TaxTMI 
TaxTMI 
1990 (11) TMI 398
X X X X Extracts X X X X
X X X X Extracts X X X X
....in this writ petition. The S.S.I. unit is engaged in the manufacture of match splints, packing cases and allied products and it started commercial production on May 1, 1977. According to the petitioners the S.S.I. unit happened to be established in the State of Himachal Pradesh as the State Government had by issuing various brochures offering several incentives encouraged the setting up of S.S.I. units by entrepreneurs within the State. An agreement was entered into between the company and the Governor of the State through the Secretary, Department of Forest Farming and Environmental Conservation on January 7, 1977, as per the terms of which the State Government had agreed to sell to the company "trees of green twist free chil" totalling....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... above irrespective of the fact whether the period of payment of any instalment is extended by the competent authority, viz., Chief Conservator of Forests or not. In case of his failure to do so, he will have to pay penalty as assessed by the Sales Tax Department. Further the buyer shall be liable to pay such levies/taxes as may become legally payable hereinafter under any Act, Rules or regulations." The Director of Industries, Himachal Pradesh, had from time to time issued certificates to the petitioner-company to the effect that the company is eligible to the grant of incentives as a small-scale industrial unit as announced by the Government of Himachal Pradesh through different notifications. Annexures P2/A and P2/B are two such certi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the seller including the Forest Department is bound to realise/charge sales tax at the first sales and the production of the registration certificate cannot help in any way to make tax-free sales to you....." It is not necessary for the purpose of this writ petition to refer to the further correspondence between the petitioner-company and the State Government and its officers. The prayer for exemption from sales tax was not acceded to and a demand was made by the Conservator of Forests, Bilaspur, for payment of a sum of Rs. 2,70,410.80 as the sales tax and surcharge due on the sale of timber to the petitioner from the forest divisions at Bilaspur, Mandi Karsog and Nachan. Annexure P14 is a copy of the demand. The Chief Conservator of For....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and actually sold within the State of Himachal Pradesh. Section 4 of the Sales Tax Act is the charging section under which subject to sections 6, 7 and sub-section (2) of section 12 every dealer whose gross turnover exceeds the taxable quantum is liable to pay tax under the Act on all sales effected and purchases made. Section 6 of the Act provides for the rate of tax on the taxable turnover and as per the proviso to sub-section (1) the rate of tax in respect of item No. 34 in Schedule A is 25 paise in a rupee. Item 34 of Schedule A is "Timber not including converted timber". The definition of goods in section 2(e) would take in also timber, and timber is defined in clause (11) to include trees fallen or felled or agreed to be felled. Su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....luded from collecting tax from the purchasing dealer. Tax is levied under the Act on the taxable turnover of every dealer and sub-section (3) of section 6 quoted above, excludes from the concept of taxable turnover the turnover on sale to a registered dealer of goods specified in the certificate of registration for use by him in the manufacture of goods within the State and for sale of the manufactured goods also within the State. The quantity of timber sold to the petitioner-S.S.I. unit does not fall within the taxable turnover of the Forest Department if the goods sold are those specified in the certificate of registration of the S.S.I. unit as for use in the manufacture and sale of the manufactured goods within the State of Himachal Prad....