ROHTAS INDUSTRIES LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) The petitioner, a joint-stock company, has prayed for quashing the demands of sales tax contained in three letters dated the 2nd December, 1978, 16th February, 1979, and 18th June, 1979 (annexures 2, 3 and 5), respectively. The demands in question relate to exploitation of bamboos made by the petitioner from forest coupes in pursuance of an agreement of lease entered into between the petitioner and the State Government in the year 1968. The petitioner has also prayed for quashing of an order of the Commissioner of Commercial Taxes dated the 7th May, 1979 (annexure 4), upholding the orders of the Assistant Commissioner of Commercial Taxes to the effect that the pettioner was liable to pay -sales tax in relation to the transactions of exploitation of bamboos by the petitioner from the Government forest- coupes leased out to it by the State.

(2.) The petitioner-company owns a paper factory at Dalmianagar and for the purpose of manufacture of paper it entered into an agreement for exploitation of bamboos from the forests with the State of Bihar through the Divisional Forest Officer, Hazaribagh (respondent No. 4). The agreement was for grant of lease of the right of exploiting bamboos on the terms and conditions mentioned therein for twelve years, i. e., from the year 1968-69 to 1979-80. For silvicultural purposes a year is deemed to begin from the 16th October and end on the 13th June. The petitioner agreed to pay a minimum royalty of Rs. 1,05,000 a year under Clause 2(a) of the agreement, but as provided under Clause 2(c) thereof, a revision was made on the 1st July, 1975, and the minimum royalty payable by. the petitioner was raised to Rs. 3,03,000 a year instead of Rs. 1,05,000 as fixed originally. The annual minimum royalty was payable by the petitioner irrespective of the fact whether, for its own default or due to any other cause, the petitioner-company is unable to exploit bamboos from the leased out forest coupes. It is provided under Clause 6(a) of the agreement that if the petitioner-company fails to start work of exploitation of bamboos from the forest coupe even after the lapse of two months reckoning from the 15th October each year, the Divisional Forest Officer can lawfully sell the coupe to another party or exploit it departmentally in order that silvicultural operations may not lag behind, and the sale proceeds will be appropriated by the Government although the petitioner-lessee shall have to pay the stipulated minimum royalty. Clause 7 of the agreement provides that, if the petitioner fails to remove any bamboo within the section or coupe of the forest the felling of which is obligatory, as per rules in schedule D, within the period allotted for such operation, it shall forfeit the right to cut or remove such bamboos and they shall be the property of the Government and the petitioner shall be liable to pay certain fines and charges. Clause 16 of the agreement provides that the lessee will not be entitled to any compensation whatsoever from the lessor for any loss that may be sustained by the lessee by reason of fire or tempest or flood or violence of any army or of mob or other irresistible force or natural calamity or by reason of theft by any person or persons. The clause further provides that in the event of the forest department setting fire to the forest for silvicultural purposes the lessee will be responsible for safeguarding the forest produce sold to him and no compensation will be paid by the Government for losses arising out of such controlled silvicultural burning or general forest fire. Clause 17 of the agreement provides that on completion of work in any section of the annual coupe or in the event of the termination of the agreement by efflux of time, if the lessee had failed to cut the bamboos fit to be cut or had not removed the bamboos cut from the limits of the section or coupe or from the leased area, those products would become the absolute property of the lessor and the Divisional Forest Officer will be at liberty to sell, remove or otherwise deal with the same in such manner as he may think and the lessee shall also forfeit all its rights under the agreement to exploit any further bamboo that may at that date remain unexploited and in no case will be entitled to any compensation whatsoever in respect thereof. The petitioner, under the terms of the lease, has the right to use forest roads and forest lands, without payment of any additional amount therefor, for temporary storage of bamboos on the lands inside the coupe, subject to certain restrictions on such use, as provided under certain clauses of the agreement.

(3.) In view of the above provisions in the lease, the petitioner asserts that the agreement is for carrying out forestry (silviculture) operation by the State through the lessee and the mode and manner of exercising the rights to exploit, which terms includes felling, conversion, collection, extraction, removal and transport, have been subjected to various restrictions and obligations under the agreement and the acts of the lessee in violation of such restrictions and obligations have been subjected to penalties and damages, as provided in Clauses 6(a), 8(e), 13, 18, etc.