1996 (11) TMI 415 - SC - VAT and Sales Tax

Whether velavelan wood and karuvelan wood supplied by the assessee to Seshasayee Paper and Boards Limited, Pallipalayam and other companies for manufacture of pulp can be said to be firewood and as such exempt from sales tax? Held that - Appeal dismissed. The wood sold by the appellant may be used and described as firewood. But when it was sold with the object of being converted into pulp for manufacturing rayon, it was not being sold as firewood at all. The exemption is granted to firewood meant to be as firewood. The exemption cannot be extended to sales of wood for manufacture of rayon even though such wood is capable of being used as firewood and is generally used as such. The exemption is obviously for the benefit of people who buy or sell firewood for the purpose of using the same as firewood.This exemption is not for the benefit of persons who sell wood for manufacture of rayon pulp.

Summary

The Supreme Court held that wood supplied for manufacturing pulp cannot be considered firewood exempt from sales tax. The High Court decision was upheld, stating that wood sold for pulp production does not qualify as firewood for tax exemption. The appeals were dismissed, and no costs were awarded.