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PETITIONER: STATE OF MAHARASHTRA & ANR.

       Vs.

RESPONDENT: CHAMPALAL KISHANLAL MOHTA

DATE OF JUDGMENT: 17/03/1970

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S.

CITATION:  1971 AIR  908            1971 SCR  (1)  46  1970 SCC  (1) 611  CITATOR INFO :  R          1985 SC1293  (45)

ACT: Bombay  Sales  Tax  Act  (51 of  1959)  as  amended  by  the Maharashtra  Act  (15 of 1967), S.  2(7)--"Goody"  including standing timber agreed to be severed--Sale of standing trees agreed  to  be severed under contract--If  ’sale  of  goods’ liable to sales tax.

HEADNOTE: The  contract  of  sale  entered  into  by  the   respondent expressly  provided that the timber agreed to be sold  shall be  severed.  The High Court held that the sale of  standing trees was not a sale of goods chargeable to sales tax  under the  Bombay  Sales  Tax  Act, 1959.  and  the  decision  was confirmed  by this Court on appeal.  But after the  judgment of  the High Court and before the appeal was heard  in  this Court,  the  expression "goods" in the Act  was  amended  by Maharashtra Act 15 of 1967 with retrospective operation,  so that,  it  included at all relevant times,  standing  timber agreed  to be severed before sale or under the  contract  of sale. In a petition for review to this Court, HELD  :  Since the judgment of this Court  suffers  from  an error  apparent  on  the face of the  record,  the  judgment should be reviewed and the appeal allowed. [47C] A  State  Legislature  may  not extend  the  import  of  the expression sale of goods" so as to impose liability for  tax on  transactions  which are not sales of  goods  within  the meaning  of  the Sale of Goods Act.  But, by  the  inclusive definition in s. 2(7) of the Sale of Goods Act, things which are  attached  to  the land may be  the  subject  matter  of contract  of  sale  provided that under  the  terms  of  the contract  they  are to be severed before sale of  under  the contract  of  sale.   The timber in  the  present  case  was therefore "goods" within the meaning of s. 2(7) of the  Sale of  Goods  Act.  Since the expression " sale  of  goods"  in Entry 54, List II, of the Constitution has the same  meaning as  that  expression  has  in the Sale  of  Goods  Act,  the amendment is valid. [47 H; 48 A-E] The  State of Madras v. Gannon Dunkerley, [1959] S.C.R.  379

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and  Pandit  Banarsi  Das  Bhanot v.  The  State  of  Madhya Pradesh, [1959] S.C.R. 427, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION: Review Petition  No.  29  of 1969. Application  for review of this Court’s Judgment dated  July 17, 1969 in Civil Appeal No. 1878 of 1967 arising out of the judgmentand  order  dated July 18, 1966 of the  Bombay  High Court, Nagpur Bench in Special Civil Application No. 722  of 1965. N. S. Bindra and S. P. Nayar,for the petitioner/appellants. A. G. Ratnaparkhi, for the respondent. 47 The, Judgment of the Court was delivered by Shah, J. Appeal No. 1878 of 1967 was ordered to be dismissed by  this  Court on July 17, 1969.  The Court held  that  the sale  of standing trees is not sale of goods  chargeable  to sales tax under the Bombay Sales Tax Act, 1959. A  petition  for review of Judgment has been  filed  by  the State  contending that after the judgment of the High  Court and  before the appeal was heard, the Bombay Sales Tax  Act, 1959  was  amended by the Maharashtra Act 15  of  1967  with retrospective  operation,  and  by  the  amendment  standing timber  was  included  ’in the  definition  of  timber,  but counsel for the State failed to invite the attention of  the Court  to that Act.  Since the judgment of this Court it  is claimed  suffers from an error apparent on the face  of  the record, we have granted review of judgment. The expression "goods" was defined in s. 2(13) of the Bombay Sales Tax Act, 1959.  By Maharashtra Act 15 of 1967 by s.  2 the definition of "goods" was altered by providing that               "In  section  2 of the Bombay Sales  Tax  Act,               1959  .  . . in clause (13), after  the  words               ’and commodities’ the following shall be,  and               shall  be deemed always to have  been,  added,               namely:- ’and  all  standing  timber which is agreed  to  be  severed before sale or under the contract of sale’." The  definition  was  retrospective  in  operation  and  the expression "  goods" included at all relevant times standing timber  agreed  to  be  severed before  sale  or  under  the contract of sale. The  expression "sale of goods" in Entry 54 List 11 of  Sch. VII  of the Constitution has the same connotation as it  has in the Sale of Goods Act, 1930.  This Court in The State  of Madras  v. Gannon Dunkerley & Co. (Madras) Ltd.(1)  observed that  the expression "sale of goods" was, at the  time  when the  Government Of India Act, 1935, was enacted, a  term  of well-recognised legal import in the general law relating  to sale  of goods and in the legislative practice  relating  to that topic and must be interpreted in Entry 48 in List 11 in Sch.   VII of the Act as having the same meaning as  in  the Sale of Goods Act, 1930 : see also Pandit Banarsi Das Bhanot v.  The State of Madhya Pradesh (2).  The expression "  sale of goods" in Entry 54 in List II of Sch.  VII of the Consti- tution  has also the same meaning as that expression had  in Entry  48 in List II of the Government of India  Act,  1935. The State Legislature may not therefore extend the import of the expression (1) [1959] S.C.R. 379. (2) [1959] S.C.R. 427. 48

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"  sale  of  goods" so as to impose, liability  for  tax  on transactions which are not sales of goods within the meaning of the Sale of Goods Act. By  Art. 366(12) of the Constitution the expression  "goods" is  defined as inclusive of "all materials, commodities  and articles".   That  is, however an inclusive  definition  and does  not throw much light on the meaning of the  expression "goods".  But the definition of "goods" in the Sale of Goods Act, 1930, as meaning "every kind of moveable property other than  actionable  claims and money; and includes  stock  and shares,  growing  crops, grass, and things  attached  to  or forming  part  of the land which are agreed  to  be  severed before sale or under the contract of sale".  Standing timber may  ordinarily not be regarded as "goods", but by the,  in- clusive definition given in s. 2(7) of the Sale of Goods Act things  which are attached to the land may be  the  subject- matter of contract of sale provided that under the terms  of the contract they are to be severed before sale or under the contract of sale. 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  s.  2(7)  of the Sale  of  Goods  Act  and  the expression  "sale of goods" in the Constitution in Entry  54 List  11 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. The  appeal  is  allowed  and  the  petition  filed  by  the respondent  must be dismissed.  Since the State succeeds  in this  appeal, relying upon a statute which was passed  after the judgment of the High Court, there will be no order as to costs throughout. V.P.S.                        Appeal allowed. 49