NARAYANA REDDY Vs. DIVISIONAL FOREST OFFICER

JUDGEMENT

(1.) The petitioners who are "beedi leaves contractors" seek issuance of writs directing the respondents-forest authorities to release the abnus leaves without insisting on the payment of sales tax. Pursuant to the tenders called for by A.P. Forest Development Corporation (hereinafter referred to as "Corporation") the petitioners were awarded contracts for the "purchase" of beedi leaves in the specified units for the 1997 season. The Government appointed the Corporation as "agent" for the Forest Department for the purpose of collection and disposal of abnus leaves in the forest areas. The Divisional Forest Officer entered into agreements with the petitioners on behalf of the agent-A.P. Forest Development Corporation which is owned and controlled by the State Government. The broad features of the contract are as follows :

(2.) The petitioners, who are described as "purchasers" are required to do pruning of abnus plants in the unit after obtaining prior permission and will have to establish collection centres known as "khallas" and keep their representative at each collection centre for the purpose of collection of abnus leaves. At the collection centres, the leaves in raw form, got plucked and collected by the Corporation, are entrusted to the purchasers. The purchaser is obliged to reimburse the collection charges to the Corporation. The subsequent operations like curing, bagging and transportation to the Corporation's godowns are required to be done by the purchaser. The leaves will be kept in the godowns approved by the Divisional Forest Officer and they remain in the godowns at the risk of the purchaser but under the control of Divisional Forest Officer. The department also puts its own locks to the godowns. The petitioners are allowed to remove/take delivery of the bags on the strength of the permits issued by the officials of the Corporation. The permits are issued only after payment of the sale amount calculated at tendered rate, the collection charges payable and the sales tax thereon. The sale amount is also known as "royalty". It is enjoined in clause (7) of the agreement that the purchaser shall not become the owner till all the amounts due are paid to the Corporation. The sale amount and collection charges are payable in three equal instalments. On payment of each instalment, proportionate quantity of beedi leaves is released. The abnus leaves are also released on submission of bank guarantee subject to certain conditions.

(3.) It is the contention of the petitioners that sales tax is not liable to be paid on the transaction inasmuch as there is no sale involved. It is submitted that the essence of the contract is the conferment of right to take way beedi leaves from the plants and it creates an interest in the land. In other words, the transaction, according to the petitioners, is in the nature of profit-a-prendre. It is contended that royalty is charged for conferring the said benefit but not as a consideration for sale. It is submitted that the use of the words "sale amount", "purchaser" are not conclusive.