1994 (10) TMI 285 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of turnover and additional sales tax disallowed on firewood and pulpwood sales. Dispute over whether karuvel trees sold can be considered as firewood.

Analysis:
The petitioner, a dealer in firewood and pulpwood, challenged the disallowance of exemption and imposition of additional sales tax on a turnover of Rs. 3,94,769 by the Deputy Commercial Tax Officer. The Appellate Assistant Commissioner upheld the assessment on a reduced turnover of Rs. 2,89,425, considering a portion as second sales of timber. The Tribunal affirmed this decision, leading to the petitioner's revision.

The petitioner argued that the karuvel trees sold were primarily used as firewood, supported by bills and delivery notes indicating the sale as firewood. The Government Notification exempting firewood from sales tax was also cited. The opposing view contended that the trees were used for pulp production by the buyer, suggesting they were not firewood.

The Court considered precedents like Lakshmi v. State of Tamil Nadu, emphasizing that common understanding and market usage determine the classification of wood as firewood. The Court noted that the karuvel trees sold were commonly known as firewood and not intended for pulp production. Referring to Commissioner of Sales Tax v. Marwah & Co., the Court highlighted that common usage defines the classification of goods for tax purposes.

Relying on the above principles, the Court held that the karuvel trees sold by the petitioner were indeed firewood, despite their use by the buyer for pulp production. The assessing authority's revision to tax the sales turnover of karuvel trees was deemed incorrect. Consequently, the previous assessment exempting the sale of karuvel trees from tax was reinstated, and the orders of the lower authorities were set aside.

In conclusion, the Court allowed the petitioner's revision, overturning the tax levied on the sales turnover of karuvel trees. The original assessment made by the assessing officer was restored, and no costs were imposed.