IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA C.W.P. Nos. 139 & 165 of 1999 Date of decision : 24.3.2008 1. CWP No. 139 of 1999 M/s Ibrahim Nasrulla Malik & anr. ..Petitioners Versus State of H.P. and others ..Respondents 2. CWP No. 165 of 1999 M/s Gauri Shankar Sharma ..Petitioner Versus State of H.P. and others ..Respondents Coram The Hon’ble Mr. Justice Deepak Gupta, Judge. The Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 For the Petitioners: Mr. M.M.Khanna, Senior Advocate, with Ms. Pushpa Attri, Advocate For the Respondents: Mr. Rajesh Mandhotra, Deputy Advocate General Per Deepak Gupta, J. (Oral) Both these writ petitions are being disposed of by a common judgment since common questions of law and fact arise in these petitions. 1 Whether the reporters of the local papers may be allowed to see the Judgment? 2 The present case involves the interpretation of Section 5-A of the H.P. General Sales Tax Act, 1968 (Act No. 24 of 1968) (hereinafter referred to as the Act). The petitioner firm in the writ petition had also challenged the constitutional validity of the aforesaid Section. At the time of hearing of the petition, this point was not pressed by the learned Senior Counsel for the petitioner in view of the judgment of the apex Court in the case of Hotel Balaji and others, etc. etc. Vs. State of Andhra Pradesh and others reported in AIR 1993 SC 1048 wherein similar provisions in the Sales Tax Acts of other States have been upheld. The admitted facts are that the petitioner firms in both cases are dealers duly registered under the Sales Tax Act. They purchase forest produce, i.e. Kaur, Dhoop, Muskball etc. from local villagers/farmers who were granted extraction permits by the Forest Department. After purchase, the dealers send these goods to their commission agents at Amritsar. The dealers have not paid any tax at the first stage of sale. Thereafter the dealers have sent these goods to their commission agents at Amritsar. Admittedly the dealers have paid the price of the goods to the villagers/farmers from whom goods were 3 purchased. According to the dealers this is an inter State sale under Section 3 of the CST Act and, therefore, no tax is leviable on this transaction. The Assessing Officer has come to a finding of fact that the dealers in fact purchased the goods from the villagers/farmers and had perfected their title in the goods. Therefore they sent the goods to their commission agents at Amritsar. The question which arises is whether tax is leviable under Section 5-A of the H.P. General Sales Tax Act or not. At the outset we may add that we are not clear why the sales tax was not levied on the petitioner at the initial stage itself when the petitioner purchased the goods from the farmers. In any event, we are clearly of the view that the transaction with the farmers was entirely different and the petitioner had perfected the title of the goods when it paid the price to the farmers. Thereafter the petitioners have only sent the goods for sale outside Himachal Pradesh, but the goods have not been actually sold. They have been sent to commission agent who represented the dealers themselves. Section 5-A of the Act reads as follows:- “[5-A. Levy of purchase tax on certain goods.- Where a dealer who is liable to pay tax under this Act purchases any goods other than those specified in Schedule “B” from any source, and- 4 (i) uses them within the State in the manufacture of goods specified in Schedule “B”, or (ii) uses them within the State in the manufacture of goods, other than those specified in Schedule “B”, and sends the goods so manufactured outside the state in any manner otherwise than by way of sale in the course of inter-State trade or commerce or in the course of export out of the territory of India, or (iii) uses such goods for a purpose other than that of resale within the State or sale in the course of inter-State trade or commerce or in the course of export out of the territory of India, or (iv) sends them outside the State in any manner otherwise than by way of sale in the course of inter-State trade or commerce or in the course of export out of the territory of India, and no tax is payable on the purchase of such goods under any other provisions of this Act, there shall be levied a tax on the purchase of such goods equal to the rate as notified, under sub-section (1) of section 6, by the State Government.]” It is clear that the transaction in question falls squarely within the ambit of Clause (iv) aforesaid. The goods have been sent outside the State of Himachal Pradesh in a manner otherwise than by way of sale. In fact we are of the view that the dealer was liable to pay tax under this Act even when it purchased the goods from the farmers. Learned counsel for the petitioner has not shown us any provision of law to show how the sale of forest produce by farmers, which admittedly is not 5 agriculture or horticulture produce, is not excisable to tax. Only agriculture or horticulture produce sold by a person or a member of the family of a person who has grown the same in land owned by them or in which they have substantial interest is exempt from tax. Further, as pointed above, the sending of the goods outside the State is not by way of sale and, therefore, the State was entitled to levy sales tax under Section 5-A of the Act. In view of the above discussion, we find no merit in these writ petitions which are accordingly dismissed. ( Deepak Gupta ), J. March 24, 2008(K) ( Rajiv Sharma ), J.