1990 (6) TMI 206 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of the commodity as "timber" under Entry 84 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.
2. Inclusion of cutting and transport charges in the purchase turnover under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

1. Classification of the Commodity as "Timber":
The primary issue was whether the wood purchased by the assessee fell within the definition of "timber" under Entry 84 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The Tribunal had previously concluded that the wood, referred to as "soft wood," did not fall under the category of "timber" and was thus taxable at a multi-point rate rather than under the single-point rate specified for timber.

The Court examined various precedents, including decisions from the Andhra Pradesh High Court, Madhya Pradesh High Court, Orissa High Court, Kerala High Court, and the Supreme Court of India. The consistent interpretation across these cases was that the term "timber" includes wood used or suitable for building, carpentry, or joinery, and does not lose its character when sawn into planks, rafters, or other sizes.

The Court specifically referred to the Supreme Court's definition of "timber" as "wood used for or suitable for building (as a house or boat) or for carpentry or joinery." The Court held that the logs purchased by the assessee, even if referred to as "soft wood" for producing splints, still fell within the category of "timber" as they could be used for general building purposes or by artisans.

Conclusion: The Court concluded that the commodity purchased by the assessee squarely fell within the term "timber" as found in Entry 84 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The Tribunal's contrary interpretation was set aside.

2. Inclusion of Cutting and Transport Charges in the Purchase Turnover:
The second issue was whether the cutting and transport charges should be included in the purchase turnover for tax purposes under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal had excluded these charges from the purchase turnover, reasoning that there was no positive material to show that these expenses were incurred by the sellers.

The Court noted that both the assessing authority and the first appellate authority had dealt with this issue in detail. The Tribunal had assumed, without sufficient evidence, that the cutting, loading, unloading, and transport charges were not incurred by the sellers. The Court emphasized that it was the assessee's obligation to produce sufficient and acceptable material to substantiate their claim for exclusion. The absence of such material, except for purchase vouchers prepared by the assessee themselves, was insufficient to warrant exclusion.

Conclusion: The Court held that the Tribunal had misdirected itself on the facts and the principles of law governing the issue. The Tribunal's decision to exclude the cutting and transport charges from the purchase turnover was set aside.

Final Judgment:
The Court set aside the orders of the Tribunal in both tax cases (T.C. No. 1126 of 1980 and T.C. No. 1129 of 1980). The tax cases were allowed, but there was no order as to costs. The Court upheld the inclusion of cutting and transport charges in the purchase turnover and confirmed that the commodity in question fell within the term "timber" under Entry 84 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.