BHADRACHALAM PAPERBOARDS LIMITED Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) The petitioner in this writ petition - Bhadrachalam Paperboards Limited - is asking for the issuance of a writ of mandamus "declaring the action of the respondents in demanding payment and the collection of sales tax from the petitioner-company on royalty and extraction charges paid for bamboo and hardwood supplied to the petitioner-company from 1978-79 onwards as illegal, null and void and for a consequential order directing the respondents to refund the amounts collected from the petitioner-company so far and for not collecting the same in future". The respondents in the writ petition are Government of Andhra Pradesh represented by its Secretary, Forests and Rural Development, Hyderabad and other officials of the Forest Department as well as the Commissioner of Commercial Taxes, Government of Andhra Pradesh, Hyderabad. The petitioner entered into an agreement with the State Government for supply of bamboo and hardwood from the Government forest on certain terms and conditions. The agreement is dated 27/03/1978. The Sales Tax Department demanded and collected sales tax upon the value of the bamboo and hardwood removed by the petitioner from the forest. The petitioner did not question the same until the Supreme Court delivered its judgment in State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 21 3/03/1985. Soon after the petitioner came to know of the said judgment (evidently after it was reported in law journals), it filed this writ petition on 11/12/1985, questioning the said levy. In W.P.M.P. No. 19431 of 1985 filed in this writ petition this Court by its order dated 26/12/1985 granted interim stay of collection of sales tax from the petitioner. The petitioner is, therefore, asking for refund of the sales tax paid by it during the period from 27/03/1978 to 31/10/1985. Reliance is placed upon the aforesaid decision of the Supreme Court. According to the petitioner the principle of the said decision squarely applies to the facts herein. Reliance is also placed upon a Bench decision of this Court in W.P. No. 10550 of 1983 disposed of on 29/02/1988 to which one of us (B. P. Jeevan Reddy, J.) was a party (Andhra Pradesh Paper Mills Limited v. Government of Andhra Pradesh [1989] 73 STC 26). In the said Bench decision this Court followed and applied the principle of the decision of the Supreme Court in State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213 and held that in the case of an agreement for the sale of bamboo, and having regard to the terms and conditions of the agreement, there is no sale of goods attracting sales tax. The petitioner in that writ petition was Andhra Pradesh Paper Mills Ltd., Rajahmundry.

(2.) The learned Government Pleader for the Commercial Taxes submitted in the first instance that the principle of the said two decisions has no application to the facts of this case. According to him the Bench of this Court in W.P. No. 10550 of 1983 (Andhra Pradesh Paper Mills Limited v. Government of Andhra Pradesh [1989] 73 STC 26) considered the levy of sales tax under Section 6-A of the Andhra Pradesh General Sales Tax Act where the tax was being levied and collected from the purchaser. He submits that in the case of this petitioner the demand is not upon the petitioner but upon the Forest Department as seller of the goods. He submits that according to the definition of the "dealer" in the Act, the Forest Department is also a dealer. He submits that both bamboo and hardwood are placed in the First Schedule to the Andhra Pradesh General Sales Tax Act which means that the tax is payable at the point of first sale in the State. For this reason, he says, the principle of the said decision has no application.

(3.) We are not inclined to agree with the learned Government Pleader. Whether the tax is levied under section 6-A of the Act or under section 5(2) read with the First Schedule, there must be a purchase or sale, as the case may be, to attract the tax. Unless there is a sale the State cannot levy tax under section 5(2) read with the First Schedule. It is not disputed that the agreement entered into between the petitioner and the Government is in similar terms as the agreement considered by this Court in W.P. No. 10550 of 1983 (Andhra Pradesh Paper Mills Limited v. Government of Andhra Pradesh [1989] 73 STC 26). We may also mention that though the Bench was concerned in that case with bamboo alone, the discussion shows that the same principle is applicable even in the case of timber. Indeed that is the principle enunciated by the Supreme Court in State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213. We are, therefore, of the opinion that the principle of the said decision squarely applies here.