1984 (11) TMI 294 - HC - VAT and Sales Tax

Summary

Issues:
Exigibility of tax on shade trees cut and sold as timber or firewood by owners of plantations under the Kerala General Sales Tax Act.

Analysis:
The High Court of Kerala addressed the issue of whether shade trees cut and sold as timber or firewood by plantation owners are subject to tax under the Kerala General Sales Tax Act. The Court referred to the decision in Manager, Pulpally Devaswom v. State of Kerala, where it was held that turnover from trees of spontaneous growth cannot be taxed unless they are of a business nature or the sales are of goods produced by the seller. The Sales Tax Appellate Tribunal upheld this view, finding no error in the orders under revision.

The Court also considered the argument made by the Revenue's counsel, contending that the decision in Pulpally Devaswom conflicted with previous judgments. However, the Court disagreed, stating that the earlier cases did not specifically address the questions examined in Pulpally Devaswom. It was clarified that for a transaction to be considered under the definition of a "casual trader" or "dealer," it must be of a business nature, as established in previous decisions such as Deputy Commissioner v. Tirumbadi Rubber Co.

Regarding the interpretation of section 2(viii)(e), the Court emphasized that only sales of goods produced by the seller could classify them as a "dealer." It was highlighted that cutting trees of spontaneous growth does not amount to production of goods by the seller unless the trees were planted and nurtured for commercial purposes. The Court agreed with the approach taken in Pulpally Devaswom on this matter, distinguishing between trees planted for commercial use and those of spontaneous growth.

Furthermore, the Court noted that the amendments made to the relevant sections by Acts of 1980 and 1978 were not considered in these revisions as they pertained to earlier transactions. Ultimately, the revisions were dismissed without any order as to costs, affirming the non-exigibility of tax on shade trees cut and sold by plantation owners as per the Kerala General Sales Tax Act.