2001 (12) TMI 838 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Determination of whether Casuarina wood qualifies as firewood.
2. Applicability of sales tax exemption on Casuarina wood under the Tamil Nadu General Sales Tax Act.

Issue-wise Detailed Analysis:

1. Determination of whether Casuarina wood qualifies as firewood:

The petitioner, a paper manufacturer, purchased Casuarina wood from farmers in Tamil Nadu. The wood was described as having dimensions of 0.6 meters in length and 5 cm in width at the thin end. The primary contention was whether Casuarina wood could be classified as firewood, which would make it eligible for sales tax exemption under a government notification.

The petitioner provided extensive evidence from various publications to support the claim that Casuarina is predominantly used as firewood. References included:
- "Casuarinas" by Dr. N.S. Subbarao and C. Rodriguez Barrueco, which stated that Casuarina wood is mainly used as fuel in India and China.
- "A Handbook on the Identification and Description of Trees, Shrubs and Some Important Herbs of the Forests of the Southern States," which described Casuarina as a tree chiefly used for fuel.
- "Casuarinas Trees of Multiple Utility" by the Indian Council of Forestry Research and Education, which noted that Casuarina wood is used for fuel and has significant calorific value.

The court acknowledged that Casuarina is a multipurpose tree used for various purposes, including fuel, scaffolding, and pulp for paper manufacturing. However, the primary question was whether its use for making pulp disqualifies it from being classified as firewood.

2. Applicability of sales tax exemption on Casuarina wood under the Tamil Nadu General Sales Tax Act:

The petitioner was assessed to purchase tax under Section 7A of the Tamil Nadu General Sales Tax Act. The petitioner argued that Casuarina wood should be exempt from tax as firewood, based on a government notification issued under Section 17(1) of the Act.

The court referred to the Supreme Court judgment in Mukesh Kumar Agarwal vs. State of Madhya Pradesh, which emphasized that words in a taxing statute should be understood in their common parlance. The Supreme Court had held that the specific use of an article by a particular consumer does not determine its nature for tax purposes.

The court noted that Casuarina, like eucalyptus, is a tree whose parts can be used for different purposes. The fact that Casuarina wood is used for making pulp does not necessarily disqualify it from being classified as firewood, especially when its size and characteristics make it suitable for use as firewood.

The court also considered previous judgments, including:
- Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam vs. C.R. Paul & Sons, where the Kerala High Court held that wood used for making pulp could not be classified as firewood.
- Deputy Commissioner vs. Western India Plywoods (P) Ltd., where the Kerala High Court held that the predominant use of the wood as firewood was decisive for its classification.

The court concluded that the predominant use and common understanding of Casuarina wood as firewood should be considered. The fact that the petitioner used the wood for making pulp does not change its classification as firewood, given the absence of specific conditions in the exemption notification.

Conclusion:

The court held that Casuarina wood qualifies as firewood and is eligible for sales tax exemption under the Tamil Nadu General Sales Tax Act. The writ petitions were allowed, and the assessment of purchase tax on the petitioner was set aside.