Forest bamboo contracts as profit a prendre, not sale of goods, where property never passed in deliverable state.

A forest bamboo arrangement was treated as a grant of profit a prendre, not a sale of goods, because the lessee received only a controlled right to enter forest land, fell and remove bamboo subject to working plans, annual allotment, weighment, transit control, royalty revision, supervision and termination rights. The bamboos were not in a deliverable state when the agreements were made, so property did not pass under the sale law or sales tax statute. Annual cutting and removal did not convert the arrangement into a contract of sale; royalty was payable for exercise of the right, not as price. The transaction therefore fell outside the charging concept of sale.

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Issues: (i) Whether the preliminary agreement dated 19 September 1975 or the regular contract dated 20 July 1977 amounted to a sale of bamboos within the meaning of the Andhra Pradesh General Sales Tax Act, 1957 and the Indian Sale of Goods Act, 1930. (ii) Whether, upon annual cutting and removal of bamboos, the arrangement nevertheless became a contract of sale or a sale, or whether it was only a grant of profit a prendre.

Issue (i): Whether the preliminary agreement dated 19 September 1975 or the regular contract dated 20 July 1977 amounted to a sale of bamboos within the meaning of the Andhra Pradesh General Sales Tax Act, 1957 and the Indian Sale of Goods Act, 1930.

Analysis: The contract permitted the lessee to fell, collect and remove bamboos over a long period, but the bamboos were subject to forest working plans, silvicultural restrictions, annual coupe allocation, weighment, transit control, royalty revision, minimum royalty, departmental supervision and termination for breach. Property could not pass on the dates of the agreements unless the goods were in a deliverable state and the contract was unconditional. The bamboos were not in a deliverable state at either stage, and the terms were materially similar to those considered in the earlier Supreme Court decision on bamboo contracts.

Conclusion: No sale of bamboos took place on 19 September 1975 or on 20 July 1977, and the arrangement did not attract sales tax as a completed sale.

Issue (ii): Whether, upon annual cutting and removal of bamboos, the arrangement nevertheless became a contract of sale or a sale, or whether it was only a grant of profit a prendre.

Analysis: The annual allotment, though quantified, was only a right to enter forest land and take bamboos subject to statutory and contractual controls. The royalty was payable for the exercise of that right, not as price for goods sold. The substance of the transaction was a benefit arising out of land coupled with ancillary rights, which answers the description of a profit a prendre rather than a sale of goods.

Conclusion: The arrangement did not become a sale on annual cutting or removal, and it was only a grant of profit a prendre and a right in immovable property.

Final Conclusion: The writ petition succeeded because the bamboo arrangement was outside the charging concept of sale under the sales tax law and did not create a taxable transfer of property in goods.

Ratio Decidendi: Where a forest contract confers only a controlled right to enter land, fell and remove growing produce subject to statutory restrictions, supervision and royalty, and the goods are not in a deliverable state so that property does not pass, the transaction is not a sale but a profit a prendre.

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