STATE OF MADHYA PRADESH & ORS. vs ORIENT PAPER MILLS LTD.

The Supreme Court held that under Section 2(g) of the Madhya Pradesh General Sales Tax Act, the lease of forest area for timber extraction constitutes a sale of goods, as the timber is considered movable property to be severed under the contract. The Court clarified that the transaction, although labeled a lease, was essentially a sale of standing timber, thus making the Forest Department liable to collect sales tax. The High Court's ruling that the Forest Department was not a dealer was overturned, affirming the applicability of sales tax on the timber extracted.