JUDGMENT P. C Balakrishna Menon, C. J.—The first petitioner is a Private Limited Company (Company for short) having its Head Office at New Delhi and the third petitioner is its Managing Director. The Company has established a Small Scale Industrial Unit (S. S. I. Unit) at Bilaspur in Himachal Pradesh and the S. S. I. Unit is the second petitioner in this writ petition. 2. The S. S. I. Unit is engaged in the manufacture of match splints, packing cases and allied products and it started commercial production on 1st May, 1977. According to the petitioners the S. S. I. Unit happened to be established in the State of Himachal Pradesh as the State Government had by issuing various brouchers offering several incentives encouraged the setting up of S. S. I. Units by entrepreneurs within the State. An agreement was entered into between the Company and the Governor of the State through the Secretary, Department of Forest Farming and Environmental Conservation on 7th of January, 1977, as per the terms of which the State Government had agreed to sell to the Company "trees of green twist free chil" totalling upto 11,000 cubic metres standing volume annually for a period of 20 years in the first instance and for a further period upto 10 years as may be agreed upon between the parties. Annexure P-l is the agreement under which 11,000 cubic metres of standing chil timber was agreed to be sold to the Company for manufacturing match splints, packing cases and allied products in its S. S. I Unit at Bilaspur. The S S. I. Unit was duly registered by the Director of Industries, Himachal Pradesh as a Small Scale Industrial Unit. Annexure P-2 dated 8th July, 1977, is the certificate of registration as a S. S. I. Unit. The S. S. I. Unit was also registered as a dealer under the H. P. General Sales Tax Act, 1968, (hereinafter referred to as the Sales Tax Act), as is clear from Annexures P-5 and P-6 produced alongwith the writ petition. The quantity of timber required for the manufacturing process in the S. S. I. Unit is being supplied by the Forest Department of the State Government as per Annexure P-l agreement, referred to above. The quantity of timber required for the manufacturing process in the S. S. I. Unit is being supplied by the Forest Department of the State Government as per Annexure P-l agreement, referred to above. Clause-7 of Annexure P-l agreement is extracted below;-— "The Buyer shall have to produce Registration Certificate under Himachal Pradesh General Sales Tax Act, 1968 (Act No. 24 of 1967). In case the Buyer fails to produce proof of his registration, he shall have to pay Sales Tax as applicable from time to time in Himachal Pradesh along with the instalments of the sale price. The buyer shall have to pay the sales tax on the due date of instalments as provided above irrespective of the fact whether the period of payment of any instalment is extended by the competent authority viz. Chief Conservator of Forests or not. In case of his failure to do sOj he will have to pay penalty as assessed by the Sales Tax Department. Further the buyer shall be liable to pay such levies/taxes as may become legally payable hereinafter under any Act, Rules or regulations " 3. The Director of Industries, Himachal Pradesh had from time to time issued certificates to the petitioner Company to the effect that the Company is eligible to the grant of incentives as a Small Scale Industrial Unit as announced by the Government of Himachal Pradesh through different notifications. Annexures P-2/A and P-2/B are two such certificates issued by the Director of Industries on July 8, 1981 and September, 24, 1984 respectively. Annexure P-6 letter of the Divisional Forest Officer, Nachan, addressed to the Conservator of Forests, Bilaspur, specifically states that the Company had produced the certificate of registration as a dealer under the Sales Tax Act as required under clause-7 of the agreement and hence no sales tax is to be levied in respect of the timber sold to the S. S. I. Unit. Different Forest Officers were, however, taking contrary views and the S S I. Unit was not allowed to lift the quantity of timber sold to it unless sales tax on the quantity sold is also paid. Hence the Company by Annexure P-7 letter addressed to the Excise and Taxation Commissioner Himachal Pradesh requested him to issue the necessary certificate exempting the S S. I. Unit from payment of sales*tax. Hence the Company by Annexure P-7 letter addressed to the Excise and Taxation Commissioner Himachal Pradesh requested him to issue the necessary certificate exempting the S S. I. Unit from payment of sales*tax. The Excise and Taxation Commissioner by his reply, Annexure P-9, informed the Company that its S. S. I. Unit is not entitled to exemption from sales-tax. The relevant part of Annexure P-9 is extracted below:— "With reference to your letter No. BLP/Acctt. 34/79-80/485, dated the 31st December, 1979, on the subject cited above, I am to inform you that clause-7 of the agreement referred in you* letter dated the 31st December, 1979 appeals to be inconsistent to the provisions of H. P General Sales Tax Act, 1969 because the sales-tax on timber has been levied at the first stage of sale w. e. f. 1 8-1975, as such the seller including the Forest Department is bound to realise/charge sales-tax at the first sales and the production of the registration certificate cannot help in any way to make tax free sales to you ," 4. It is not necessary for the purpose of this writ petition to refer to the further correspondence between the petitioner-Company and the State Government and its officers. The prayer for exemption from sales-tax was not acceded to and a demand was made by the Conservator of Forests Bilaspur for payment of a sum of Rs. 2/70,410,80 as the sales-tax and sur charge due on the sale of timber to the petitioner from the forest divisions at Bilaspur, Mandi Karsog and Nachan. Annexure P-14 is a copy of the demand. The Chief Conservator of Forests by Annexure P-15 letter informed the Company that its S. S. I Unit is not entitled to exemption from sales-tax as per the clarification issued by the Government as per letter No. 18-1/75-SF (Part) dated 21-2-1981 5. The petitioner challenges the demand for payment of sales-tax on the quantity of timber sold to the S. S I. Unit and claims a total exemption on the "basis of section 6 (3) of the Sales Tax Act read with clause-7 of the agreement extracted above. The petitioner challenges the demand for payment of sales-tax on the quantity of timber sold to the S. S I. Unit and claims a total exemption on the "basis of section 6 (3) of the Sales Tax Act read with clause-7 of the