1991 (1) TMI 419 - HC - VAT and Sales Tax

Summary

Issues:
1. Rate of sales tax leviable on "packing shooks" obtained from timber logs.

Analysis:
The judgment pertains to the rate of sales tax applicable to "packing shooks" derived from timber logs. The petitioner, a registered dealer under the Karnataka Sales Tax Act, contended that packing shooks fall within entry No. 45 of the Second Schedule to the Act, which specifies different tax rates for timber products. The Revenue argued that packing shooks are distinct from timber and should be taxed differently. The court was tasked with interpreting whether packing shooks could be classified under the definition of "timber in cut or manufactured form" as per the Act.

The petitioner maintained that packing shooks should be considered a form of timber, citing precedents such as Commissioner Sales Tax v. B.M. Wood Works and G. Ramaswamy v. State of Andhra Pradesh, where similar products were deemed to fall under the category of timber. Additionally, the Supreme Court's decision in State of Orissa v. Titaghur Paper Mills Co. Ltd. equated timber with various wood products, supporting the petitioner's argument.

However, the Revenue relied on the Supreme Court's ruling in Mukesh Kumar Aggarwal and Co. v. State of Madhya Pradesh to distinguish between timber and other wood products. Despite the Revenue's contention that packing shooks were not equivalent to timber in commercial terms, the court emphasized that the legislative language encompassed all forms of timber, including different shapes and sizes. The court rejected the Revenue's argument and held that packing shooks fell within the definition of timber as per the Act.

Moreover, the court highlighted the legislative intent behind the inclusion of specific wood types in the definition of timber, emphasizing that if packing shooks were meant to be excluded, the Legislature would have explicitly stated so. The court concluded that the petitioners were entitled to succeed in their claims regarding the tax rate applicable to packing shooks. Consequently, the writ petitions were allowed, except for one that was dismissed as unnecessary, thereby ruling in favor of the petitioners regarding the tax treatment of packing shooks derived from timber logs.