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<h1>Forest gum extraction contracts: interest in immovable property, not goods. Sales tax on first sales.</h1> The Court found that forest contracts for gum extraction granted an interest in immovable property, not subject to sales tax as goods. The contracts ... - Issues:Validity of sales tax assessment on forest contracts for gum extraction, interpretation of sales tax liability, applicability of exemption notification, nature of forest contracts as sale of goods or interest in immovable property.Analysis:The petitioner challenged the validity of sales tax assessment on forest contracts for gum extraction. The Assistant Sales Tax Officer included the amount paid for the contracts in the taxable turnover, considering it a sale of goods. The petitioner argued that the contracts granted the right to collect gum, constituting an interest in immovable property, not goods subject to sales tax. The Additional Commissioner upheld the assessment, stating sales tax applied at the first sale point, and the consideration paid could not be deducted from taxable turnover.The Court found the approach of the Sales Tax Authorities erroneous, clarifying that the contracts granted a right to collect gum, not a sale of gum itself. The contracts allowed collection of existing gum and future secretion, akin to a license to enter forest lands. Citing precedents, the Court established the right to collect gum as an interest in immovable property, not goods subject to sales tax. As the petitioner sold the collected gum to purchasers, those transactions constituted the first sales, making the petitioner liable for sales tax on the sale price, not the contract consideration.Consequently, the Court allowed the petition, quashing the sales tax assessment orders for the periods in question. The orders of the Sales Tax Authorities and the Additional Appellate Assistant Commissioner of Sales Tax were set aside. The Court held that the petitioner should have been assessed based on the sale price of the gum sold, not the contract consideration. Each party was directed to bear its costs, and the security deposit was to be refunded to the petitioner.
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