Royalty as purchase price: payment for State-owned mahua flowers attracts purchase tax when it forms the consideration for acquisition.

Royalty paid to the Forest Department for removal of mahua flowers was treated as the purchase price where the dealer acquired State-owned goods as the first purchaser. On that footing, the royalty formed the consideration for the transaction and purchase tax was leviable on the amount under the Orissa Sales Tax Act, 1947. The governing principle is that, when State-owned goods are obtained on payment of royalty as consideration, the royalty assumes the character of purchase price for purchase tax purposes.

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Issues: Whether royalty paid to the Forest Department for removal of mahua flowers constituted the purchase price so as to attract purchase tax under the Orissa Sales Tax Act, 1947.

Analysis: The reference arose from an assessment dispute concerning the levy of purchase tax on mahua flowers. The Tribunal had accepted that, on the facts, the dealer was the first purchaser and that the amount paid as royalty represented the consideration for obtaining the goods from the State. Once the transaction was accepted as a purchase, the royalty paid by the dealer became the purchase price because the goods belonged to the State and were acquired on payment of that consideration.

Conclusion: Royalty paid for collecting mahua flowers was the purchase price, and purchase tax was leviable on that amount. The question was answered in the affirmative against the Revenue.

Ratio Decidendi: Where State-owned goods are acquired on payment of royalty as consideration, the royalty constitutes the purchase price for the purpose of purchase tax.

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