1970 (3) TMI 105 - SC - VAT and Sales Tax

Whether the sale of standing trees is not sale of goods chargeable to sales tax under the Bombay Sales Tax Act, 1959? Held that - Appeal allowed. As in the present case it was expressly provided that the timber agreed to be sold shall be severed under the contract of sale. The timber was therefore goods within the meaning of section 2(7) of the Sale of Goods Act and the expression sale of goods in the Constitution in entry 54 in List II having the same meaning as that expression has in the Sale of Goods Act, sale of timber agreed to be severed under the terms of the contract may be regarded as sale of goods.

Summary

Issues:
- Interpretation of the term "goods" under the Bombay Sales Tax Act, 1959.
- Retroactive amendment of the definition of "goods" under Maharashtra Act 15 of 1967.
- Application of the definition of "goods" in the Sale of Goods Act, 1930.
- Determination of whether standing timber constitutes "goods" for the purpose of sales tax.

Interpretation of the term "goods" under the Bombay Sales Tax Act, 1959:
The Supreme Court held that the sale of standing trees is not subject to sales tax under the Bombay Sales Tax Act, 1959. The definition of "goods" under this Act was crucial in determining the taxability of the transaction.

Retroactive amendment of the definition of "goods" under Maharashtra Act 15 of 1967:
The State filed a petition for review, arguing that an amendment to the Bombay Sales Tax Act in 1967 retrospectively included standing timber in the definition of "goods." This retrospective amendment was a significant factor in the review of the judgment.

Application of the definition of "goods" in the Sale of Goods Act, 1930:
The Court referred to the Sale of Goods Act, 1930, to interpret the term "goods" in the context of the sales tax legislation. The definition of "goods" in this Act influenced the determination of whether standing timber could be considered as goods for tax purposes.

Determination of whether standing timber constitutes "goods" for the purpose of sales tax:
The Court analyzed the definition of "goods" under the Sale of Goods Act, 1930, which includes movable property agreed to be severed before sale. In this case, since the timber was agreed to be severed under the contract of sale, it fell within the definition of "goods." Therefore, the sale of timber could be considered a sale of goods for tax purposes.

In conclusion, the Supreme Court allowed the appeal, dismissing the petition filed by the respondent. The Court emphasized that standing timber agreed to be severed under the terms of the contract can be regarded as goods for the purpose of sales tax. As the State succeeded in the appeal based on a post-High Court judgment statute, no costs were awarded.