agreement extracted above. Alternative reliefs axe also claimed on the basis of Annexure P-16 notification dated 27th May, 1974 issued by the Government under section 42 of the Sales Tax Act granting a tax holiday for a period of five years from the date on which the unit had come into existence. Further relief on the alternative basis is also claimed under Annexure P-18 notification dated 5th July, 1978 issued by the State Government under section 6 of the Sales Tax Act providing for Concessional rate of tax for a subsequent period of five years, 6. As earlier stated, the Unit was duly registered with the Directorate of Industries as a S. S. I. Unit, it was also registered as a dealer under the Sales Tax Act and it had started commercial production w.e.f. 1st May, 1977. There is no dispute that the quantity of timber sold by the Forest Department of the State Government is fully utilized for the manufacture of match splints, packing cases and allied products in the S. S. I. Unit at Bilaspur and the manufactured goods are intended for sale and actually sold within the State of Himachal Pradesh. 7. Section 4 of the Sales Tax Act is the charging section under which subject to sections 6, 7 and sub-section (2) of section 12 every dealer whose gross turnover exceeds the taxable quantum is liable to pay tax under the Act on all sales effected and purchases made. Section 6 of the Act pro vides for the rate of tax on the taxable turnover and as per the proviso to sub-section (1) the rate of tax in respect of item No. 34 in Schedule A is 25 paise in a rupee. Item No. 34 of Schedule A is "Timber not including converted Timber*. The definition of goods in section 2 (e) would take in also timber, and timber is defined in clause (II) to includes tree fallen or felled or agreed to be felled. Item No. 34 of Schedule A is "Timber not including converted Timber*. The definition of goods in section 2 (e) would take in also timber, and timber is defined in clause (II) to includes tree fallen or felled or agreed to be felled. Sub-section (3) of section 6 of the Act defines the expression taxable turnover* and it exempts, inter alia, turn over relating to sales to a registered dealer of goods for use by him in the manufacture of other goods in the State of Himachal Pradesh and for sale within the State. The relevant portion of sub-section (3) of section 6 of the Sales Tax Act omitting the unnecessary parts is extracted below s— "(3) In this Act, the expression taxable turnover* means that part of dealers gross turnover during any period which remains after deducting therefrom— (a) his turnover during that period on — (i) ..................... (ii) sales to a registered dealer... ....of goods specified in his certificate of registration for use by him in the manufacture in Himachal Pradesh of any goods other than the goods declared tax free under section 7 for sale in the State of Himachal Pradesh. " 8. The learned Advocate General submits that tax on timber is levied at the first point of sale and the liability is of the selling dealer, namely the Forest Department. It is also pointed out that there is no purchase tax on timber and the petitioner Company is not entitled to claim exemption under section 6 (3) of the Act. Sub-section (1) of section 13 enacts that "no person shall collect any sum by way of tax in respect of sale or purchase of any goods on which no tax is payable under this Act". This would show that the selling dealer if not liable to tax in respect of the goods sold, is precluded from collecting tax from the purchasing dealer. Tax is levied under the Act on the taxable turnover of every dealer and sub-section (3) of section 6 quoted above, excludes from the concept of taxable turnover the turnover on sale to a registered dealer of goods specified in the certificate of registration for use by him in the manufacture of goods within the State and for sale of the manufactured goods also within the State. The quantity of timber sold to the petitioner S. S. I. Unit does not fall within the taxable turnover of the Forest Department if the goods sold are those specified in the certificate of registration of the S. S. I. Unit as for use in the manufacture and sale of the manufactured goods within the State of Himachal Pradesh. Even though the certificate of registration of the SSL Unit as a dealer under the Sales Tax Act is not produced, we are inclined to agree with the Counsel for the petitioner that the certificate would show that the goods purchased by it are for use in the manufacture and sale of the manufactured goods within the State in view of Annexure P-6-leiter of the Divisional Forest Officer and clause-7 of Annexure P-l agreement referred to earlier in this judgment. The reason for such a provision in section 6 (3) extracted above is not far to seek. It is not disputed that the goods sold are for use by the S. S. I. Unit in its manufacturing process within the State and the manufactured goods are also for sale within the State. Since the manufactured goods are sold within the State, the State is assured of tax on the sale of such goods and the legislative intention for the exemption of tax at the point of sale to the manufacturing unit was clearly to avoid a situation where the manufactured goods will be subject to tax at two points, one at the point of sale of the raw-material and the other at the point of sale of the manufactured goods. The view expressed by the Excise and Taxation Commissioner in Annexure P-9 that the tax is to be levied at the first point of sale is besides the point. He is also wrong in his view that clause 7 of Annexure P-i agreement is inconsistent with the provisions of the Sales Tax Act. 9. In the view that we have taken on the interpretation of section 6 (3) of the Sales Tax Act, it is unnecessary for us to go into the question of promissory estoppel argued by the learned Counsel Shri D. V. Sehgal on the basis of the notifications Annexures P-l6 and P-l8 issued by the Government under sections 42 and 6 respectively of the Sales Tax Act. 10. 10. For the foregoing reasons, we hold that the quantity of the timber sold by the Forest Department of the State to the petitioner S. S. I. Unit for its use in the manufacture and sale of other goods within the State is not exigible to tax under the H. P. General Sales Tax Act and a writ of mandamus will issue directing the respondents to forebear from levying or collecting sales/purchase tax from the petitioner S. S. I. Unit in respect of timber sold to it for the aforesaid purpose. 11. The writ petition is allowed as indicated above. The parties will suffer their own costs. Writ petition allowed.