Assessee had an interest in the agricultural or horticultural produce grown on any land.

The question for determination in each of these petitions is whether the assessee is entitled to the benefit of the proviso to section 2(i) of the Madras General Sales-Tax Act IX of 1939 (hereinafter referred to as ‘the Act’), and as such entitled to exclude from his turnover the proceeds of the sales of arecanut in the assessment year, that is, whether they were sales by a dealer of "agricultural or horticultural produce grown on land in which he had an interest whether as owner, usufructuary mortgagee, tenant or otherwise."

That the assessee was a dealer as defined by the Act was never in dispute. The finding of the Appellate Tribunal, which differed from the departmental authorities on that point, was that the cured arecanut sold by the assessee was agricultural or horticultural produce. The correctness of that finding was not challenged, and the arguments before us proceeded on the assumption, that the arecanut sold by the assessee was horticultural produce within the meaning of section 2(i) of the Act. The question that remains was whether that arecanut was "grown on any land in which the assessee had an interest whether as owner, usufructurary mortgagee, tenant or otherwise". That question was answered in the negative by the Tribunal and the correctness of that decision was challenged before us by the assessees.

In each case the assessee entered into a contract with the owner of the tope, that is, the land which contained areca-palms, among others, under which the assessee became entitled to collect the usufruct of the trees in that tope. The period of the contract was one year, and even when renewed it was only on an annual basis. In many of the cases before us, the contracts were oral and not written, but that in no way affected the determination of the real question at issue, whether the assessee acquired an interest in the land under the terms of his contract. Mr. Nambiar, the learned Counsel for the assessees, invited us to construe the terms of the written contract which the assessees, Venkatarama Goundar and Sahib Rowther entered into as fairly typical, and the learned Counsel conceded that none of the other assessees could claim he was in a more favourable position.

The terms of the contract relevant for our present purpose were:

"This lease-deed is in respect of the usufruct. The undermentioned tope belonging to you and in your possession and enjoyment, we have accepted to take on lease for a period of one year from 1st Chitrai, Vikruthi year to 31st Panguni month on a rental of Rs.17,000. We have taken possession of the said tope............after payment regularly of rent, if we commit default in surrendering possession of the tope, (after the expiry of the lease) from the date of default, we have not only to pay damages at the rate of Rs.22,000 per year but you are also authorised to take possession of all the crops on the demised land as well as the land without permission. When we surrender and deliver possession of the tope (on the expiry of the lease) we will do so in your presence or in the presence of persons authorised on your behalf without any detriment to the future crop and after cutting the crops we are entitled to. In respect of the undermentioned tope sirkar kandayam (assessment), veli maramathu (repairs to the fence), pruning, turning over the soil, watering, must be borne by you. When there is no water, the obligation to arrange for the flow of water to the tope rests on you and we will depute one person for the same.

We will be responsible for any kind of damage to the tope, namely, allowing of any cattle to graze, or any damage caused to the trees........or any damage caused to the fence or any kind of damage caused by our negligence. We will not ask for any reduction of rent if rains fail or if there is any deficiency in the growing crops or if any damage or loss has resulted........

To this effect we have executed this lease-deed in respect of the usufruct."

Does this contract crea