Forest collection rights are not a sale of goods; tax applies only when extracted gum is first sold.

A forest contract granting entry into forest land to collect gum from trees, including gum already present and gum secreted in future, was treated as a licence coupled with an interest in immovable property rather than a sale of goods. Because the occurrence, quantity, and quality of the produce were not guaranteed, the contract consideration was not the taxable sale price. Sales tax could arise only on the first sale of the extracted gum by the contractor to purchasers, not on the amount paid to obtain the forest rights. On that basis, assessment on contract consideration was unlawful and the impugned assessments were liable to be quashed.

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Issues: Whether the forest contracts amounted to a sale of gum as goods liable to sales tax on the contract consideration, or only a grant of the right to collect and appropriate gum from trees, and consequently whether assessment could be made on the consideration paid for the contracts instead of on the sale price realised on resale of the gum.

Analysis: The contracts were not mere sales of gum as movable property. Having regard to the terms allowing the petitioner to collect gum existing on the trees and gum secreted in future, and to the clauses showing that the occurrence, quantity, and quality of the forest produce were not guaranteed, the contracts were in substance licences coupled with a grant of the right to enter forest land and take gum. Such a right to collect and appropriate gum from trees was an interest in immovable property and not "goods" within the meaning of the Act. The taxable first sale of gum occurred when the petitioner sold the extracted gum to purchasers, and the assessment could not lawfully be based on the consideration paid to obtain the forest contracts.

Conclusion: The assessment on the basis of the contract consideration was unlawful. The petitioner was liable, if at all, only on the sale price realised on the first sales of gum by it, and the impugned assessments were liable to be quashed.

Ratio Decidendi: A contract conferring the right to enter land and collect natural produce from trees is a grant of an interest in immovable property and not a sale of goods; sales tax, therefore, cannot be levied on the consideration for such a grant but only on the taxable sale of the produce when it is subsequently sold as goods.

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