Transactions covered by contracts for the sale of bamboos from forests are not exigible to sales tax and the Divisional Forest Officer is not entitled to claim reimbursement of tax paid by him on such transactions.

JUDGMENT

R. N. MISRA, J. - The petitioner, Messrs. Straw Products Limited, a company incorporated under the Companies Act of 1956 with its registered office at Jaykaypur in the District of Koraput is engaged in the manufacture of paper and allied products. For the purpose of obtaining pulp for paper-making, the company obtained two leases from the State of Orissa on 17th May, 1956, and 22nd August, 1956, on the basis of royalty. Both the contracts were for a term of 16 years with a stipulation for renewal and in January, 1974, the two leases have been renewed for a further term of 16 years. There is no stipulation for reimbursement of sales tax in the contracts. On 24th February, 1975, the Divisional Forest Officer, Balliguda Division, sent the following letter to the petitioner :

"I am a registered dealer and my registration No. is GA-II-3252. I am assessed to tax on sale of all standing trees which includes bamboos for the years 1969-70 to 1971-72 and the assessments for the period from 1972-73 till to date are pending.

Since, I am liable to pay sales tax to the State, it is incumbent on me to realise sales tax from you.

Your transactions with the undersigned from the year 1969-70 are as below and the tax payable by you is noted against each.

----------------------------------------------------------- Year Amount Paid Amount of sales tax to be paid at 5 p.c. ----------------------------------------------------------- Rs. P. Rs. P.

1969-70 83,749.08 4,187.45 1970-71 1,11,657.35 5,582.90 1971-72 1,29,000.00 6,450.00 1972-73 1,78,915.90 8,945.75 1973-74 3,72,960.00 18,648.00 1974-75 3,72,960.00 18,648.00 ------------ Total 62,462.10 -------------

Since according to the tax laws, tax on all sales are to be realised and remitted during the same quarters, I would request you that all arrears of sales tax as detailed above may please be paid by 15th March, 1975, failing which this letter will be operative for stopping extraction and despatch of bamboo from the forests to your depots ............"

The petitioner thereupon sent a letter of protest to the forest authorities contending that the transaction was not exigible to sales tax and in the absence of stipulation of reimbursement, the company had no liability of meeting the demand. It was further pointed out that the threat of stopping extraction and removal of timber from the forests was an arbitrary and high-handed action. The Government machinery should not take such arbitrary and unsustainable steps. When the petitioner found that there was imminent danger to its business, these two writ applications were filed asking for quashing of the demand on the footing that the transactions under the leases were not exigible to sales tax and, at any rate, the petitioner could not be forced to make the payment and for non-payment the petitioner could not be restrained from working out its leasehold rights. The two writ applications are for the two separate contracts but as common questions have been raised and one set of arguments were advanced by the parties, we propose to dispose of both these applications by one common judgment.

2. Two separate counter-affidavits have been filed, one by opposite parties 1 to 3 and the other by opposite parties 4 and 5. The Divisional Forest Officer of Balliguda Division in his counter-affidavit on behalf of opposite 1 to 3 has pleaded that clause 10 of the contract making provision that no fee other than payments expressly mentioned therein (namely royalty) would be payable by the lessees is to be read along with clause 7, wherein it has been provided thus :

"Nothing herein contained shall