JUDGMENT

Satish Chandra, J. - The question of law raised in this writ petition is whether sales tax is chargeable in respect of a contract for tapping the blazes cut in the chir trees of Government Forests to collect Resin.

2. The Tons Forest Area belonging to the State Government has been divided into coupes, ranges and blocks. In each block the Forest Department determines the chir trees which are fit for the tapping resin. The Government officials make cuts called blazes in each tree. The number of trees which have been blazed is counted. The Government then sells the annual use of the blazes, block wise, by an auction. The Conservator of Forests issued notice on January 12, 1971 fixing January 27, 1977 as the date of auction. The petitioner won the auction for coupe Nos. 8, 9 and 15 in Sangtur and Devate Ranges. After his bid had been accepted, a formal contract, on a printed form, was executed between the petitioner and the Forest Department. Annexure B to the writ petition is a copy of the contract in respect of the Sangtur Range, coupe No. 8. In this coupe, 66,509 blazes were sold to the petitioner at the rate of Rs. 402.00 per hundred blazes. The sale price was calculated at Rs. 2,67,366.18. The contract was for the calendar years 1971 as well as 1972. The petitioner had thus to pay a sum of Rs. 5,34,732.38 as royalty to the Forest Department for purchasing the contract for coupe No. 8. Similar contracts were entered into for coupe Nos. 9 and 15. Condition No. 8 of the auction notice stated that apart from security, the contractor shall have to deposit 3% or whatever be the current rate, as sales tax. The contract which was ultimately entered into provided that it was subject to the conditions contained in the sale notice and also the conditions of sales announced at the time of auction. The contract mentioned the various dates on which the specified amounts of installments of royalty were payable.

3. The petition states that for the year 1971, the Forest Department realised from the petitioner a sum of Rs. 17,638-19 as sales tax. By a letter dated May 8, 1972, the Deputy Conservator of Forests demanded, inter alia, sales tax to the tune of Rs. 18,801.06 from the petitioner for the year 1972 in respect of the three coupes purchased by the petitioner. The petition states that when the petitioner received the aforesaid letter of demand, they sought legal advice and were informed that no sales tax is payable under the U.P. Sales Tax Act for tapping of the resin from the blazes on the trees. Accordingly, on June 15, 1972 the petitioner replied to the respondents that no sales tax was leviable or payable in respect of the contract taken by the petitioner. The demand was illegal and that the sum of Rs. 17,638.19 realised under a mistake in the previous year may be refunded at the earliest. The respondents, however, did not accept this contention and continued to press for the recovery of the sales tax dues. Hence the present writ petition challenging the validity of the levy of sales tax.

4. The following questions require consideration :

(a) Whether the transaction inter-parties did not involve sale of goods.

(b) Was Resin horticultural produce not liable to sales tax.

(c) Prior to December 1, 1973, no sales tax having been levied on resin, no tax was chargeable for 1971 and 1972.

5. On the first point, the petitioners case is that the transaction was in law an easement, i.e., licence coupled with a grant known as "profits a prendre" and not sale of goods. Sales tax was, hence, not leviable. The respondents contend that in substance the contract was of sale of resin, a minor forest produce. Resin was goods liable to sales tax.

6. The respondents state that the resin blaze means a cut which is made on a chir tree for extracting resin, by adopting the resin tapping system. The contractor was responsible for collection of the resin from the blazes, and he carried it away.

7. Condition No. 8 of contract provided that the tapping season w