1985 (10) TMI 278 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the property in bamboos passed to the Company soon after they were severed or extracted from the land.
2. Whether the bamboos cut, but not transported on or before January 15, 1969, were liable to be charged at the enhanced rate of Rs. 20/- per ton under the Government Order dated December 31, 1968.
3. Whether the Company was entitled to the refund of the amount recovered in excess of Rs. 10/- per ton.
4. Interest entitlement from the date of suit till the date of decree and the rate of future interest.

Detailed Analysis:

1. Property in Bamboos Passing to the Company:
The primary question was when the property in the bamboos passed to the Company-whether it was when the bamboos were cut and extracted from the forest land or when they were actually lifted from the forest through a specified outpost. The court concluded that the property in the goods passed to the Company when the bamboos were cut and extracted. This conclusion was based on the interpretation of the terms of the agreement (Ex. D-1) and the application of Section 18 of the Sale of Goods Act, which states that no property in goods is transferred to the buyer unless and until the goods are ascertained. The court referred to the Supreme Court decision in Badri Prasad v. State of M.P., which supported the view that the property in the cut timber passes to the buyer when the trees are felled.

2. Enhanced Rate Applicability:
The court examined whether the bamboos cut but not transported before January 15, 1969, were liable to be charged at the enhanced rate of Rs. 20/- per ton as per the Government Order dated December 31, 1968 (Ex. P-3). The court concluded that the enhanced rate was not applicable to the bamboos cut and stacked before January 16, 1969, under the previous Government Order dated November 4, 1968 (Ex. P-2). The enhanced rate was to be effective from January 16, 1969, and did not retroactively apply to bamboos already cut and stacked.

3. Entitlement to Refund:
Given the conclusion that the enhanced rate did not apply to the bamboos cut before January 16, 1969, the court held that the Company was entitled to a refund of the excess amount recovered by the Government. The court found that the Government had unlawfully and unreasonably withheld the amount even after the Company issued a statutory notice and filed a suit for refund.

4. Interest Entitlement:
The court addressed the Company's cross-objection regarding the refusal to award interest from the date of suit till the date of decree and the low rate of future interest awarded by the trial court. The court found that the trial court erred in not awarding interest from the date of suit. Since the amounts were wrongly claimed and recovered, the Company was entitled to interest at the rate of 6% per annum from the date of suit (August 25, 1972) till the date of decree (June 30, 1975).

Conclusion:
The appeal by the defendant (State of Karnataka) was dismissed, and the cross-objection by the plaintiff (Company) was allowed with costs. The court ordered the defendant to pay the plaintiff a sum of Rs. 2,34,531/- with interest at 6% per annum from the date of suit till the date of decree. The appellant was to bear its own costs and pay the costs of the respondent in the appeal.