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5. In the counter, the Assistant Chief Conservator of Forests while referring to Cl. (60) of the terms of sale, under which the petitioners had agreed to pay stamp duty, stated that prior to 1959, agreements of the Forest Department were exempt from Stamp Duty both in the Andhra and Telengana regions by virtue of Entry 10 and Cls (i) and (xi) of entry 11 of the Revenue Department Notification No. 13 dated 17-12-1938 of the Government of Madras and Rule 18 of the Executive Instructions contained in the Hyderabad Forest Contracts Rules, But in view of the extension of the Indian Stamp Act to the whole of the State of Andhara Pradesh by the Indian Stamp (Andhra Pradesh Extension and Amendment) Act XIX of 1959, with effect from 1-4-1959 the government through G. O. Ms. No. 1887 Revenue dated 17-10-1961 omitted entry 10 and Cls. (I) to (xi) of Notification No. 13 dated 17-12-1938. Consequent upon the extension of the Indian Stamp (Andhra Pradesh Extension and Amendment)Act, 1959 with effect from 1-4-1959, and repeal of the Hyderabad Stamp Act as from that date, all rules, notifications, instructions, etc., under the Hyderabad Act also stood repealed. Accordingly, the various contracts also became liable for stamp duty as in form No, 9 from 1961 onwards.

6. The question which we have to consider is what is the nature of the right which the petitioners have acquired under the auction held for the sale of beedi leaves, cutting of bamboo or other forest produce, all of which has to be cut and taken away within a short period, i.e., in the case of beedi leaves within about nine months and in other cases within a year or so. In so far as taking charge of coupes is concerned , the right that is conferred upon the petitioners is stated in cl. 32 viz., that they will be at liberty to enter, take possession and work the unit from the date of signing of the agreement, and the right is one as per Cl. (1) to cut and collect beedi leaves, bamboo or timber. The agreement which the petitioner as are being asked to execute upon which stamp duty is required to be paid as on a lease, is a standard one, the terms of which would show that it was an agreement for sale and purchase of forest produce. Cl. 1 of the agreement, says that the quantity of forest produce sold and purchases under the agreement is all the said forest produce which may now exist or may come into existence in the contract area, which the forest contractor may remove from the said area in accordance with the terms of the agreement during the period specified in the agreement and the forest produce may be extracted only during the aforesaid period. Clause 4 sets out the consideration payable by the contractor under the agreement and the mode of its payment as being specified in Sch. III which, it is stated, does not include payment of sales- tax or stamp duty.

8. In Mohanlal Hargovind v. I. T. Commissioner AIR 1949 PC 311 the appellant obtained a short term contract from the forest department of the Government, of collecting and removing tendu leaves for a sum payable in instamlent as the consideration for the grant with a permission to coppice and pollard the tendu trees. It was held that under the contract it was the tendu leaves and nothing but the tendu leaves that are acquired, that it is not the right to pick the leaves or to go on to the land for the purpose - those rights being merely ancillary to the real purpose of the contracts and if not expressed would be implied by law in the sale of growing crop. Similarly the small right of cultivation given in the contracts is merely ancillary and is of no more significance than would be e. g. a right to spray a fruit tree given to the person who has brought the crop of apples. The question as to whether the expenditure incurred for acquiring the raw material or was it capital expenditure. Lord Greene, M. R. after examining terms of the contracts which are similar, if not identical, to the terms and conditions of sale in the draft agreement in the instant case referred to cl (1) which identifies the subject-matter of the contract, which was described as " the forest produce sold and purchased under the agreement" as that specified in Sch. I of the "contract area" therein indicated. By cls the quantity of the forest produce is defined as all the said produce " which may now exist or may come in the forest contractor may remove from the said area ... during the period form 5th day of September 1939 to the 30th June 1941.....Schedule 1-A in that case is also similar to Schedule 2 of the standard agreement, which we had not extracted earlier. It provides that " the contractor shall commence his work before the .. day of ..19.. and shall, to the satisfaction of the office empowered to execute the contract on behalf of the Government, make continuous and adequate progress throughout the term of the contract". In considering this clause, it was observed at page 312:

In another case R. Deshpande v. Muttam Reddy, another Bench of this Court consisting of Chandra Reddy, C. J. and one of us ( the present Chief Justice) were considering the question whether plucking of beedi leaves was a service rendered coming within the mischief of Sec. 7 (d) of the Representation of the People act 27 of 1956). Even though the several decisions were not cited before the Bench, it was held that the nature of beedi leaves contract was such that no supply of goods or execution of any works to or for the Government was envisaged. The Government for a consideration, sells the beedi leaves in forest areas specified in the contract to the contractor who should within the period of contract pick the beedi leaves and remove them from the forest. At pages 182-183, it was observed.