Profit a prendre in mining lease excludes purchase tax where extracted minerals are not bought as goods.

Minerals extracted under a mining lease were treated as a profit a prendre, meaning a right to take a benefit arising out of land and not a purchase of goods. On that basis, the essential element of sale or purchase was absent, because the assessee did not buy the minerals from another person but extracted them under rights granted in the lease. Section 7-A of the Tamil Nadu General Sales Tax Act was therefore inapplicable, as its levy depends on a taxable purchase of goods followed by consumption or other specified treatment. The value of the extracted minerals could not be brought to purchase turnover under Entry 54 of List II.

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Issues: Whether the minerals extracted by the assessee from the leased land constituted a profit a prendre so as to involve no sale or purchase of goods and, consequently, no liability to purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act.

Analysis: The levy under Section 7-A applies only where there is a purchase of goods in the course of business in circumstances where the sale or purchase is liable to tax and the goods are consumed or otherwise dealt with in the manner contemplated by the section. The lease granted to the assessee conferred a right to extract minerals from the land, which is an interest in immovable property and a benefit arising out of land. The Court applied the settled principle that such a right is a profit a prendre and not a transaction of purchase of goods. Since the minerals were extracted under the mining lease and not purchased from another person, the essential ingredient of a sale or purchase was absent. The taxing power of the State under Entry 54 of List II could not be invoked to treat the value of the extracted minerals as purchase turnover.

Conclusion: The levy of purchase tax under Section 7-A on the minerals extracted from the leased land was unsustainable, and the assessee succeeded on that issue.

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