1972 (8) TMI 115 - HC - VAT and Sales Tax

Issues Involved:
1. Definition of "timber" under item 63 of the First Schedule to the Andhra Pradesh General Sales Tax Act.
2. Tax liability on planks, rafters, cut sizes, etc., derived from logs of wood.
3. Interpretation of legislative intent and statutory construction.
4. Commercial and popular meaning of "timber."
5. Administrative interpretation and its influence on tax provisions.
6. Application of past Supreme Court rulings on similar matters.
7. Prospective application of revised tax clarifications.

Issue-Wise Detailed Analysis:

1. Definition of "timber" under item 63 of the First Schedule to the Andhra Pradesh General Sales Tax Act:
The primary question was whether planks, rafters, cut sizes, etc., derived from logs of wood, qualify as "timber" under item 63. The court noted that the term "timber" is not defined in the Act or the Rules, and thus, its ordinary meaning must be considered. Dictionaries and common parlance indicate that "timber" includes wood prepared for building, such as planks and rafters.

2. Tax liability on planks, rafters, cut sizes, etc., derived from logs of wood:
Under Section 5(2)(a) read with item 63, a dealer in timber is liable to pay sales tax at the point of first sale. The petitioners argued that since their sales were not the first sales, they should not be taxed again. The court agreed, stating that the planks, rafters, and cut sizes derived from logs of wood still qualify as "timber" and should not be taxed a second time.

3. Interpretation of legislative intent and statutory construction:
The court emphasized that the words used in a statute must be given their ordinary meaning unless it contradicts the legislative intent or leads to absurdity. The term "timber" was interpreted in its common and ordinary sense, as the statute deals with a matter affecting the general public.

4. Commercial and popular meaning of "timber":
The court ruled that in both popular and commercial senses, "timber" includes planks, rafters, and cut sizes. This interpretation was supported by various documents and affidavits presented, which showed that in commercial circles, these items are commonly known as timber.

5. Administrative interpretation and its influence on tax provisions:
The court considered the administrative interpretation given by the Board of Revenue, which initially treated planks, rafters, and cut sizes as "timber." This interpretation was consistent until a revised clarification was issued in 1969. The court noted that such administrative interpretations, although not legally binding, can influence statutory construction.

6. Application of past Supreme Court rulings on similar matters:
The court cited several Supreme Court rulings to support its interpretation. For example, in Sales Tax Commissioner, Indore v. Messrs. Jaswant Singh, the term "coal" was interpreted to include "charcoal" based on common parlance. Similarly, in Tungabhadra Industries Ltd. v. Commercial Tax Officer, hydrogenated oil was still considered "groundnut oil." These precedents helped the court conclude that planks, rafters, and cut sizes remain "timber."

7. Prospective application of revised tax clarifications:
The court noted that the Government's revised clarification, issued in 1969, directed that planks, rafters, and cut sizes be treated as general goods and taxed under Section 5. However, this was to be applied prospectively from April 1, 1969. The court found that this change did not alter the inherent nature of these items as "timber."

Judgment:
The court declared that planks, rafters, and cut sizes derived from logs of wood are "timber" under item 63 of the First Schedule to the Act. Consequently, these items cannot be taxed as general goods under Section 5(1) of the Act. The court directed the respective tribunals to handle each case in light of this interpretation. The writ petitions were allowed, with no order as to costs, and an advocate's fee of Rs. 50 in each case.

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