioner. The respondents shall bear their own costs and pay those incurred by the petitioner to whom the security amount shall be refunded. Hearing fee Rs. 100.