Krishna Iyer, J. - (1.) The State of Madhya Pradesh, blessed with abundant forest wealth, whose exploitation, for reasons best known to that government, was left in part to the private sector, viz., the respondent, Orient paper Mills, which is the appellant in this appeal by certificate, The subject-matter of this litigation, however, is the competency to collect sales tax from the respondent for the bamboo and salai wood extracted by it, under a transaction relating to some government forests in Vindhya Pradesh which, on 'states reorganisation in 1956, became part of madhya Pradesh. The transaction itself was dressed up as a lease-deed executed by the then State of Vindhya Pradesh on August 4, 1956 in favour of Orient Paper Mills, the respondent herein. At that time no sales tax could be levied under the law from the forest department of the appellant State or the respondent mills. However, on April 1, 1959 the M. p. General Sales Tax Act, 1958, (hereinafter referred to acronymically as MGST Act) came into force. On the footing that the Forest Department was a dealer it got itself registered as such, under the sales tax law, on November 3, 1962. The respondent, of course, is a registered dealer under the same law. Subsequently, the Chief Conservator of Forests, representing the appellant, demanded of the respondent that it pay sales-tax on the timber extracted under the lease deed. whereupon the claim was repudiated by the respondent. In consequence, the appellant proceeded to levy the sum representing the sales tax on the value of the timber cut and removed as per the terms of the contract, resorting to revenue recovery proceedings authorised by Section 82 of the Indian Forest Act. Thereupon the respondent moved the High Court for the issuance of a writ under Article 226 of the Constitution of India against the State to forbear from collecting sales tax illegally. Holding that the State Government and its Forest Department were not dealers within the sense of the sales tax law, the writ petition was allowed, notwithstanding the adverse findings against the petitioner-respondent on some other vital points.
(2.) The State has challenged this finding in the appeal before us. The validity of the attempted exaction is the gut issue in these proceedings, although the center of gravity on this forensic stage has shifted from the question of the forest department being a dealer to whether the transaction styled lease does at all involve sale of goods. From no dealer, no sales tax to no sale, no sales tax is the shift in the epicenter of the argument caused by an amendment to the sales tax statute legislated after and on account of the very judgment under appeal. Suffice it to say for the present no sale, no sales tax is a legal truism.
(3.) It may by mentioned right here that the respondent before us is not directly liable to pay sales tax, even assuming that the lease deed involves sale of goods. The forest department of government is admittedly a registered dealer for the relevant period, and it is claimed by the appellant State that it was liable qua dealer to pay tax on sales of timber, and by virtue of Section 64-A of the Sale of Goods Act such sums, which became leviable only after the agreement was entered into in 1956, could be recovered from the purchaser-respondent. It is virtually admitted in this appeal, as stated earlier, that both parties are registered dealers under the relevant Sales Tax Act. Nor is it in dispute that if the appellant forest department were liable to pay sales tax for the sales of timber which were alleged to have taken place, the respondent, in turn would be liable to make good that sum in view of the plain provision in Section 64A of the Sale of Goods Act. But to attract that provision there has to be sale of goods. Was there any sale of wood under the lease deed That is the core of the legal quarrel agitated before us.;